An Analysis of Online Dating Agencies

1.0 INTRODUCTION

This project is based on a comparative analysis of three significant industry players using Farhoomads’ DOT framework. We chose this framework as it provides a broad scope in which to explore the main competitors. By discussing the various components of the DOT framework several other environmental theories are also covered, such as PESTEL, SWOT and Porters Five Forces. We also tried to incorporate the topics and case-study questions tackled in lectures to define the main e-business issues.

Match.com International Limited is owned by InterActiveCorp (IAC) and is based in Dallas, Texas. Originally set up in 1995, the company now has reportedly just over 15 million members worldwide in over 40 countries, with the site available in 15 different languages (Match.com, 2008a). The company employs just over 350 people (Match.com, 2008b) and its estimated turnover is in the region of $350m (approx £232.8m, Dallas Business News, 2008), mainly as a result of subscription fees, internal advertising on the website and due to a number of successful partnerships which have been established.

Match faces tough competition from DatingDirect, another key player in the field of online dating, recently ranked second in the UK according to the September 2008 Hitwise study, which monitors traffic on the Internet (Online Personals Watch, 2008). Launched just after Match in 1999, the company has approximately 5 million users registered in the UK alone (DatingDirect, 2008a). Based in Birmingham, the company was bought by The Meetic Group in 2007, a French based company, for a reported £27.3m (The Register, 2007). Although DatingDirect remains a UK brand, Meetic has identical services available across many different European countries, based on the same layout and process, however under the Meetic brand name (please see appendix 1 for examples). The company employs just over 100 staff of more than 10 nationalities who modify the site and verify content regularly (DatingDirect, 2008b). In 2006, the company reportedly turned over approximately £11m in 2006 (The Register, 2007), mainly from the same sources as Match.

And finally, Allegran Ltd, launched on Valentines Day on 2003, is the parent company to a number of smaller subsidiary online dating companies, including Loopy Love (2003), Dating For Parents (2006), Girls Date For Free (2004), Dreams Discovered (2005) and Quick Flirt (2006, Allegran, 2007). The company aims to focus more effectively on different segments in the market, by creating a number of smaller brands with different target markets (please refer to appendix 2). The company is based in the UK but as of 18th November 2008 it has been reported that the company was bought by EasyDate (Online Dating Book, 2008), another online dating competitor. At the beginning of the year, the company was owned by Associated Newspapers (The Guardian Online, 2006) and had 24 members of staff, however has recently had to lay off 70% of its workforce due to the high costs of marketing and the estimated £1m losses the company has suffered over 2008 (Online Personals Watch, 2008).

2.0 STRUCTURE

Ever since the advent of the Internet back in the 1980’s, a whole new dimension was created with regard to dating, allowing people to find love online (OLPA, 2003). ‘Online dating services started hitting the UK dating scene in the early 2000’s’, however never really took off until about 2005 (Young, 2007). Ever since this period, the popularity of online dating has drastically increase as developments in technology have continued to make it easier for people to use dating sites. Now, when searching for ‘online dating agencies’ on Google, just under 21 million results are pulled up in under a second (Google, 2008) and with approximately 141 online dating agencies registered in the UK alone at the end of 2007 (The Guardian Online, 2007), it is clear that this industry is big business. Due to the popularity of the Internet, the online dating industry has gradually become more saturated with the market predicted to make annual revenue of £430 million by the end of 2011 (The Times Online, 2008).

The industry is characterised by many niche agencies offering a focussed and specific service, either by religion, region, age, and sexual preference etc, for instance Jdate (for Jewish Singles), Date Older Women and Vegan and Veggie Dating. However, there are a few larger online agencies that focus their strategic capabilities on the mass market, and as a result dominate market share. For instance, Match.com and DatingDirect, who are not only successfully established and recognised in the UK, but also all over the world providing a general service for all types of people to use.

The main business driver, pushing the market forwards can be attributed to sociable factors, such as the need to meet new people, communicate with both existing and new friends and ultimately find someone who would be a potential partner. Although some agencies charge a subscription fee for customers to use their services, many online agencies now provide their service free of charge, which continues to drive and expand the market, making it more accessible for everyone, regardless of individual finances. Even with the threat of a recession looming, research suggests that online dating agencies successfully maintain profitability as users seek ‘emotional support and comfort of a relationship when times get hard’ (Search Mate UK, 2008).

3.0 COMPETITORS

Looking at the competition in the e-dating industry, there are many similarities between competitors, all offering a platform for users to meet and converse with other users in some way. However the main differences lie in the markets, which they cater for and the extent to which they adopt and embrace technological advances. From our research we have found that DatingDirect and Match.com typically cater for the mass market, embracing technological change by offering new and improved ways to find love on the Internet. In comparison, Allegran and its numerous smaller brands provide a service for niche markets, specifically aiming to cater for needs at a more personal level, however with fairly simplistic functionalities and communication methods.

Social networking sites are having a major impact on the online dating industry, with sites such as Facebook, MySpace and Bebo all offering virtual worlds and similar functionalities to that of e-dating sites. However, the stress is placed on socialising rather than love finding, and as Quansah (2004) identifies, social networking sites use different communication tools not yet typically used by online dating sites (Romm-Livermore, 2008). Whilst research suggests that this is a major threat to the industry, some e-dating sites, in particular DatingDirect, have embraced this as an opportunity by using this as an advertising platform, knowing that millions of people visit social networking sites everyday (see appendix 3).

