Some 75 percent of consumers polled by Consumer Reports say they would “definitely” or “probably” buy the same quadruple play or triple play bundle they already purchased again. That normally is viewed as a sign of customer “loyalty,” perhaps best described as an attitude of “I will keep buying this product from you” rather than “I love this product.”
It might not matter much what the motivations are for the actual behavior. What matters is that a current customer is inclined to continue with the relationship, and continue buying the same level of service.
The theoretical underpinning of product bundling is “economy of scope,” in this instance the strategy of selling more products to a relatively fixed set of customers.
The earlier and opposite strategy had been the “scale” approach of selling more units of the same product to a wider set of customers.
That change in strategy is necessary for any service provider in a market that has new competitors, taking market share. That obviously is true for the fixed network voice, video entertainment and broadband access and mobile services markets.
Under such conditions, where a service provider has fewer potential customers, revenue growth requires selling more products to an existing customer. In some cases, some providers can grow another way, by buying similar assets.
At some point, that “grow through acquisition” strategy winds up capped, either by government regulators or the ability to finance further acquisitions. But the “scope” approach always makes sense on an operating basis, especially when acquisitions are not feasible.
The other advantage, from a service provider perspective, is the ability to hide the actual retail price of each component. That is important when a company faces price competition from other competitors. By using a headline price for three or four services, a provider can avoid direct “apples to apples” price comparisons for various bundle components.
The attraction for consumers is the ability to save money. The overall cost of a triple play or quadruple play offer is less than the cost of buying each component separately.
Among the major carriers, the highest proportion of subscribers who said they’d “triple play” again had bundles with FiOS (News - Alert). FiOS received what Consumer Reports calls “standout” scores for its broadband speed and reliability, TV picture and reliability, and phone call quality and reliability.
For consumers in a handful of Midwestern cities, WOW received high marks for its bundled telecom service, especially for billing and support coordination.
“With carriers offering introductory discounts as much as half off, it’s little wonder why three quarters of those who bought a triple or quad-play telecom package (cable, internet, home phone, cell phone) told Consumer Reports that they would definitely or probably purchase that same bundle of services again,” says the report by the Consumer Reports National Research Center.
The full report on telecom services and the result of 84,000 responses can be found in the May issue of Consumer Reports and online at ConsumerReports.org.
Edited by Brooke Neuman