EHarmony: more than traditional Internet dating.
Gupta, Atul ; Murtha, Rebecca ; Patel, Niharika 等
CASE DESCRIPTION
This case will allow students to analyze marketing strategy and
target markets, be informed about and able to discuss legal and ethical
issues in the marketplace and also about branding of a company and how
the brand can continue to keep the company going one way even if going
another way is in the company's best interests. This case has a
difficulty level of three to four and is best utilized in higher-level
undergraduate or graduate courses. This case is designed to be taught in
one and a half class hours with students having two hours of
out-of-class preparation.
CASE SYNOPSIS
EHarmony is an online dating company that was started in 2000,
under the premise that it matched couples scientifically on "29
dimensions of compatibility." Unlike other dating sites, eHarmony
focuses specifically on creating lifelong "matches" and has
marketed the company accordingly. Originally, eHarmony was based on
strong Christian principles, using the number of marriages produced from
the site as a marketing tactic. However, competition and a more mature
market have led the company to expand in order to survive and still hold
a competitive advantage. Now, it has gone after the secular market in
order to compete with the largest online dating company, Match.com.
In trying to expand, however, eHarmony has made several mistakes.
First, eHarmony has excluded gays and lesbians and been sued for doing
so. They eventually settled out of court and agreed to provide gays and
lesbians with a separate service for matching. Furthermore, other
lawsuits allege that eHarmony's matching system is not scientific
and allows online predators and scam artists to connect with unknowing
singles. That case is still in the court system.
Another way that eHarmony has tried to expand is by creating
specific sites for different countries. In Britain, it created a new
method of matching for British singles, but for its Canadian and
Australian sites, eHarmony utilized the same system as in the United
States. Ignoring the sociological differences could be extremely
detrimental to the company as a whole.
Finally, eHarmony has chosen to advertise in traditional ways,
utilizing television and print advertisements instead of advertising
online or creating applications for mobile devices. In doing so,
eHarmony has missed out on a large part of the market--the younger
generation that is constantly on the go and rely on mobile devices and
computers rather than television and print.
INTRODUCTION
In 1997, after practicing clinical psychology for 35 years, Dr.
Neil Clark Warren came to believe that there was a better way to find
love than by simply leaving it up to chance. Dr. Warren set out to test
this theory and identify the characteristics between spouses that were
consistently associated with the most successful relationships. After
three years of research, Warren's team developed the Compatibility
Matching System. This system allows matchmaking between compatible
persons with whom they are likely to enjoy a long-term relationship.
Based on this model, eHarmony was launched in 2000 and since then,
millions of people have used eHarmony's Compatibility Matching
System to find compatible long-tem relationships, many of them leading
to marriages. In the beginning, Warren started marketing eHarmony
primarily to Christian sites, touting it as being based on Christian
principles. Now in marketing through TV or radio ads, ($50 million spent
last year, $80 million projected this year) there is no mention of its
Christian connection. EHarmony is increasingly seeking out secular
audiences through online partnerships with various media outlets.
EHarmony's matchmaking service has grown into the
fourth-largest dating site on the Web, behind Match.com, Yahoo!
Personals and Spark Networks, according to Internet measurement company
comScore Media Metrix. While other leading dating sites allow users to
find their own matches by searching through online ads, eHarmony has its
users fill out a 436-question test designed to evoke thoughtful and
revealing responses. EHarmony then emails users potential matches,
encouraging people to get acquainted before they even see each
other's photos. Matches on eHarmony are based on "29 areas of
compatibility" such as character (curiosity, intellect,
appearance), "emotional makeup" (anger, mood, and conflict
issues), family values (background, education, spirituality), and traits
(humor, sociability, ambition). Whereas some singles found the
questionnaire tedious and exhausting, others applauded its thorough
nature and found the results revealing and insightful. The length of the
questionnaire was intentional; Warren and his team believed that only
those truly committed to finding an appropriate match would complete the
entire process.
Once an interested person completed the questionnaire, eHarmony
would search its database for matches, but only for individuals who met
at least 25 out of the 29 compatibility areas, on either a local or
worldwide basis. The results, according to the company's web site,
would be "matches unlike those on any other online dating
service" and "scientifically evaluated to be uniquely
compatible" with each prospective eHarmony member. Once a match was
found, however, love-seekers needed to officially become an eHarmony
member by paying $49.95 for a one-month trial membership, $99.95 for
three months, $149.95 for six months, or $249.95 for a year-long
membership. eHarmony guaranteed at least one match per month (though
there were often dozens), with the hope of falling in love.
