If you want to sell a product online, it is crucial to know how to design your product portfolio to maximize conversion rates and profits. To determine a lucrative portfolio structure, it is essential to understand the product elements’ character from the customer’s point of view first. This is the foundation for the “best” combination of elements in a product bundle.
This is demonstrated by a particularly successful project involving OVB. Considering the client’s perspective and behavioral economics findings, OVB’s publishing portfolio was optimized to increase the portfolio value by 36% in the empirical test. But let’s start from the beginning.
Status quo of subscription stores
Up until today, many subscription stores of publishers often resemble a showcase in which the publisher combines and presents all products and options in a variety of ways. Various offers are presented side by side under the rationalizing assumption that “the customer is of age and knows what he wants and needs.” This was also the strategy initially pursued by OVB.
The OVB web shop was characterized by a large variety of choices. At first glance, this product presentation seems logical and correct.
However, taking a closer look at the subscription store, several questions need an explanation for the potential subscriber:
- What is the difference between “free trial” (“Kostenlos probelesen”) and “try now” (“Jetzt testen”; top row, middle)?
- Is there also a standard or only the premium subscription (“Premiumabo”; top row, right)?
- And, what if I don’t want ePaper (as offered within the “Samstagabo”; middle of the second row)?
Of course, these are all questions that a potential customer could answer himself. However, the conjunctive will likely remain the same in this case – or would you painstakingly gather all the information you need to decide on one of the many options in the end? If it does not fail because of the lack of will, it probably does so because of the time factor. But why are so many subscription stores presented that way?
The approach “the more, the merrier” follows a widespread misconception: the “Homo Oeconomicus” – equivalent to a customer who always makes “rational” i.e., fully informed, price-driven, and influence-resistant decisions.
In fact, this customer profile overlooks essential insights from behavioral economics, which show that customers neither (can) make rational judgments, nor do they like to make decisions. Therefore, diversity is rather counterproductive for them.
For this reason, you are well-advised not to offer your customers your full range of products and services as usual. Instead, take the decision off your customers’ shoulders: “Decide for them” by tailoring your offers to the individual needs and preferences of your customers. This way, your customers don’t have to actively decide at all – YOU can decide for them. And trust us: Your customer (and your turnover) will thank you for it!
Win customers by deciding for them
How then can the offer portfolio and the subscription store be arranged to make potential subscribers “decided?”
#1 Understand product elements from the customers’ point of view and combine them accordingly
The first step is to understand the individual product elements according to their significance for the customer. You can only achieve this by surveying your target groups. The goal is to first determine which component is chosen most often and how much (more) respondents would pay for a bundle containing this element.
Assign your product elements to the following categories:
- Basic elements: They are particularly relevant for many customers but do not encourage them to pay more for the product just because it is included. These elements should thus be included in the basic bundle.
- Tiering elements: These product elements entice the potential subscriber into a higher-value subscription. They are especially relevant for many, but not a matter of course. They contribute to a higher price acceptance and differentiate the bundles from each other.
- Additional options: They are only relevant to a few people. However, they are so important to them that they would be willing to pay a higher price.
- Question mark: Sometimes, there may be a few “slow sellers” hiding in your product portfolio. You should take a closer look at them. Just because the majority considers them to be “unimportant,” and they only contribute little to price acceptance, this does not mean that you should remove them from the offer. After all, even irrelevant product elements can positively influence the customer’s decision.
According to their character, this differentiation of product elements from the customer’s point of view is elementary preparatory work for creating product bundles.
#2 Experimental tests
After sorting and recombining your product elements, experimental and comparative testing of the new portfolio structures follows. Based on the test results, you can use the bundles that promise you maximum portfolio value. Variations include, for example, the number of bundles, the price structure, price communication, naming, and/or communication of use cases.
#3 Guide through the subscription process
Finally, it is crucial to design your subscription store accordingly. However, this does not mean that you simply present the “more valuable” product bundles next to each other (as in the initial example). You will only be truly successful if you go one step further and design your subscription store to act as a catalyst for customer decisions and thus reflect the customer’s decision architecture.
OVB has implemented a new homepage explaining the product components in detail and hides irrelevant offers through preliminary questions.
A combination of illustration and preliminary questions allows the portfolio to be displayed to the (potential) subscribers according to their specific needs. This also prevents those interested in a print from seeing the lowest prices offered by digital services and being confused by them (negative price anchor). OVB was thus able to achieve sensational test results for its new portfolio and adapt the subscription store to suit.