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Discounts, Convenience Come in Bundles

9/17/2000 8:00 PM Eastern

Baltimore-Operators worried about forfeiting revenue by offering discounts on bundled services should know that refusal to offer such price breaks could mean money left on the table.

"We have to discount bundles because our competitors have seen this as a weakness of ours," Cox Communications Inc. vice president of marketing Joe Rooney said during a bundled-services panel at the East Coast Cable 2000 show. The need to bundle for competitive reasons "is the reality," he added.

In research results released recently by Horowitz Associates Inc., consumers rated "one bill" as the advantage most likely to motivate them to buy all of their communications services from a single provider.

Discounted pricing on those services was the No. 2 reason, and the study found a 26 percent reduction to be the average overall monthly discount customers expected to receive from a "good" bundled deal.

The average household in the study of 801 consumers in 41 cable markets paid $122 a month for a combination of telecommunications services, including cable television, local and long-distance telephone, Internet access and cellular telephone.

The Horowitz study also indicated that consumers would consider adding new communications services if offered a bundled package and discount.

Whether operators believe they're ready to bundle or not is irrelevant, said Horowitz Associates president Howard Horowitz, because "consumers are saying that they want it."

AT & T Broadband has a number of objectives when it comes to bundling, vice president of branding and partnership marketing Cathy Kuo said, such as customer growth and churn reduction. For their part, consumers see bundling as a reward for their loyalty to a single company.

"Our challenge is to find a way to make our objectives and theirs intersect," said Kuo, as well as to find a way to make it easy for customer-service agents to sell bundled services.

Offering customers who buy several services a discount on multiple installations is "a no-brainer," added Time Warner Cable senior vice president of marketing Brian Kelly.

Rooney agreed. "For the financial people, I'd say we're not in the installation revenue business," he added. "We're in the monthly recurring revenues business."

 

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