Research conducted by Liebowitz suggests that ‘social networking tools are ideally placed to enhance dating websites’ as although a similar service is offered, it can be used to complement and aid relationship development (Romm-Livermore, 2008, p. 267). E-dating sites should look to and benchmark themselves against the successful practices used by social networking sites in order to develop the websites according to the trends in the market. For example, utilising a ‘Circle of Friends’ tool that lists your friends and potential suitors which as Weng (2007) argues ‘develops relationships and increases sociability’ (Romm-Livermore, 2008). Also technological enhancements such as private instant chat options, as successfully used by MSN, allow a real time method of communicating, eliminating the time and frustration associated with current methods of messaging.

Although all three e-dating organisations analysed are major contenders for market leader in their own field, all are facing intense competition from a new player in the market. EHarmony embraces the idea of scientific dating based on clinical research, by using a combination of in-depth psychometric tests in order to understand individuals on a deeper level and create better relationship matches for them (e-Harmony, 2008). Since the website was developed in 1997, over 20 million users have registered to its service, across a total of 191 countries and so the innovation has clearly been a success with its users. As a result, many online dating companies are now introducing and embracing the psychometric side of dating on a deeper level, in order to keep up with trends in the industry and remain competitive.

On the opposing side of the bricks and clicks debate, online dating agencies also face tough competition from offline methods, such as speed dating, other social occasions and activities, such as salsa dancing, and personal advertisements in newspapers and magazines. Whilst online methods boast advantages such as easy accessibility, low cost, privacy and safety (Romm-Livermore, 2008), offline methods offer people advantages such as face-to-face interaction, which can be extremely valuable when looking for a potential partner. Such offline methods are suitable for people who benefit from ‘low dating anxiety’, which is typically people under the age of 30 (Valkenburg, 2007, p. 849). This fits well with the research mentioned in the customers, section, suggesting that people use online dating more readily above this age, due to time restraints, work and family commitments (The Guardian Online, 2007).

To conclude, ‘selecting from different e-dating services can be a challenging process for individuals in their search for potential friends and partners’ (Romm-Livermore, 2008). It is evident from our analysis that both the online and offline dating industry is a highly competitive market, with organisations not only facing intense competition from within the market, but also externally from substitute services. Reflecting on Porter’s five force model, due to the low costs and ease associated with setting up an agency, the market has fairly low barriers to entry and so appears attractive to potential investors. However, as a result competitive rivalry is extremely high and along side increasing competition from numerous substitute services, this puts customers in a position where they have extremely high bargaining power. As a result, it is imperative that online dating organisations benchmark themselves against the market leaders and main competitors in the field as so they can efficiently and effectively strive to develop and maintain a competitive advantage, whilst evolving potential threats into areas of opportunity. They must recognise the need and the importance of constantly acting innovatively by developing a move-block-move strategy, ensuring that practices are unique as well as inimitable.

4.0 CUSTOMERS

The number of people who have turned to online dating as a means of finding love has increased drastically over the last five years, with research conducted by PARSHIP showing that approximately 7.8 million Britons used a form of online dating in 2007, compared to 5.4 million in 2005. Future trends also indicate that these figures are to continue to increase throughout 2008 by up to 15% (Response Source, 2008). Research into the characteristics of people that use online dating, show that the average user is aged between 45 and 55 (The Guardian Online, 2007), with men visiting sites more frequently than women (52% to 48%, with this increasing to 59% to 46% by the end of 2008, Response Source 2008).

Suggested theories of online dating agree with such research, where this method is considered more convenient for people who hold down full time jobs and who have children to cater for. Coinciding with this view, online dating has also proved popular for divorcees who although make up only 8% of the population, stand for 27% of the online dating population (Valkenburg, 2007). Above the average age which research suggests, computer illiteracy increases and therefore people are not inclined to use online methods and will substitute them for offline methods. In comparison, people who fall below this age, although they are extremely computer literate, they are keen and able to socialise more readily, and so online methods would complement their dating lifestyle. There are also strong arguments as to why people prefer online methods as opposed to offline methods. A main reason being that people who suffer from high dating anxiety find the Internet an easier and safer environment to use when communicating due to the worries and nerves associated with finding love using face-to-face techniques (Valkenburg, 2007). In comparison to this, people who have low dating anxiety use online methods to complement existing offline methods, rather than seeing it as a substitute method (Valkenburg, 2007).

After randomly selecting 15 profiles from each of the online dating agencies we have analysed, (please refer to appendix 4), the trends identified above are evident in our results, where we found the average age of users to be 41, with users ranging from 18 to 73, but with the majority of users aged between their 30’s and 50’s. As Allegran owns a number of online dating agencies, all catering for different niches in the market, their customers traits varied the most depending on type of website. For example, from our analysis, the users of Dating For Parents were aged between 25 and 65, with an average age of 46. In contrast to this, Girls Date For Free, which is aimed at a younger generation, had an average age of 31, with ages ranging from 18 to 53. Match.com and DatingDirect are more generic online dating agencies, catering for all individuals, and so after looking at a random selection of their customers, the results fit in well with the bigger picture as identified earlier, with average ages of 43 and 41 respectively.

