How to Increase ARPU with Smart Product Bundling

For B2B subscription companies, launching new products is one of the most exciting and rewarding aspects of the subscription model.

After all, what could be better than finding a new way to surprise and delight your customers?

But what many subscription companies don’t realize is that too much product proliferation can actually confuse your customers and hurt your bottom line. To develop products effectively, B2B subscription businesses should actively manage their product catalogs: removing redundant products, assessing bundling choices, and associating add-on products with core products. Digital marketing company rankingCoach knows quite a bit about launching products. This digital marketing company for small to medium-sized businesses started in 2014 as a search engine optimization (SEO) product. The company provided the service by subscription to smaller locally based businesses like plumbers, hairdressers, and restaurants. Over time, they have continued to add product features to their core offering, including Google ad listings and online reputation management For rankingCoach, the key to managing their suite of products has been staying close to the data. “We push all information we have on product usage into one data warehouse for analysis,” explains Daniel Wette, CEO and Co-founder of rankingCoach. “And that becomes the basis for our product decisions.”

“We push all information we have on product usage into one data warehouse for analysis, and that becomes the basis for our product decisions.”

— Daniel Wette, CEO and Co-founder of rankingCoach

rankingCoach’s data-centric approach jives with research from The Subscribed Institute, which shows that successful subscription companies actively manage their product catalog based on customer insights derived from data. Successful companies are talking to customers, looking at the data, and making intelligent, thoughtful decisions about their products. They then create a streamlined offering that serves customers well and can also evolve as customer demands and business conditions change. “With the right bundling, we massively increased the average revenue per user over the past year,” says Wette. “The product features were leaner, but the average pricing was higher, and in addition the adoption rate for the features increased. The end result was 50% higher average revenue per user.”

“With the right bundling, we massively increased the average revenue per user over the past year. The product features were leaner, but the average pricing was higher, and in addition the adoption rate for the features increased. The end result was 50% higher average revenue per user.”

— Daniel Wette, CEO and Co-founder of rankingCoach

But it’s not just about streamlining the product catalog and calling it a day. Subscription companies need to make sure the catalog is actually meeting the needs of customers. That means looking at the product catalog through the eyes of a customer. rankingCoach’s latest product offering — a Facebook stream for small businesses — is a great example. The companies gain access to information about everything that happens online around their business. For example, the company is notified when they receive a review or a ranking change. It also lets them know when a competitor gets a review or deploys a Google ad. “At the beginning, we thought we would offer the product as an add-on to our core product, for an additional €1-5 per month,” says Wette. “But we wanted to see how customers used the product first. It turns out, with the information stream, the usage of the product changed, with much more customer engagement than normal. Because of the increased engagement, we decided to offer it for free, because the increase in overall satisfaction was worth it.”

The rankingCoach story bears out several best practices in subscription product management:

The revenues of higher-growth companies are typically concentrated in a smaller, more highly curated set of products, and simplicity is the preferred approach. High-growth B2B companies sell a significantly larger percentage of their catalogs.
Active management of the product catalog (once a quarter vs. once every two to three years) gives companies the agility to respond to customer needs in real-time.
B2B companies must automate catalog processes as much as possible. Though selling is distinctly human, managing your subscription business well demands robust technology tools.

The lesson for subscription companies is clear: Create new products that your customers will love, served up in a must-have package.

How to Increase ARPU with Smart Product Bundling

rankingCoach Offers Best Practices in Subscription Product Management

For B2B subscription companies, launching new products is one of the most exciting and rewarding aspects of the subscription model.

“We push all information we have on product usage into one data warehouse for analysis, and that becomes the basis for our product decisions.”

“With the right bundling, we massively increased the average revenue per user over the past year. The product features were leaner, but the average pricing was higher, and in addition the adoption rate for the features increased. The end result was 50% higher average revenue per user.”

The rankingCoach story bears out several best practices in subscription product management:

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