Your local cable company has probably offered you a “triple play” package that combines phone, internet and television services. They offer lower pricing for the combined services, and many customers buy the package, even if they don’t use all the services to the optimum.
Businesses in many sectors, including PR services, sell bundled packages. The companies have good reason to package services – to generate more revenue. They may also obtain more customer data, reduce transaction costs or sell more products in bulk. In addition, they may lock in the customer with a long-term contract. Sometimes they increase the fees after a year or two, hoping most customers won’t notice or won’t bother to complain or switch to a competitor. It’s more difficult for customers to switch three services than one.
From the customer’s viewpoint, the bundled services look like a good deal during the sales process.
The Fiction of Bundled Services
Packaged deals don’t always make sense, warns Marshall Lager, senior analyst in Ovum’s Customer Engagement practice.
“Businesses want us to think they have our backs and are practically giving away their goods and services,” Lager writes for CRM Media. “We entertain this fiction (or sometimes actually believe it) and take advantage of freebies because we’re receiving some sort of benefit, and the wheels of commerce continue to turn.”
Cable companies package services to save labor costs, Lager says. The connections are provisioned in bulk, with all services connected. By lowering the overall price of services, cable companies avoid having to reconfigure individual accounts. Apparently, the amount of work and the associated recordkeeping is worth $30 per customer per month.
The Question of Transparency
“Unbundling or a la carte pricing benefits the buyer and packaged or bundled deals give the advantage to the seller,” writes Anthony K. Tjan, CEO of venture capital firm Cure Ball, in the Harvard Business Review. Bundling means lower marketing and selling costs for vendors.
In contrast, a la carte pricing
- Creates pricing transparency.
- Allows purchasers to select options they want.
- Allows buyers to see how the seller values each item, which may differ from the perceived or real value.
- Enables customers to select best-in-class services and avoid paying for services they won’t use.
- Allows customers to customize services to meet their specific needs.
- Provides the customer with more leverage in price negotiations.
Media Lists, News Release Distribution and Media Measurement
Like businesses in other industries, the larger providers of PR services bundle their services. Their version of the triple play includes media lists, news release distribution and media measurement. Like cable companies, they make the package seem enticing. Many corporate and government PR departments write RFPs for the three services combined – requiring vendors to supply all three services.
Some companies offering PR services bill themselves as a “one stop shop” that provides all the services the customer needs. However, it’s nearly impossible for one company to offer the top-notch product in all categories. Some of their products likely range from average to poor. It’s far more likely that customers can obtain better products through a la carte purchases from companies that offer individual “best in class” or “best in breed” products.
In fact, PR departments almost certainly can obtain better results if they purchase the key PR services separately: a media list database, press release distribution and media measurement services. Many customers view the media list from Cision as best in class. But those same customers may believe that Business Wire offers a better news release distribution service than Cision. Media monitoring and measurement services such as our Glean.info offer more and better analytics than the bundled services. Glean.info also offers customization not available in packaged services, enabling customers to obtain the exact metrics and analytics they want. Customer service for the non-bundled services usually outshines bundled services.
Overall, by purchasing services from separate vendors, customers can obtain better services, customized to their specific needs. Somewhat surprisingly, separate services can also be less expensive than bundled services.
Bundled PR services should not be the default purchase decision. When purchasing PR services, customers should most definitely consider separate services. When issuing RFPs, customers should allow vendors to offer only one part of the PR services package or they should write separate RFPs for each service. They should also require bundled services to provide a line item price for each service to better assess pricing.
Instead of reflexively buying a bundled service, a little extra research to identify best-of-breed unbundled services can result in getting better PR services at lower cost and with better customer service.
Bottom Line: Bundling PR services into a PR version of the triple play is a marketing tactic that benefits vendors more than PR departments. PR departments can obtain the best media lists, news release distribution and media measurement by purchasing the services separately from different vendors. No company is the best at all three, or even two.