It is paramount that online dating agencies recognise that the needs of customers looking for love have not been met by existing services and so companies should strive to cater for the needs of their growing number of customers accordingly using various e-CRM strategies (Smith, 2005). E-CRM involves ‘optimising the customers experience and implementing web based CRM strategies to provide an integrated service’ (Farhoomand, 2004, p. 296), and it is crucial that agencies recognise the need to do this in order to satisfy customer’s needs and in turn retain customers. Farhoomand suggests four building blocks of lifetime CRM including looking at an organisation’s strategy, processes, technology and measurement (p. 300).

Strategy

Looking at the online dating agencies, which we have analysed, it is evident that the needs of the users are central to all of the mission statements and strategies of the company. For instance, match.com aim not only to provide an excellent service, but also guarantee users to find love, with the well-known saying, ‘find someone special in six months, or we’ll give you six months free!’ (Match.com, 2008c).

Process

Processes relate to the customer acquisition, retention, loyalty and lifetime value management capabilities of an organisation (Farhoomand, 2004). This is essential as the number of alternatives for online dating services are increasing, meaning agencies need to remember that it is crucial to not only attract new users, but also keep existing users happy with the service. In order to do this, they need to gain a deeper understanding of their customers needs by obtaining feedback from users as so they can find out what they like and dislike about the website. This enables agencies to make improvements, in turn increasing customer loyalty and creating a customer lock in situation.

For example, Quick Flirt attracts Internet users to register to the website by offering a £20 Virgin wine voucher on completion of registration. As users then set up a profile and begin to use the service, they then get the chance to participate in a survey questioning them about their likes, dislikes and expectations of the service, which enters them into a prize draw to win either £50 in Marks and Spencer or Amazon vouchers. This then allows Quick Flirt to gain a deeper understanding of their customers, increases the levels of information and knowledge, which they have about a user and to make necessary changes to maintain customer satisfaction.

Technology

Technology focuses on creating a customer centric integrated infrastructure, which embraces new processes, systems and technology in order ‘to collect, process and manage customer data’ more effectively (Farhoomand, 2004, p. 305). For example DatingDirect has launched a new site called DatingDirect Affinity, which allows users to discover more about their personality and their ideal partner whilst providing relationship advice and guidance (Sandison, 2008). This also offers the website the opportunity to identify their core, profitable users and obtain more detailed information about them. This is a vast comparison to sites such as Dreams Discovered who offer the basic functions and tools when it comes to communicating and finding potential love matches.

Measurement

Relating to the final component, it is crucial that agencies find an effective and cost-efficient way of measuring satisfaction to ensure that investments and technology developments are not wasted or incorrect. Organisations should monitor the methods implemented due to the problematic nature of evaluating intangible services. This area ties in closely with the process building block whereby it is necessary for agencies to contact users on a regular basis to gain feedback about the service. All of the dating agencies we looked at feature customer satisfaction surveys to find out what users like and dislike about the service and then develop ways in which they can improve their service around this.

As identified from analysing the main players in the field of e-dating, CRM techniques are evident throughout all organisations at all stages of the service, from registration through to general day to day usage. It is necessary for online dating agencies to not only satisfy their customer base through adopting e-CRM methods, but to identify who their customers are in the first place as so they can create and tailor a strategy which will enable them to attract and retain their customers effectively. Once this has been accomplished, the correct e-CRM policies can be implemented as so they can cater for their needs successfully, enabling companies to remain competitive when the market they are operating within is becoming saturated with many new companies, specifically aiming and catering better for the needs of small niche groups. The industry possess low barriers to entry and therefore it is crucial that agencies convince users that their website is the right one for them, whilst reassuring existing users to stay with the website. Otherwise, agencies run the risk of alienating customers by providing an incorrect service, resulting in customers leaving the site and the website failing almost instantaneously.

5.0 PEOPLE

Allegran

Initially, a happy go lucky culture was adopted when the company was first set up back in 2003 (Online Dating Book, 2008). However in 2006, Allegran was sold to Associated Newspapers for £46.5m to help strengthen the latter company’s online presence (Guardian Online, 2006). At the same time this provided Allegran with greater financial support to continue to develop the company’s innovative and blue ocean strategy, searching for new niches and aiming to exploit them ahead of the market. At this time, the employee’s mind-set and capabilities reflected these changes and their previous hard work and perseverance had paid off, resulting in the company being awarded one of the top five fastest growing company’s in the UK in 2007 (as voted in Real Business, Allegran, 2007).

The company and the brand were both continuing to grow stronger, making profits in excess of £7.4m, ‘an increase of 160% on the previous year’ (Guardian Online, 2006). However as a result of poor financial turnover over 2008, Allegran has been recently sold a second time to EasyDate, and in the process, has laid off a massive 70% of its 24-staffed workforce (Online Personals Watch, 2008; Online Dating Book, 2008), which will inevitably have had a massive impact on the remaining staff and on the organisations culture. The recent failures have been attributed to high marketing costs, the reported £1m losses the company has suffered over the year (Online Personals Watch, 2008), and also due to the mismanagement and lack of communication throughout the organisation, with management making and implementing the wrong decisions at the wrong time (Online Dating Book, 2008).

The blinkered and niche focus of the company’s operations, which although has been the main reason for the company’s success over the last five years, has ultimately resulted in the company losing focus and direction, failing to take into account the needs and wants of a demanding customer base. It can be presumed that the workforce of Allegran will now have changed from an innovative, high spirited and motivated team, to a now smaller group of individuals who will be unsure of both the company’s and their own futures, who will be demotivated and who will be suffering from low job satisfaction as the companies future and direction remains uncertain.