The proprietary nature of its system does not allow eHarmony to
reveal exactly how the 29 dimensions are used to match people. Eharmony
does not accept members who are already married, have been married more
than three times, or those it judges to be emotionally unfit to enter a
relationship, such as the severely clinically depressed. Furthermore,
eHarmony reserves the right to declare someone "unmatchable."
EVANGELICAL CHRISTIAN CONNECTION
Dr. Warren is an evangelical Christian with strong ties to the
conservative Christian community, including a prior business
relationship with the Focus on the Family leader James Dobson. About a
dozen questions in eHarmony's Personality profile touch on faith,
but the questions are nondenominational. The research that eHarmony has
developed to match couples has been based on traits and personality
patterns of successful heterosexual marriages with no thought to gays
and lesbians. This would prove detrimental to the company. In 2005, Eric
McKinley sued EHarmony for discrimination, filing a lawsuit in the State
of New Jersey based on the fact that he was denied access to eHarmony
because he is gay. McKinley's lawyers believed the suit to be the
first of its kind against the Internet's largest dating site of 12
million members. In an interview on National Public Radio, Dr. Warren
said:
"I have a deep desire for gays and lesbians to be matched well
if they're going to be together. I had some people come to me who
were actually gays, and they wanted to know how I would advise that they
try to build a site to do a good job. And I spent a lot of time with
them talking about the need for research, the need to look at what
really does work for gays and lesbians in terms of the couples and how
you develop research instruments that will help them to do that job
well. And I've tried to be helpful in those ways, but we've
taken the position that right now we don't choose to [match gays
and lesbians]."
In the interview, Warren indicates that he has not done enough
research about same sex coupling and that he imagines the principles of
coupling might be different for homosexuals. After legal battles,
eHarmony settled the case by announcing that it would match gays and
lesbians under a new service (and website) called "Compatible
Partners." Compatible Partners draws on the same body of knowledge,
and a disclaimer at the site informs users that the means employed to
match prospective partners has not been modified to accommodate
additional research involving same-sex couples. In other words,
Compatible Partners uses the same theories and assumptions about who
will be a good fit for gays and lesbians as eHarmony uses for
heterosexuals.
But what the move hasn't done is clear up eHarmony's
legal problems: a second suit alleges that by relegating gay dating
services to a separate site, eHarmony is still discriminating and
denying users access to the site they wish. For some among the religious
right, eHarmony's agreement with the state of New Jersey to create
a new site for gay users constituted surrender to the demands of gay
"activists" determined to "criminalize
Christianity." In January 2010, eHarmony again settled a lawsuit
with the promise that they would link their straight and gay websites
and allow people to use both without paying double fees. They also
agreed to pay about $500,000 to an estimated 150 Californians to settle
the class-action suit, plus around $1.5 million in court and
attorney's fees.
Expansion to Britain
EHarmony launched its British website in October 2008. In Britain,
the service cost 34.95 pounds ($61.78) for a month, or 14.95 pounds per
month for a six-month period after a seven-day free trial. Before going
live in Britain, eHarmony spent about a year working with researchers at
England's Oxford Internet Institute to gather compatibility
characteristics unique to Britain by interviewing married couples. Since
it opened in June of 2008 eHarmony.co.uk now has more than 800,000
singles registered. In September 2009, 5 million singles visited British
dating sites. On average, about 4 percent of people have used a dating
site in Europe. In Britain, online dating is twice as popular as the
rest of the continent, with 8 percent of the population having visited a
dating service. EHarmony now charges 33.95 [pounds sterling] for one
month's membership, Dating Direct charges about 25 [pounds
sterling] a month and Match.com charges around 22 [pounds sterling],
although the monthly rates decrease as you sign up for longer
subscription periods.
Eharmony has 800,000 registered singles compared to 6.5 million for
Match.com, but the latter has been in Britain much longer than eHarmony.
JupiterResearch, an Internet and technology analysis firm, predicts that
revenue from the online-dating market in Europe will reach 430 million
[pounds sterling] by 2011, compared with 250 million [pounds sterling]
last year. The number of people paying to use online-dating sites in
Europe is also expected to grow to six million by 2011, compared with
2.8 million two years ago. The British market is particularly
strong--together with Germany, it accounts for more than half of
European online personal spending. In contrast, American online
dating--, which is set to reach 11.7 million paid users next year--has
virtually reached saturation. Mr. Waldorf, CEO of eHarmony, is confident
that there is a niche in the UK for his company, which he argues is the
home of more serious daters looking for a long-term relationships:
"The UK has a very strong market for online dating and that
strength is combined with a gap in the market for matchmaking services.
