eHarmony (CSN, Tuesday, Week 8)

20 Mar 2012competing-with-social-networks year-two

Three key activities in every search process: breadth, search, interaction (BSI)

For any search activity, there are three basic models.
You can find potential spouses via:
Your social network: Activities (work, school)
=====> bad breadth (small pool, homogenous)
=====> easy search (good knowledge about potential partners)
=====> easy interaction (already many excuses to talk)

Others' networks: Brokered (friends, parents)
=====> okay breadth (bigger pool than your own acquaintances)
=====> okay search (rely on others decision-making)
=====> okay interaction (broker can help determine potential partner's interest/availability)

Chance: Bars (or walking down the street, etc.)
=====> excellent breadth
=====> bad search (hard to discern compatibility/"quality")
=====> bad interaction (hard to "make a move"/creepy, social repercussions, gender norms, etc.)

In online dating ====> Facebook = Activity, eHarmony = Brokered, Match/OkCupid = Bars.
Corollary: if you see a search process where one of these three classes of interaction does not exist, it's a business opportunity.

eHarmony Key Factors to Success:
-- High barriers to entry (long survey, expensive fee, reject "bad" applicants)
-- Matching algorithm (better matches [?], limited choices = easier to pick, lessens social stigma of reaching out)
-- Limited communication (avoids feast-or-famine problems [women with attractive photos get deluged with messages], increases odds of a response [because the other party doesn't have tons of choice either])
-- Guided Communication (answer important questions [location? kids?] early)

But you still need bodies on the platform!
And tons of challenges with marketing --- dating is scary/uncertain. Compare with picking a hair-care product:
"If you want to buy shampoo, the shampoo bottle is like, 'Uh-huh, I'm going home with you!'" -- Misiek

Word-of-mouth advertising doesn't work well; no one wants to tell their friends they are using an online dating service...
So customer acquisition cost tends to be very high: ad spend for big sites on the order of 40% of revenue.