It is necessary for Allegran at such a crucial time to try and remain focussed and positive, updating the workforce where necessary so they do not feel alienated by the recent set backs. Regular meetings will ensure that all staff feel appreciated and involved in the process in one way or another. Realistic goals and targets should be set if the company wishes to continue in the future, as this will provide some clear attainable focus points, which can aid in motivating the workforce and getting back on track. However, the organisation as a whole should learn from this failure, and should identify where they went wrong in order to avoid making similar mistakes again in the future. Constant training for all levels of staff would be beneficial as to ensure that knowledge and skill sets are not lost at a time when people are not working as much, and it will also enable staff to learn new skills and knowledge, expanding opportunities for the firm in the future.

Match.com

Match’s company credo revolves around trust, that is, between users and the organisation regarding issues such as privacy, data control, and trust that the organisation can help users to find a suitable match. They work on a policy of being open-minded and honest, aiming to create successful relationships between themselves and users, and between users ultimately (Match.com, 2008d). The company employs approximately 350 people to help deliver this credo (Match.com, 2008b), and therefore it is vital that all employees work in a way that is consistent with this, ensuring that all data is handled according to the correct procedures. The company prides itself on providing the best levels of customer support, and therefore the organisation has a substantial ‘customer success team’, a ‘customer welcome team’, a ‘people team’ and a ‘matching team’ (Match.com, 2008d) who ensure that all problems and issues are dealt with in a correct manner, eliminating any future problems, whilst supporting the philosophy of trust maintenance throughout the company.

The company is extremely customer-centric, which ultimately leads to an integrated service delivery (Rust, 2002). In turn, if users are happy with the service that they receive, then customer loyalty increases, creating a brand lock in whereby users choose to stay with the service. As Nederhof (2003) states, ‘we are living in a cross-functional, process driven, CRM world’ (Greenberg, 2004, p. 9) and Match has recognised and identified with this fact by moulding its business practices and credo around this. As Match offer a typically standard mass service, their global success can be attributed to their credo and policies which has enabled the organisation to attract in excess of 15m members worldwide (Match.com, 2008a).

From analysing Match’s current practices, they seem to be very successful at managing a worldwide online dating organisation, and so it would be beneficial to the company to maintain this customer centric way of thinking in order to maintain market share and increase profits. Again, consistent training programmes would be advantageous to Match to ensure that staff remain aware of their current knowledge and skills, as well as developing employees in new ways to enhance their creativity and continue to drive the business forward. It would also be favourable for all staff to adopt benchmarking practices as so they remain in touch with what is happening in the external competitive environment to them, as so they do not suffer a similar fate to that of Allegran.

DatingDirect

DatingDirect employs around 100 staff of more than 10 nationalities to support its brand development on a worldwide scale (DatingDirect, 2008b). As identified previously, although the DatingDirect brand is a UK based brand, it is modified and offered to users all around the world under different brands names of its parent company, The Meetic Group (please see appendix 1).

As a result a main task of the employee base is to adopt localisation processes. Localisation is defined as the ‘tailoring of website information for individual countries or regions’ (Chaffey, 2006, p. 239). In order for localisation procedures to be effective, DatingDirect staff need to carry out more than just basic translation. Different concepts have different meanings across countries and so everything needs to be considered from the context of the country or region then website is being designed for (Chaffey, 2006).

DatingDirect’s employees are focussed on both developing an innovative service, whilst also providing over half the employee base to answering complaints and queries regarding the site (DatingDirect, 2008c). Similarly to Match, they recognise the importance of satisfying their users, ensuring that they not only meet but also exceed the expectations of their customers, enhancing customer satisfaction and loyalty.

However, although they state this as a core business activity, it is evident from researching the company on the Internet that this is not true in practice. Communication between DatingDirect and users seems to be a one way flow, whereby customers are unable to contact the company to discuss problems with the service they are receiving (Lets Fix Britain, 2003; Review Centre, 2008). Not only should two-way flows of communication be evident throughout an organisation, but also between customers and the company to avoid dissatisfaction (Benham Tye, 1992). Such inconsistencies between what the organisation states and what they do in practice can create conflict between users and the company. It may also have the opposite effect than intended, where customers may choose to leave the site, reflecting badly on the brand and creating bad publicity for the company.

From the analysis of the company above, it is evident that there are inconsistencies in the way business operates, according to the way in which they perceive their activities and the way in which the customer perceives the business. It is crucial for survival that managers address this issue and aim to understand where the problems have originated. Staff at all levels then need to be briefed about any changes, where constant communication and training programmes should be implemented to facilitate and support this change. Also, it remains in DatingDirect’s best interests to open up two way flows of communication as so customers do not feel alienated and as a result leave to another online dating site. They have been extremely successful up until now at creating both a world-renowned and UK based brand and it is essential that they recognise this and develop new practices and procedures to prevent this from happening further.

6.0 STRATEGY

Online dating services use the Internet as a platform to bring together buyers and sellers. They do not have to integrate the Internet in to a traditional business model therefore they have created a model around the Internet’s abilities (Smith, 2005). E-business strategy is all about trade-offs a company makes in deciding where it wants to go and how it is going to get there. Basic competitive forces as well as the market dynamics within the industry influence these tradeoffs (Farhoomand, 2004). Ultimately, a company’s goal is to sustain competitive advantage to be the best. A source of competitive advantage is to configure and manage the value chain, making imitation by competitors difficult (Farhoomand, 2004). As start up costs are particularly low in to the industry, online dating services such as Match.com and DatingDirect have had to gain a competitive advantage by specifying and communicating a purpose and it is how they deliver this purpose that ultimately sustains competitiveness.

