The Best Upsell You Can Offer Is a Bundle
A lot of eCommerce talk is all about how to boost sales. And when that happens, invariably people start thinking about how to upsell customers as a way to increase average cart values. By upsell I mean that if customers have added Product A to their cart, thinking of a way to entice them to also add Product B. This is typical thinking and I can see why a lot of sellers try to go about things like this but there’s an easier way:
Product Bundles.
We're all pretty familiar with product bundles. Anyone who’s ever been through a drive-thru and ordered a combo meal has purchased one. Why do they work so well? Well, there are SO many reasons that we’ll get into in a moment but I know I’m not the only one who panic orders a #7 at Taco Bell even though they don’t even drink soda.
Product bundles are the perfect upsell. They allow you to boost sales, grow revenue, and up your AOV (average order value) all at once.
Bundling, Defined
Price bundling is a marketing strategy or a pricing strategy where you combine two or more products and typically sell them at a lower price than if the items were sold individually. There are two types of bundles: pure and mixed.
Pure bundles are things that you can ONLY buy as a bundle (think: a buffet meal - one cost includes all and you can’t buy things ala carte).
Mixed bundles are things that you can buy either separately OR as a bundle. Example: my taco bell value meal. I could buy the tacos and soda on their own or as a combo.
For eCommerce purposes, I think mixed bundling is the way to go so most of what we’re going to talk about from here on out is going to be with that model in mind. Now, on to the good stuff:
Why Bundling Works So Well
Let me count the ways!
“Using an upsell product bundling strategy can be 68% more effective than trying to grab a new customer.”
Simplified buying process - as humans, we’re geared to freeze up if given too many options to pick from, a phenomenon called Hick’s Law that I go into depth on in this post. The bottom line on this is that more choices = more decision time. Providing a smaller number of choices decreases the mental load required to make a purchasing decision which leads to happier, more satisfied customers. Bundling takes advantage of this by not asking customers to try to pair up or select items on their own. The fear of choosing the “wrong” thing is much lower with bundles, especially when they’re positioned as problem-solving and are features/benefits-focused.
Increased perceived value - people love a deal so even if they weren’t necessarily planning on buying everything in the bundle, sometimes the “savings” is just too good to resist. Think of my Taco Bell value meal. I don’t even drink soda and I understand pricing strategy so I KNOW that I could probably save money by just ordering the items I want ala carte. But the ease of ordering by number plus the “savings” is a strong motivator. There’s a sense that you’re getting more but paying less.
Easy to market and promote - it’s easy for customers to see the value in bundles of complementary products which makes your job selling to them just that much easier. From an analytics standpoint, since bundles increase your average order value you can spend a lot less per conversion to sell the same number of products. Not to mention that if you do go the pure bundling route (where your products are available to purchase only as bundles and not individually), you only need to promote the number of bundles SKUs you have, not the total number of product SKUs. This means things like fewer Instagram promoted posts to come up with, less marketing copy to write, and fewer branded photoshoots required! Lastly, studies have shown that it’s 68% more effective to market a product bundle to an existing customer than trying to acquire a new one.
Lower shipping, distribution, and fulfillment costs - as long as you’re packing a box for shipment, you might as well make sure it’s filled to the brim! There’s a fixed cost associated with shipping and fulfillment that may be hard to meet when you’re selling products piecemeal but that’s easy to beat with product bundles. Think about it: how many times have you received a giant, empty Amazon box with one lone item in it? The box, packing inserts, and even the shipping label itself cost pretty much the same whether you’re shipping one item or three. So if you’re struggling with getting ahead on shipping, bundling may be just the ticket.
Reduced friction & increased sales - People are so busy that even if they wanted to check out allllll of your products to find just the right one, they just may not have the time to do so. Bundles are a convenience that are appealing for just how fast and easy they are to order. There’s also a little psychology at play here - one line item in your cart at checkout just “feels” less expensive than a cart with multiple items. At checkout, a cart with multiple items may give some shoppers pause and even compel them to start removing things to “save for later”. A bundle is a one-and-done package deal that you can’t second guess. If you sell services or other complementary products as a bundle, people also won’t feel “nickel and dimed” by multiple line items of associated costs. The bundle price is what it is and that’s it.
Bundling Tips
Ready to incorporate bundling into your eCommerce strategy? Here are some tips!
Combine low-volume, low-priced items with high-volume, premium ones. This not only helps you move slower inventory, but it can also help people discover new favorite products that they otherwise might not have tried. Think of this as the when you buy shampoo and it comes with a little, free travel-size bottle of styling gel by the same brand. You may not have tried the styling gel on its own but as part of a bundle, it was low risk for you and helped the brand move some of its lower volume products. Win-win.
Promote your bundles as great gifts. Position product bundles as a way to solve a specific problem, benefit a certain type of person, or celebrate a holiday or special occasion. Buyers shopping for someone else are always looking to experts like you to ensure their gift is a success. To get the most out of this segment, create a category for bundles in your shop! This way people have the option to skip right to them and won’t have to even worry about sifting through individual products trying to find the right thing.
Try bundling instead of discounts. Discounting decreases a product’s perceived value so I’ve never understood how quick some sellers are to look to discounting strategy instead of bundling strategy. Bonus - not only does bundling boost the perceived value of the products being sold but also of the company itself! You don’t want to be known as a discount seller.
Combine bundles with free shipping offers. Set your free shipping threshold (i.e. “Orders over $100 ship free!”) at the price of your best bundles. As we discussed above, bundling can help you get ahead on shipping costs because you’re shipping more in roughly the same amount of packaging and for the same fulfillment cost. This can help you avoid shipping orders for lowe priced products that cost more to ship than you’re making.
Give your bundles a great name. I always say to focus on the benefits and features of products and product bundles because that makes them harder to compare to others. When you position your product bundle as solving a specific problem, you no longer have to worry about your competition; they’re selling commodities and you’re selling solutions. This has another benefit of people ignoring a higher cost for a bundle than buying just one of the goods. Any sort of price-based comparisons fall away as people focus instead on how the products are going to improve their lives or solve some sort of problem.
Bundling FAQs
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I mean, higher discounts are always nice but be careful you’re not devaluing your products or brand. There’s no perfect percentage but studies have shown that at only a 20% discount people may prefer to buy items separately while higher discounts steer people towards bundles instead. I would also make sure you’re pricing your individual products appropriately so that there’s room to bundle them effectively. Individual products should be priced at a premium to bundled goods.
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The answer to this may surprise you! Studies have shown that when the bundle cost is on the high side bundles that include fewer products perform best. Conversely, low-cost bundles do better when they contain more items.
I think the secret to this is that both expensive bundles with lots of products in them and cheap bundles that skimped on inclusions can come across as cheap.
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Upselling (aka suggesting an alternative product to the one a customer originally intended to buy) really only works when the upsell is less than 25% higher than the original item. Upsells work best for low-risk and low-value items otherwise you run the risk of making people feel like they were bait and switched!
Cross-sells (suggesting companion products that would pair well with the product purchased) can be as simple as showing related products on the page or before checkout and also do well for items that are priced lower than the first item.
Both of the above can be beneficial but shouldn’t really be the heart and soul of your selling strategy. p.s. I go into more on upselling & cross-selling in this post!
For more about selling bundles on Squarespace check out this post!
