Beyond BOGO: Leveraging customer data for next-level bundle marketing

Have you ever bought more to save more? Many companies are built on this principle. You walk out of the store, spending way more than you intended because the sales were too good to miss!? That’s why even if bundling is not one of your primary business propositions (like it is for Costco), it should be in your repertoire.

BOGO is such a common bundle deal that it has its own acronym. Many customers have taken advantage of bundle pricing to save money, much to their benefit and your monetary gain. Using psychological principles and customer data, bundling can be turned into a discount strategy that wins sales. 

Bundling transforms product perception. By using zero and first-party customer data, you can tailor bundles to meet specific preferences and personalize them so there’s something enticing for each persona that shops with you. Let’s tap into the psychology that makes this tick.

The psychology behind product bundling

Bundling relies on simple psychological principles to draw us in. Any good marketing technique uses psychology as its backbone, and this is no different. A good bundle will attract customers with these factors:

• Enhanced value perception
• Simpler decision-making
• A completeness factor
• FOMO

Value perception

A two-pack of multivitamins for 20% less than two at full price is a good deal, right? You’ll buy another bottle next month anyway, so you might as well stock up. 

Customers see bundled products as having better value than individual items. This value-add drives successful bundling strategies. By presenting a bundle at a discounted price compared to the sum of individual prices, you make customers feel they are getting more for less, which boosts repeat sales and customer loyalty.

We mentioned this earlier, but Costco is the king of perceived value. The average Costco shopper spends $100 twice a month at the warehouse on megapacks of toilet paper, BOGO deals on pastries, and bulk grocery buys.

This marketing machine works because Costco knows its customers: affluent shoppers who have the excess money to buy in bulk. The company obsesses over research, customer data, and putting customers at the forefront of strategy.

Costco has plenty in its marketing toolbelt (like membership tiers and the $1.50 hot dog), but bundling definitely makes shoppers feel like the store adds value to their grocery run.

Simple decision-making

No one is surprised to learn that convenience is a key factor in most purchasing decisions. Bundling simplifies decision-making for customers. 

When faced with too many choices, customers can experience decision fatigue. This can lead shoppers to look elsewhere for a product, or, if everything feels too inconvenient, they may abandon their purchase altogether. 

Product bundles reduce the number of decisions a customer needs to make. This is essential if you’re selling something with a barrier to entry, like a product that requires specialist knowledge.

For instance, a starter bundle or essentials kit simplifies consumer decisions.  Someone just starting a hobby is probably wondering where to start and what they need. 

An amateur photographer, for example, is likely wondering which camera accessories are essential, which camera to buy, and even how invested they want to be in the hobby in the first place. A starter kit for a budding photographer might include:

• A camera body
• Memory card
• Basic lenses
• Carrying case
• Tripod
• Extra batteries

Voila! You’ve solved multiple problems with one bundle — and, if you’re savvy, you’ve priced it at a discount. The shopper doesn’t need to hit another store for a tripod, read reviews on other lenses, or spend even more time shopping around with competitors. 

Completeness factor

The completeness factor taps into the human desire for completeness. Why buy one piece of a collector’s set when you can purchase the whole thing?

Customers are more likely to buy a bundle that meets all their needs in one purchase rather than piecing together separate items. An example of this is in the skincare industry. 

Skincare brands espouse that products work best together when bought from a single brand with specific product routines. Rather than researching and buying products for individual concerns, you can purchase a bundle tailored to your skin type or based on your skin regime.

Urgency and FOMO

Creating a sense of urgency drives customers to act fast. Lim ited-time bundles capitalize on this psychological trigger, though the sense of urgency could be an illusion. Many companies use this technique around the holidays (BFCM, anyone?) for seasonal packages only available for special occasions.

Most limited-time bundles come packaged with a timer countdown. This builds FOMO because customers can see their opportunity to purchase the discounted deal wasting away.

Using customer data to bundle effectively

There are obviously many psychological triggers that draw customers to bundles. As marketers, we can capture customer data that helps us use the right psychological tricks to speak to our customers, which keeps bundling from feeling disingenuous.

Using customer data will set you apart from mediocre brands that simply copy-paste competitor tactics. Your product’s data isn’t replicable, so it can teach you exactly what you need to create tempting bundles as a customer discount strategy.

Purchase history

Take a look at customer purchasing trends; the proof is in the receipts.

Analyzing purchase history will help you identify which products customers buy together. Entire  algorithms rise and fall on this feature that capitalizes on FOMO and more straightforward decision-making:

What’s the peanut butter and jelly of your products? If you’re a haircare brand, that could be shampoo and conditioner. If customers buy those together, selling them as a bundle makes sense to save your shoppers time.

Take a look through customer purchases and scour for these trends. Or, have an algorithm in a Customer Data Platform do it for you!

Segmentation strategies

Segment your audience using customer data to personalize bundles better. You could segment the audience by:

• Repeat customers
• Buyers for specific product types
• Shoppers who’d benefit from retargeting
• Demographic data that influences purchase trends

Gathering and making sense of this data is time-consuming, so consider using a tool like a CDP to help you segment audiences in real-time. This will help you create bundles tailored to the right groups.

Customer feedback

Customer feedback is invaluable. Use customer signals to refine bundle strategies. These can be surveys, reviews, or a thumbs-up or thumbs-down feature asking if an algorithmic suggestion was helpful.

Regularly collect feedback to ensure your offers are attractive. Customers keep our assumptions in check with their feedback.

Types of product bundles

Ready to start packaging services together? A lot of work goes on behind the scenes to make a bundle work. These different types will reach the right audiences.

Pure bundles

Pure bundles comprise products that are only available as a bundle, not sold individually. Many service-based businesses will do this to avoid offering a service a la carte that consumes more energy than it’s worth. For instance, cable and phone companies typically offer pure bundles.

Pure bundles work well when combined products create a unique value proposition that separate purchases couldn’t replicate. But if you expect shoppers to want a single product or service, this shouldn’t be your sole strategy.

Mixed bundles

If pure bundles can’t be sold separately, mixed bundles can. Mixed bundles offer products that can be bought either individually or as part of a bundle. 

Customers prefer flexibility and personalization. Allowing them to mix and match between bundled and unbundled products appeals to a broader audience. Use mixed bundles if you have an audience that favors convenience (by bundling) and personalization (by buying separate items).

Brands usually keep the bundles attractive by pricing them at a discount, meaning customers who want individual items will go out of their way to pay more for those specific items.

Cross-sell bundles

Cross-sell bundles combine complementary products from different categories. Harkening back to the camera example, a cross-sell bundle pairs a camera with a memory card and a camera case. 

This strategy will encourage your audience to buy new items, and it’s an excellent way to introduce them to other product types and associate them with new services.

Tiered bundles

Tiered bundles are the bread and butter of service businesses. These types of bundles offer different levels of product or service that ascend in price, such as a basic, premium, and deluxe skincare set. 

This approach caters to different budget levels. The best part of this bundle type is that you can set the bundles side by side and compare their features, encouraging customers to upgrade.

Conclusion

Bundling creates irresistible product combinations. However, you need customer data to back your bundles up. Find the right combos that have the most appeal by looking at customer data such as:

• Wishlists (your customers are literally telling you what they want to buy)
• Purchases
• Audience segments
• Predictive analytics tools

Otherwise, you’ll reduce sales rather than boost your ROI. 

Data cloud platforms like Snowflake, combined with a CDP like Simon and other content delivery platforms are tools that help you store real-time customer data and act on it quickly. Implementing the best bundling pricing strategies is easiest and most accurate when the data analysis legwork is done using these tools.

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