Match.com realise that each country is culturally and ethically diverse. They stress that it is right to change your product platform in each country if you have the resources to do so. Consequently, their purpose is communicated in diverse ways. For example in France they use the expression, ‘to do a piece of the road together’ as a statement for success which is different to America’s symbol for success, a wedding dress. Therefore Match.com had to tailor their product to the French Market and communicate a purpose that is understandable and meaningful taking into consideration cultural and language differences (Brand Strategy, 2007). Additionally DatingDirects Managing Director, Alistair Shrimpton quotes, ‘DatingDirect has a purpose. It’s there for single people to meet like-minded people. What is Facebook? It’s really purposeless’ (Howell, 2007). Moreover, by coupling a value chain with customers, not only can organisations attract rivals customers but it can also increase customer retention (Farhoomand, 2004).

Michael Porter is perhaps one of the most influential authors on strategy and classifies the Internet as an enabling technology: a powerful set of tools that can be used in almost any industry and any strategy (Gailliers, 2003). As online dating agencies are built solely on the Internet, Porter recognises that the only way to compete on being better is through operational competitiveness; doing the same things competitors do, but only better and strategic positioning; doing things differently and adding a unique value to customers (Gailliers, 2003). Ultimately, these factors are concerned with embracing technology for an advantage. However, globalisation and open standards such as HTML and XML have facilitated the ease of copying.

Therefore, technology is a defensive weapon usually used to catch up with market leaders (Farhoomand, 2004). The Internet is becoming more accessible through the use of mobile phones, as later discussed, and is a service online dating organisations are using to gain a competitive advantage. DatingDirect has already established a partnership with Vodafone to accommodate for the growth of mobile technology and is an arena other dating agencies have yet to enter. To maintain market leadership, online dating services must continually innovate and make the service second to none. Inevitably, in such an industry it is easy to imitate new innovations, however focus should be on the pace to which new innovations are implemented.

Coupled with the strategic issues discussed above, overall success of Match.com, DatingDirect and Allegran is also down to their individual marketing strategies. As the dating industry is demographically and geographically very diverse, online dating services must ensure that they tailor services to satisfy all customers needs as customers ‘differences in age, religion, nationality, interests, location and other factors determine preferences when searching for a companion’ (Smith, 2005). Allegran have adopted this marketing strategy by introducing five dating sites aimed at a different segment of the market. For example, Dating For Parents caters for single parents looking for companionship and Dreams Discovered caters for individuals looking for long-term relationships.

This technique of segmenting the market attracts a specific customer to a site and increases the chances of finding a suitable match as the majority of users will share an interest. Ultimately, Allegran target a particular market but match.com house the biggest and most interesting mix of members. Matthew Welch, Marketing Manager of Match.com quotes that ‘you are most likely to find someone you are looking for here because of what we call ‘liquidity’ – the size of our pool’ (Brand Strategy, 2007).

Match.com, DatingDirect and Allegran have implemented diverse promotional and advertising techniques to alleviate the brand in the market and attract customers. In order to gain and retain customers, online dating services must advertise their service to emphasise that their information technology, infrastructure and customer service is better than that of their competitors. Match.com have invested heavily in TV campaigns, ensuring that advertisement is local and relevant. Globally, Match.com want to be seen as a ‘friend’, appealing to individuals worldwide and promoting the brand as likeable and normal (Brand Strategy, 2007). Furthermore, Match.com invest heavily in above the line advertising with Television, press and outdoor campaigns. The latest initiative ‘features two characters, Cupid and Fate and encourages single people to find love for themselves by signing up to Match.com’ (Rufus, 2008).

Furthermore, Match.com have recently issued another marketing campaign, aimed at men. Jason Stockwood, Managing Director at Match.com quotes that men were the first adopters of online dating, but the balance has significantly shifted. Therefore the advertisement encourages men to sign up to Match.com and offers them a week’s free subscription (Marketing, 2008). By using these marketing mediums, Match.com know whom they are reaching, when and how, which is extremely successful and is why their brand is established globally. DatingDirect are also implementing such strategies to boost their brand in the UK. ‘The site is launching its biggest ever TV campaign, on a Sex and the City theme, planned for the first quarter of 2008. It’s a direct riposte to Match.com’ (Howell, 2007).

It is extremely important for online dating industries to embrace strategy in order to become market leader. By implementing new and innovative technology, online dating services are able to attract and retain customers and ultimately, be profitable. Therefore it is important for all companies, especially Allegran, to invest in promotional techniques to firmly establish their brand in the market and benefit from returns on investment.

7.0 REGULATIONS

There are many ethical and legal considerations concerned with online dating services; not only to protect the consumer but also the organisation. Online dating services are influenced by social norms, which are extremely fluid, shifting from location to location, and are the basis for human relationships. Therefore, online dating agencies must conform to ethical issues and legal provisions existing geographically to maintain customer loyalty and retention.

