Selling services as a bundle will change consumer buying patterns, and service providers need to recognize this and make changes themselves, according to a Yankee Group study released today.

Based on research from The Yankee Group 2005 Consumer Brand Navigator,, the study shows that customers set out to buy a single service--not a bundle--and that service providers need to understand how individual services are sold and how to leverage those individual sales to push other products, said Kate Griffin, senior analyst in the Consumer Technologies & Services Decision Service of Yankee.

“There is limited demand for consumers to say, ‘I want a bundle,’ but they can be drawn in when they are making a decision on any one of the four products,” she said. “Each product is purchased differently, and service providers need to recognize this.”

For example, the study points out that consumers in general spend much less time deciding on a local phone service and considerably more time deciding on a wireless service, with broadband and cable falling in between. More than half of those surveyed spent more than several days researching their wireless possibilities, while 46% spent a similar amount of time researching broadband. By contrast, one-third and only 20% spent at least several days researching video and voice providers respectively, an indication that these are more commodity services, the study concluded.

“We hear a lot about wireless-wireline integration, but the first step in any integration is selling two products together, and that has been challenging where wireless is concerned,” Griffin said. “I think this is an indication that they should start with wireless, and try to add other services on, rather than try to add wireless onto a DSL sale, because there are a lot of inhibitors to doing that.”

Having researched handsets and compared pricing plans before buying a wireless product--not to mention agreed on a term contract--consumers are much less likely to casually add a wireless service to their bundle, she concluded.

But consumers will be attracted to well-priced bundles, and service providers need to develop more flexible selling techniques that will involve training customer service reps to handle products across the board, and not simply one set of products at a time. The Yankee study showed 44% of consumers with a bundle made the decision to subscribe to multiple products after they first contacted a service provider, and of that number, 35% decided to subscribe to the proposed bundle immediately.

“Flexibility is really a combination of simplicity and choice,” Griffin explained. “If the person on the end of the phone transfers [the consumer] or can’t speak to the specific offering that person is calling about, you lose an opportunity. Service providers need to take a more holistic approach to information, and not sell services in silos. This will get even more fractured as some of these enhanced services come out, like Iobi.”

Service providers should also take advantage of all possible channels to upsell, she added. For instance, many of the current DSL price breaks are given to new customers who order service on the Web.

“There should be a popup offering that person a chance to save $10 more on their video service,” Griffin said.

Inbound calling opportunities are the prime time for service providers to upsell customers, if they can train their customer service representatives to respond appropriately to customer inquiries, she concludes. And packaging should be flexible enough that the bundle can be based around the product the consumer calls about, or the lead product, with other offerings sold as the tag-alongs.

Along those lines, Griffin sees BellSouth’s move to simplify its DSL pricing as an interim step to removing any obstacles to selling its broadband offering. BellSouth no longer requires consumers to buy a voice service package to get its basic DSL price of $32.95 for 1.5 megabit/256 kilobit service.

“The biggest obstacle among dialup users to broadband is price, so rather than forcing them to buy something in addition to whatever the DSL price is, you remove that obstacle,” she said. “Obviously they are being cautious because they are very protective of their telephony--they don’t want to break that DSL and telephone connection just yet. But the logical conclusion to this is what Qwest is doing with naked DSL.”