Product Bundling

We all know that pricing is a powerful tool, whether we are increasing revenue, clearing excess stock, trialling a new product or attracting customers.

However, in this part of the Customer View, we are primarily interested in making existing customers happier, resulting in you getting a greater share of what the customer already spends.

Australians are not store loyal meat buyers. Only 10% of Australians buy meat from only one shop or chain. The average butcher has about 2000 customers in a year. Of these, 600 represent over 70% of the average butchers sales.

Customer-loyalty.jpg

Product bundling is a way of increasing the loyalty of your customers. This matters because the average Australian butcher only captures $20.60 of very $100, each of their customers spends on meat.

Bundling is really as simple as a volume discount. Well executed, bundling has two purposes, to make an extra sale or two per customer and more importantly to keep that customer out of someone else's shop for longer. The average butcher would more than double their sales if they could sell all of the meat that their top 600 customers buy.

The average Australian eats dinner at home around 11 days every two weeks. So your goal should be to sell each customer 5 or 6 meals worth of meat each week.


Whilst there are many ways to execute bundling we focus here on just three:

Current Situation - no bundling.

. Dollar Spend per Week Dollar Spend per Year Dollar Spend - 10 Year Life Time Value
Total Meat bought per household $40 (for example) $2,080 $20,800
Butchers Share of Total 31% 31% 31%
Bundling Discount 0% 0% 0%
Total Value of butcher sales per customer $12.40 $644.80 $6,448
Total Value of butcher sales top 600 customers $7,400 $386,880 $3,868,800

Ideal Situation - 6 days for the price of 5 bundling.

. Dollar Spend per Week Dollar Spend per Year Dollar Spend - 10 Year Life Time Value
Total Meat bought per household $40 (for example) $2,080 $20,800
Butchers Share of Total 100% 100% 100%
Bundling Discount 16.7% 16.7% 16.7%
Total Value of butcher sales per customer $33.32 $1,732.64 $17,326.40
Total Value of butcher sales top 600 customers $19,992 $1,039,584 $10,395,840

So versus the ideal, the average Australian butcher in this example is giving away $6.5 million in sales of their best customers' money if they could ever get to 100% loyalty. But even improving loyalty from 31% to 50% is worth millions to you.