For online dating services to fulfil their objectives and establish a match between users, they encourage new members to answer a number of personal questions honestly and in detail (appendix 5). This is a potential area of concern as customers rely on these organisations and trust them to keep information confidential. In the European Union, The Data Protection Act 1998 protects consumer’s confidentiality and aims to prevent “unauthorised access to, or disclosure of, such information” (Ottley, 2006). If an organisation deals directly with customer or supplier’s confidential information, then they must register as a data user under the Act. In addition, consumers can be granted compensation if ‘damage or distress was suffered as a result of any loss, damage, destruction, disclosure or access to personal data’ (Ottley, 2006).

It is imperative that Online Dating Agencies comply with this Act as a large amount of confidential information is stored on their systems. If this information is found to be misused, potential lawsuits can be taken against the organisation, which has an adverse effect on brand reputation, recognition and member recruitment. Therefore, a ‘privacy statement’ is included in the terms and conditions outlining how data is collected, stored, distributed and protected. Furthermore, the terms and conditions also outline the ‘steps they take to maintain sensitive information in a confidential manner along with outlining corporate privacy, security policies, limitations on personal legal issues and overall liabilities’ (Smith, 2005). It is recommended to publish a detailed set of terms and conditions as it ensures corporate reputation is maintained, and customer’s personal integrity is protected (Smith, 2005).

Information is also collected through cookies, other software systems that analyse purchasing behaviour and from third parties; therefore it is imperative that organisations manage customer’s information correctly. Problems can arise when companies fail to disclose the use of cookies and information being gathered through spy ware, any information that has been sold to third parties without consent or circumstances when the security involved in collecting information has not been adequate (Farhoomand, 2004). To combat the problems arising from mishandling information, the US Federal Trade Commission identified and issued five key principles of privacy, which are accepted throughout Europe and North America. However, in the United States, actual laws protecting the use of personal date are still evolving (Farhoomand, 2004). The abundance of varying state laws could result in unpredictable business environments however; lawmakers are considering standardising legislation and establishing clearer practices (Farhoomand, 2004). By implementing such legislation, consumers will be comfortable in providing personal information knowing they are protected, which is especially important if you wish to find a potential partner through online dating.

E-commerce is fundamentally altering the way businesses have a relationship with consumers as the Internet allows for interactive two way communication which poses information privacy threats (Castaneda, 2007). ‘Firms therefore must simultaneously be able to verify that the information their customers provide is correct, and provide value for their investment’ (Smith, 2005). With the development of technology, users can now freely express their thoughts and feelings and share their videos and photographs. By having a right to freedom of expression, a ‘significant number of individuals experience mental or physical harm because of the abuse of personal information’ (Atkinson, 2007). Dinev and Hart (2004) identified a strong link between ‘vulnerability and the disclosure of personal information as the more information that is disclosed, the more vulnerable a user becomes’ (Atkinson, 2007). Therefore it is imperative that online dating services use technology to offer more effective protection.

To combat these issues, regulations are being passed in US states which require ‘criminal background checks or disclosures for users of online dating services’ (Net Coalition, 2005). These bills have been passed in Florida, Illinois and Virginia to name a few. This regulation has a tremendous effect on American online dating services, especially the niche sites as the bill creates a strong and unfair competitive advantage in comparison to the bigger more established sites, such as Match.com. Moreover, the cost of online dating services will increase due to the cost of implementing these background checks (Online Dating Magazine, 2004). The regulations have received mixed reviews from organisations and consumers, however if implemented in Europe, customers can be assured that every user is legitimate. Dating online would therefore become a more attractive service for new and existing customers. On the other hand, the cost implication to the organisation may mean an increase in subscriptions costs or the advent of subscriptions, which may hinder the growth of the industry.

Conversely, Europe has yet to implement such provisions to help protect the privacy and well being of their users. Articles and journals suggest that it is an individual’s responsibility to self-regulate the information they choose to include on these dating sites by abiding to a code of conduct (New Media Age, 2006). Consequently, Allegran have enforced a code of conduct to users of their service, which is clearly stated in their terms and conditions. Allegran urge customers to keep information private and confidential and not engage in any offensive activity otherwise their profile will be removed. Research conducted has suggested that by protecting consumer privacy and protecting consumers from harm, builds trust and ultimately guarantees loyalty and retention (Smith, 2005).

Over time, data gathering and matching techniques have evolved and it is management’s responsibility to conform to ethical and legal standards to protect customer’s information. There are a number of electronic legislation such as the ‘Electronics Signatures in Global and National Commerce Act, (E-SIGN), the Uniform Computer Information Transaction Act (UCITA) and the Uniform Electronic Transaction Act (UETA). These legislations address: how online contracts are formed, timing of acceptance, contract formalities, authentication, digital signatures, security and consumer protection’ (Smith, 2005). Furthermore, the Human Rights Act section 8 protects the right to respect private and family life, home and correspondence (Selwyn. 2006). This Act is particularly important in regards to the unauthorised monitoring of personal emails and instant messaging. If the organisation wishes to monitor this information, then they should have a justifiable reason and notify the customer that this interception may take place at any time (Selwyn, 2006). Consequently, it is clearly stated in Allegran, Match.com and DatingDirect’s terms and conditions that they reserve the right to monitor information to ensure they adhere to the guidelines and that personal information may be disclosed to certain companies in a certain manner. The reasoning in doing so however is left ambiguous.

In conclusion, online dating services have a responsibility to protect the customer as much as possible. Regulations are currently being passed in America to safeguard users from potential harm. However, they lack privacy and data protection legislation and until now, ‘the principle of self regulation has been predominant’ (Farhoomand, 2004, p. 440). Conversely, Europe has not implemented criminal background checks but have formalised a privacy directive protecting consumer data. If Europe and America were to combine both criminal background checking and data protection legislations, online dating services would be able to exercise more control over user actions making the industry more attractive to new users.

