Online Dating Sites Want Couples to Stick Around
Online dating can be a good way to find a special someone for Valentine's Day. But as a business, the romance is wearing thin.
The industry has grown at a measly 1 percent annually since 2006, according to research firm IbisWorld. That's in part because sites such as eHarmony and Match.com face a quandary: Every time their product is successful, they lose two customers.
Shayan Zadeh and Alex Mehr, both 33-year-old Internet entrepreneurs from Iran, think they have a solution. They're the co-founders and co-CEOs of Zoosk, a 4-year-old dating site based in San Francisco. It's successful, with about 15 million active users each month, but lately the two men have been thinking of ways to spur growth by becoming more like LinkedIn, a hub for job seekers that's also a destination for people not actively looking for a new gig.
Dating sites match couples and then say, "We're done with you," Zadeh said. "We feel that we can change that paradigm and provide more services along the way and throughout your life."
Zoosk works similarly to eHarmony and Match.com: Users can search listings of other singles for free but pay as much as $30 a month for services such as sending and receiving messages or seeing who has viewed their profile. One big difference is that Zoosk piggybacks off Facebook's audience of 845 million users rather than building its own.
This month, Zoosk will begin offering features to keep happy couples engaged with the site. These include anniversary gift ideas, digital scrapbooks, restaurant discounts and relationship advice from experts.
Most of the extra features will be free to Zoosk couples who keep their profiles active.
"It's really smart," said Laurie Davis, founder of eFlirt Expert, a consultancy that helps singles navigate the online dating world. "It's hard enough in the dating industry to acquire a customer, and then they leave your site so soon. There's got to be more opportunity."
Zadeh and Mehr, who met as students at Tehran's Sharif University of Technology and moved to the United States in 2000 to pursue their graduate studies, have some time to experiment. Zoosk became profitable in the fourth quarter and revenue surpassed $90 million last year, according to Zadeh. That's less than one-fifth the size of Match.com, which made $518 million in revenue last year, and about one-third of eHarmony's $265 million, but Zoosk is growing much faster. It doubled revenue in 2011, while Match.com's grew by 16 percent, excluding acquisitions. Zoosk has raised $40 million from investors that include Canaan Partners and Bessemer Venture Partners.
Other dating sites tend to view happy customers mainly as marketing tools. eHarmony and Match both operate websites encouraging successful couples to broadcast their stories. "We've always thought of them mostly as evangelists," said Grant Langston, senior director of social media at eHarmony.
By early March, eHarmony plans to introduce a Facebook application called The Story of Us that will allow couples to merge their Timelines, a feature of the social-networking site through which members display their photos, status updates and other information in reverse chronological order.
Match.com, owned by Barry Diller's IAC/Interactivecorp, is less concerned about making money from couples than it is in getting them back on the site when their relationships hit the skids.
"Caring about getting your customers to rejoin when they are single again is a good thing," said Matthew Traub, a Match.com spokesman. "We've found that the best way to get them to return is to provide a great experience while they're with us the first time around, so that's where we focus our efforts." He adds that half of Match.com's subscribers come back at some point.
Zadeh and Mehr say they're not worried about their rivals. They have 100-plus employees jamming away at new features and last year lured an executive from Cisco Systems to be finance chief. They say their underdog status spurs them to keep innovating.
"Human beings are naturally lazy," said Zadeh. "If there isn't pressure on you to do better, you'll be happy with the status quo."
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