Why unbundling is the sales strategy for commercial success

Unbundling enables you to better cross sell and upsell as well as unlock demand.

grey building

As a recent Euromonitor report tells us, “The cost-of-living crisis has caused a shift in consumer priorities, with more people prioritising value… However, value for money is only one of the several value components for today’s consumers. Quality, convenience, innovation and authenticity, among others, all comprise the value perception.”

One of the easiest ways to give consumers that sense of value is to enable them to choose and pay for exactly what they want. Not only is it playing into the value priority for the customer, but it also unlocks consumer demand for the business by giving people alternative options to the single choice of paying one price for a package of products and experiences.

This strategy is creating more opportunities for people to buy what they want and pay for what they value, and at the same time, for companies to continue to upsell and cross sell along the customer journey. It also enables better personalisation and means the brand ‘fits’ each consumer better – building greater brand affinity, a better understanding of individual customer wants and needs, and improved marketing opportunity.

Unbundling means that consumers can pay a lower price and include only the things that they want and value from what was previously a package. What it doesn’t mean is keeping the base price the same and making previous ‘package’ elements now an additional cost.

In its simplest form, unbundling enables easy upselling by allowing customers to control what they buy and combine unbundled elements in a way that makes sense to them. It’s not about creating new room types, or changing the menu etc., it’s combining elements that a hotel already has to offer, in a way that enables a consumer to have a good experience.

Flexibility is a key component here. It can take many forms – advance booking, the ability to cancel and rebook, what time a guest checks in and out, optional extras with a room booking etc. – but it’s the flexibility that adds that degree of the consumer being able to control or configure the services they want to purchase and use and that will add value to their stay.

By offering this approach, the consumer sees a clear value proposition that helps unlock greater demand because they are empowered to select elements of a booking that represent real value to them individually. By offering greater choice at the booking point, then it’s possible to select additional elements that are valued on an individual level. The net results are that rather than people selecting the lowest possible priced element, this opportunity to select from a menu of additional extras, results in a higher value booking. It’s a win win for all.

Of course, there will be consumers that are price sensitive and seeking the lowest possible price, and that’s okay too. For a cheaper price, consumers understand there will be things to trade off against, so there will be less flexibility in how far in advance they book, or whether a booking is refundable, for example. This means that businesses can manage revenue and understand demand better by incentivising behaviours.

Conversely, there are a great many others that will be prepared to pay more for the add-ons and experiences they want and really value. This approach provides choice and personalisation which creates a far better experience and incremental revenue opportunities.

This pricing strategy caters, too, to other critical changes in consumer wants and needs, unlocking new consumer demand. Because people travel for different purposes, they have diverse needs when it comes to booking flexibility, additional extras. Therefore, it widens the target consumer pool and unlocks demand that was perhaps seen as previously uncatered for such as:

  • Digital nomad – an increasing trend in the post-Covid world. Carving up the products and services supplied by a hospitality business makes this longer-term remote working trend possible for more people. They can easily access a practical work set up with faster wi-fi and a quiet place to concentrate or conduct virtual meetings, while also enjoying the experience of regularly moving to a different part of the world.
  • Bleisure – seamlessly blending or extending business travel stays to include leisure elements. Bleisure customers need to be able to present professionally while in town for their business meetings or events and want to effortlessly transition that stay to enjoy more of the leisure facilities available.
  • Sustainability focused – people want sustainable choices, such as the ability to preference refillable and reusable bottles to water rather than plastic, or to have local or vegan produce in their meals as opposed to options with a higher carbon footprint. Blending what sustainability means for each person and reducing wastage of elements that were previously bundled in and not wanted.

This demonstrates too, how the unbundling strategy can also unlock underutilised assets and enable selling everything a business has to offer whilst making it easy to buy. For example, shared spaces, meetings, and events spaces are vastly underused in a post-Covid world: with the bleisure and digital nomad trends increasing, there is an opportunity to increase revenues by utilising them, and importantly, selling them separately.

Unbundling plays into Mintel’s 2023 global consumer trends report too. This report highlights seven core drivers of modern consumer behaviour: wellbeing; rights; value; identity; experiences; surroundings; and technology.

Arguably, the unbundling pricing strategy plays each of the seven drivers either as a whole, or where people are placing their priorities individually: wellbeing (seeking physical and mental wellness); rights (feeling respected, protected an supported); value (finding tangible and measurable benefits from purchases); identity (understanding and expressing one’s self); experiences (seeking and discovering stimulation);  surroundings (feeling connected to the external environment); and technology (finding solutions through technology in the physical and digital worlds). There are selling opportunities for hospitality businesses within each of these drivers by adopting and unbundling strategy.

Importantly, not all drivers are going to be relevant to all consumers – key here are that choice and personalisation, trends the sector had been familiar with for some time, and this is where unbundling can deliver. If each customer can tailor their purchase like a hospitality pick ‘n’ mix according to what best fits their needs for each individual experience, it opens a world of cross selling and upselling opportunities for businesses.

Pace Dimensions specialises in turning market insight into competitive advantage, helping to build, and successfully evolve, exceptional businesses. Pace focuses on optimising to improve efficiency and re-structuring resources for the best chances of success. From building new distribution strategies to improving productivity, it helps to build high growth businesses maximising existing core strengths.

Find out more about how Pace Dimensions can help your business to excel at www.pacedimensions.com.

Why unbundling is the sales strategy for commercial success was originally published in Travel Weekly. The link to this article can be found here – https://travelweekly.co.uk/in-depth/comment/comment-how-unbundling-enables-you-to-better-cross-sell-and-upsell

Sign up to our mailing list