In Part 1, I talked about the well-known tradeoff that product bundles are advantageous for producers while a la carte offers are advantageous for consumers. In Part 2, I discussed the tradeoffs of product bundles versus a la carte from an entitlement management perspective and in Part 3, I will discuss best practices regardless of the course you pick.
Product and Entitlement Management Best Practices
- Keep it simple: Whether you choose product bundles or a la carte offers, have no more than 3-5 orderable options per product family to keep it simple for sales professionals and customers.
- Consider a “base + options” approach to get the best of product bundles and a la carte offers. A base bundle could package features that 80% of customers would want while niche features could go into a la carte offers. Feature usage analysis could help you fine tune what to package into the base versus a la carte offers.
- Invest in an entitlement management system. Regardless of the approach, keeping track of customers based on bundles or a la carte options can become complicated very quickly – an entitlement management system would be the way to go
- Be change-ready – changes in product packaging are inevitable as sales, customer and market needs evolve. Successful software products with active product roadmaps involve packaging and pricing with almost every major software release. Again, entitlement management systems are the proven approach for handling packaging changes without significant IT change costs.
- Avoid dependencies between options in an a la carte model. In the EZ Calculator example, if you had made “add” and “divide” a la carte, then the “average” feature would require both “add” and “divide” to be ordered and activated.
- Avoid version upgrades at the product bundle level. Version upgrades are eitherpart of software maintenance or require separate purchase. If you version a product bundle, versions for products in a bundle have to be synchronized. This is probably one reason that Microsoft’s Office suite is released once every few years. Version upgrades for a la carte product options can be independent of each other – making them more flexible for publishers. Note that SaaS and cloud-based apps can escape issues related to product versioning since by definition; most SaaS products support only one version for all customers.
- Pick orderable names carefully – ensure that the value of a bundle or option is self-evident from the name. Look to buyer personas (E.g. Accountant or Scientist for EZ Calculator) or customer segments (e.g. Home, Small Business, Enterprise for Microsoft Office) or use case groups for inspiration.
- Think through entitlement lifecycle use casesbefore you pick a course. Think beyond the initial order – subscription/maintenance renewals, upsells, version upgrades, software updates and machine management are all essential use cases to map out into a seamless customer experience.
- Standardize on one approach (i.e. bundles or a la carte) across product lines in your company. This makes it easy for sales professionals and customers.
- Invest in a customer experience czar. Once you grow beyond a few products and handful of customers, the sheer complexity of entitlement management can bog down your business and your perception as a company. Having a single voice for your company that ensures consistency of entitlement lifecycle processes and customer experience is key.
What approach has your company picked? Why? Are you planning on changing it? I would love to hear your perspectives.