He points out: "The stigma has gone. There are lots of dating sites
for flirting or casual relationships--but in terms of the brand and
space that eHarmony operates in, we offer something different."
EHarmony also operates websites specifically focused on singles in
Canada and Australia. Unlike the British site, for these two the same
scientific matching system is used and the only difference appears to be
that the singles live in Canada or Australia as opposed to being in the
United States. The subscription rates also remain the same in Canada and
Australia as they do for US subscribers. The Canadian site was the first
international eHarmony site, launched primarily because Canadians made
up the second highest percentage of eHarmony users (on the original
eHarmony site).
The site in Canada was launched in 2007, while the Australian site
was launched in late 2008. Both sites offer special free communication
weekends and specials where one can subscribe with a coupon code and get
a percentage off of the subscription fee. These specials are often
offered on Canadian or Australian holidays and free communication days
can last for up to 10 days at a time. Competition is thinner in the
foreign markets, as fewer large dating sites are specifically catered to
foreign singles, however there are several national sites that exist
specifically for users in Australia and Canada.
The main challenge is that each national market requires an entire
new set of sociological research to underpin the matching software.
However, eHarmony has refused to research the local cultures, needs and
wants before launching the new sites and the questionnaires still remain
the same for each eHarmony user, regardless of location, culture,
religion, etc. This could prove problematic as not each country is
marriage-focused as others (i.e. as a whole, the United States is more
focused on marriage than say, Australia), and many people could be
looking for different types of matches based on sociological or location
differences. As of print time, eHarmony has not changed its types of
questionnaires or surveys based on sociological differences and only
time will tell if it will.
Competitors
Major competitors to eHarmony include Match.com, Spark.com, Yahoo
Personals, PlentyOfFish.com, Chemistry.com (which is Match.com's
"Sister Site"), and PerfectMatch.com. Match.com and
eHarmony.com, which both use matchmaking systems based on user-created
and questionnaire generated profiles, still dominate Internet romance,
with Yahoo Personals steadily gaining subscribers and still growing (see
table 1). A host of other competitors are also gaining traction with new
ideas on how to put people together (see table 4). Most of the
competition is financially insignificant when compared with Match.com,
whose 20 million users and $350 million in revenue blow most serious
competitors out of the water, while eHarmony.com comes in second at 20
million subscribers and $250 million in revenue (see table 2 for
subscription fees). Match.com also claims that it is responsible for 472
marriages occurring each day, while eHarmony boasts that it is
responsible for 236 (see table 3).
OkCupid is free to join and one does not have to pay to
communicate, adding to its appeal. This advertising-supported site has
1.2 million members who have logged on in the month of March 2010 and
ads are targeted to users based on their profiles. OkCupid also tripled
its revenue in 2009. Free sites are rare, especially when it is free to
communicate with matches. Most of the other sites allow free sign-ups,
but some charge money for questionnaires, communication or other nuances
that the subscriber could want.
AreYouInterested, another online dating company, switched to a
subscription-based model last year. In this model, its users pay $20 per
month each month, or $10 per month for a six-month plan. The site also
makes money selling "virtual gifts" on Facebook. HowAboutWe
charges $16 a month, $30 for three months or $48 for six months.
Match.com, like eHarmony, is free to join, but only paying members, who
are about 1.4 million strong, can communicate on the site, also similar
to eHarmony's paying model.
The fledgling sites are growing fast, both because they are small
and have room to grow, but also because they cost significantly less
than sites such as Match.com and eHarmony. The AreYouInterested Facebook
application has been installed 15 million times, and a companion iPhone
app has posted more than 110,000 downloads. AreYouInterested parent
company SNAP Interactive Inc. had revenue of $3 million in 2009.
When it comes to advertising, online relationship service eHarmony
is outspending its nearest competitors nearly 2-1, with well over $100
million spent in 2008 alone. According to tracking service Nielsen, for
the first nine months of 2008, eHarmony spent $93.2 million on
advertising, almost twice as much as second place Match.com, which spent
$47 million on advertising in that same time period. Coming in third was
Chemistry.com with $28.2 million. No other online dating service spent
more than $1 million on ads in that same time frame.