8.0 PARTNERS

It is helpful to examine partnerships within the realm of e-business organisations to determine how they create value to the customer and the organisation. Working closely with other organisations is an ideology that is gaining acceptance between market leaders in order to be successful (Vlachopoulou, 2003). Lambert et al defines a partnership as, ‘a tailored business relationship based on mutual trust, openness, shared risk and shared rewards that yields a competitive advantage, resulting in business performance greater than would be achieved by the firms individually’ (Vlachopoulou, 2003). Furthermore, partnerships are an offering of products, which may also be competitors that complement each other (Smith, 2005).

Partnerships offer many advantages for an organisation. E business strategists such as, Tapscott (2004) suggest that partnering is a source of competitive advantage as it helps an organisations’ market exposure (Farhoomand, 2004). The press generated from such partnerships therefore can potentially boost member recruitment. Conversely, research advocates that using partners can be dangerous as it can ‘standardise the industry’s product offering’ (Smith, 2005, p.19). Furthermore, partnering increases rivalry between competitors as it makes more companies alike and has led to a ‘proliferation of outsourcing’ (Smith, 2005, p.19). By outsourcing, control shifts to suppliers and this can have a negative impact on profitability (Smith, 2005). In support of this statement, Allegran had to lay off 70% of its workforce due to high marketing costs that resulted in £1m losses. (Online Personals Watch, 2008). For that reason, it is imperative for an organisation to seek the most appropriate partner that can provide tangible benefits for the organisation without being outweighed by the costs.

Allegran

Considering Allegran was launched on Valentines Day 2003, success in the UK has been prominent. In 2007, Real Business recognised Allegran to be one of UK’ s top 5 growing companies, with Girls Date For Free being market leader (Allegran, 2007). Since their launch, Allegran have been focused on targeting single market segments in order to maximise brand exposure in the UK. Focus has not been to utilise other marketing techniques such as horizontal partnering in comparison to competitors, Match.com and DatingDirect. This is evident by looking at the 5 websites owned by Allegran. The advertisements include Tassimo, Totaljobs.com, TV Licensing and Virgin Wines, which do not necessarily compliment the firm’s offerings.

However Allegran have formed a partnership with AIM Group (Affiliate Incentive Marketing) to be a strategic partner and use their affiliate portal to advertise their product. Inevitably this would build up a bigger ‘ad inventory’ for Allegran and help them find new target audiences (New Media Age, 2005). In return, AIM group has a stake in Allegran’s business. By forming a partnership with AIM, Allegran are able to focus on core business activities while outsourcing marketing responsibilities. However as discussed above, a degree of power and control shifts to AIM which has the potential to have an adverse affect on profitability especially if the costs of outsourcing are too high. Inevitably, this was the case and Allegran had to recuperate staggering marketing costs by a 70% reduction of their workforce. Match.com

Match.com.com have formed many strategic alliances since they were established in 1995 to increase brand exposure, increase their competitive advantage and ultimately, maximise profits. One of the most prominent and successful alliances is with Microsoft and MSN whose partnership began in 2000. Initially, Match.com.com provided MSN’s Dating and Personals Service with full access to all of their online services (Brand Republic, 2006a). In 2002, Match.com.com expanded their strategic relationship with MSN to ‘market to MSN users within the MSN Member Directory through integrated links and search capabilities, linking MSN personals, powered by Match.com, with Member Directory features’ (Online Dating Magazine, 2008). Then, in 2006 Match.com signed a further deal to include Windows Live services, MSN Search, MSN Messenger, MSN Spaces, and the MSN.com homepage in to the partnership (Brand Republic, 2006b).

This meant that when a Match.com.com member experienced activity on their account, to notify them efficiently, alerts are sent to Windows Live Messenger. Furthermore, a user can sign in to Match.com and Windows Live Messenger simultaneously by synching their passwords. (Match.com, 2008e). This partnership has proved to be extremely beneficial for both global organisations and the extension of the partnership has improved overall market exposure. This is due to Match.com having more than 15 million members in 30 countries and MSN attracting more than 30 million visitors in 30 MSN markets each month (Brand Republic, 2006c). As discussed frequently throughout this report, Allegran have built on their success by developing online dating sites that target a single niche market and competitors Match.com and DatingDirect only differentiate services geographically.

However, Match.com have recently formed a strategic partnership with book publishers Penguin and have opened up a special dating website for Penguin readers called, Penguin Dating. This site is positioned as ‘a place to meet and indulge in the age-old art of writing love letters’ where readers can use their knowledge of literature to find a partner (Ritson, 2008) This partnership has the potential to be extremely advantageous for both organisations as new target markets are opened. Penguin has the scope to rejuvenate its brand and benefit from Match.com younger target audience and Match.com have the possibility to lose any associations of ‘sleaze’ tied to the brand. Additionally, the press coverage generated from the partnership will boost brand awareness and increase member recruitment especially with Penguin promoting the service in 2 million books per year (Ritson, 2008)

In addition, Match.com have also partnered with Russell Grant to create a horoscope dating service on RussellGrant.com. (Match.com, 2008f) From the above, It is evident that Match.com also tailor services to niche markets however, in comparison to Allegran, they partner with established organisations to create unique services for multiple markets. Consequently, Match.com will benefit from shared profits whilst building brand equity (Ritson, 2008) Potentially, DatingDirect and Allegran could benefit from adopting a similar strategy of building reputable alliances therefore increasing market exposure.