So what do most of the ad dollars go to? The highest amount of that
money goes to commercials that air on cable television, with the second
highest amount of that money going to commercials that air on network
television. But what makes the eHarmony story so special from an
advertising standpoint is that the company has harnessed a fusion of
brand-building advertising and direct response. This hybrid is called
"brand-building direct response" and it is the secret weapon
of the new generation of dot coms that want the branding power of
offline and the accountability of ROI positive advertising. In this new
hybrid, brand advertising and DR are no longer mutually exclusive;
rather, they are inextricably linked. This is an Internet company that
has largely been driven by old media. TV advertising (featuring
testimonials from wedded couples) has driven it this far. Consumer
research shows that 24 percent of all Americans can identify what
eHarmony does with no help, though the research does not specify the age
level of those 24 percent (table 5 shows who utilizes online dating).
With the prevalence of the Internet and new media, one would think
that eHarmony would begin advertising in a different medium. However,
eHarmony has still not advertised nearly as efficiently online as it has
via print and television advertisements. If eHarmony is not careful and
does not market to the younger generation, it could seriously miss a
large part of the online dating market and fall even further behind
leading frontrunner, Match.com.
Legalities
In recent years, eHarmony has had legal issues, stemming from its
refusal to let gays and lesbians be matched up on the eHarmony site. As
explained previously in this study, that lawsuit was settled and
eHarmony created a separate site for gays and lesbians looking for
partners. However, that has not been the end of eHarmony's legal
troubles and a recent lawsuit could cause eHarmony serious harm and
jeopardize its standing in the online dating market.
In April of 2010, eHarmony was sued in a US District Court in Los
Angeles. The plaintiffs, Lynda Kelly and Miranda Soegi, who are also
trying to make sure the suit has class action status, allege that
eHarmony's matching system is not scientifically accurate.
Furthermore, the plaintiffs argue that eHarmony is fraught with scam
artists and not true singles that want to meet other people and be
sincere.
Claiming to use algorithms to match up the singles, eHarmony
vehemently denies these charges, going so far as to say that the claims
are "baseless and meritless." However, eHarmony has not
outright denied that there are people in their matching system that are
not sincere and therefore, could be out to scam other singles.
Kelly and Soegi who are seeking $5 million in damages, argue that
there are no measures in place to make sure that the people are being
sincere and open when filling out the survey and eHarmony has no
implementation to make sure that people are who they say they are. In
the lawsuit, it is mentioned that Kelly was matched with a scam artist
in Africa who was only after money.
If the plaintiffs win the case, it could be extremely detrimental
to eHarmony, who has sought a competitive advantage through their
patented matching system. It is an extremely large draw for new
subscribers and has been eHarmony's primary marketing strategy for
years, especially since eHarmony has relied primarily on television
advertisements to draw in older singles instead of the young
twenty-something's that are not always looking for serious
relationships with online dating.
Atul Gupta, Lynchburg College
Rebecca Murtha, Lynchburg College
Niharika Patel, Lynchburg College
Table 1: Subscribers
Match.com 29,000,000
eHarmony 20,000,000
Chemistry.com 4,000,000
Perfect Match 4,000,000
Spark.com 1,000,000
Table 2.: Subscription prices in 2010 (price is per month)
Yahoo!
eHarmony Match.com Chemistry Personals
1 month $59.95 $34.99 $49.95 $29.99
3 months $39.95 $19.99 $33.32 $19.99
6 months $29.95 $16.99 $26.65 $15.99
12 months $19.95 n/a n/a n/a
Table 3: Marriages created from online dating sites
eHarmony 236 per day
Match.com 472 per day
Perfect Match not released
Spark.com not released
Table 4.: Percentage surveyed who have used the following sites
(multiple response allowed)
Match.com 29%
Yahoo Personals 21%
eHarmony 11%
MySpace.com 7%
American Singles 4%
AdultFriendFinder 4%
BlackPlanet.com 3%
True.com 2%
Jdate 2%
AOL Profiles 2%
Salon Personals 1%
Christian Mingle 1%
Other 26%
Don't Know/Refused 19%
Table 5. Who utilizes online dating?
Online Not online
Daters daters
All internet users 11% 89%
Sex
Men 12% 88%
Women 9% 91%
Ethnicity
White 10% 90%
Black 13% 86%
Hispanic 14% 86%
Location
Urban 13% 87%
Suburban 10% 90%
Rural 9% 91%
Age
18-29 18% 82%
30-49 11% 89%
50-64 6% 93%
65+ 3% 97%
Household Income
Less than $30,000 14% 86%
$30,000 to $49,999 13% 87%
$50,000 to $74,999 10% 90%
$75,000+ 9% 91%
Home Internet Speed
Broadband 12% 88%
Dialup 9% 91%
Education Level
Less than high school 14% 86%
High school grad 10% 90%
Some college 11% 89%
College + 10% 90%