DatingDirect

As part of the Meetic group, DatingDirect has also been highly successful in terms of finding the right partners. As DatingDirect operates a no subscription website, the business derives between 20 and 25% of revenues from white-label deals by providing dating platforms for ‘AOL, Virgin Media, Channel 4 and Sky’ (Howell, 2007). A white-label deal can be defined as a product that is manufactured by one organisation that is sold to another organisation which they market as their own (Investor Words, 2008). It is these deals that secure most of DatingDirect’s member recruitment as the partnership allows DatingDirect to advertise on their partners’ web pages. Additionally the deals enable visitors of Sky, Channel 4, Virgin and AOL access to all of DatingDirect’s user profiles, which increases accessibility and exposure through different channels. For example, DatingDirect can utilise AOL’s eight European portals to reach a wider European audience (Brand Republic, 2007) Evidently, DatingDirect value the development of white-label deals in order to maintain brand awareness and expand market share across Europe. Costs are also kept to a minimum as the ‘user firms’ provide the marketing to its customer base (JP Morgan, 2008a). Consequently, Allegran could benefit from forming white-label deals instead of outsourcing marketing solutions to AIM.

They could then ensure the growth of their brand in new markets while saving on technology, infrastructure and marketing costs (JP Morgan, 2008b) Match.com could also benefit from forming white-label deals with well-established organisations in order to increase the revenues they make through subscriptions and further increase their market share while keeping costs low. The growth of mobile technology and ‘mobile dating’ is rapid, therefore DatingDirect have partnered with Vodafone and Orange to expand the online dating experience and tailor the product in to a new market. ‘Visitors to the Orange UK web portal will be offered access to the DatingDirect.com services via a dating channel on the Orange website hosted by Datingdirect.com’ (Net Imperative, 2008) Furthermore, DatingDirect members will have the opportunity to access the site through their Orange mobile to retrieve messages, instant chat, search user profiles and utilise any features the website offers.

The Managing Director of DatingDirect has voiced his reasoning behind partnering with Orange and says, ‘this seamless dating experience associates two market leading brands with similar ambitions in providing converged services for their customers. Moderation and the secure and controlled environment of the dating service was a key factor for Orange choosing the company as a partner’ (Net Imperative, 2008b) While DatingDirect are embracing the growth in mobile technology, Allegran are yet to provide its members with a service that is beneficial. Currently, you are required to pay a fee for receiving alerts to your mobile phone. Additionally, Match.com provide their own mobile alert service that is available if selected during the sign in process.

Therefore, it would be extremely beneficial for both companies to form partnerships with Mobile Network Organisations in order to create a unique service to customers and stay ahead of the competition in terms of technological innovations. As the online dating industry is dynamic and extremely competitive, organisations need to recognise the potential benefits available to them in partnerships. As we have observed in the above analysis, all of the companies studied possess one or several partnerships, which allows them to benefit from increased brand exposure, technological innovations, the creation of new and unique products and the marketing of services. Consequently, each organisation can potentially learn a lot from their competitors in order to be profitable and further establish their brand.

9.0 TECHNOLOGY

Basic Technology in the Online Dating Industry

The main advantage of competing within the online dating industry is the simplicity of the technological foundation. The industry type is a Consumer-to-Consumer (C2C) industry, therefore all information detailed on the website is populated, updated and maintained by the users. The users dictate what they chose to detail on their own profiles and in turn can view other members to see if there is any compatibility between the two.

All competitors in this industry carefully construct a questionnaire for users as they join, to allow the new members to specify important qualities in a potential suitor. New members are also required to reveal information about themselves including; physical appearance, interests and lifestyle. This data is collected in a Boolean format; tick boxes that are selected if the criterion is relevant to the user (see appendix 6). This data is then stored in a database which records and maintains the information for each user.

Once a new member has joined they are then able to search for suitable partners. This usually involves looking at a specific gender, age and location (see appendix 7). In order for this to occur the required data would be input on the web page, then using the application server a request for this information would be submitted to the database server, which will either accept or reject this request. If the request is accepted then the database server will ascertain the relevant information from the database and relay the required information back to the application server. Finally the search options would be displayed on the web page for the end user.

Figure 1. 1 Information Flow

Most databases are now sophisticated enough to hold digital data e.g. photos and videos (Farhoomand, 2004). This has become increasingly evident within the online dating industry where all users are permitted to upload photos and video content in order to expand their profile.

Recently data is being used to understand the needs and the characteristics of the client to a greater extent. Electronic Customer Relationship Management (E-CRM) encourages data holders ‘to meaningfully interpret the information gathered from the customer with a view to identifying and catering to the most profitable ones’ (Farhoomand, 2004). This improved service is essential as there are few lock-ins for online dating agencies, especially for those that don’t require a subscription fee. There is also the concern that consumers are becoming increasing fickle; their loyalties are hard to retain therefore they need to feel they are receiving great value. This value comes from ‘increased speed and relevancy of information delivery’ (Atkinson, 2003 p. 9). The customers need to be readily handed astute information that matches the requests submitted. Online dating agencies already do this to an extent by using search histories and selected links in order to narrow down the clients’ requirements. However, social networking sites have an advantage in this field as users populate more information within their profiles and join groups that match their personality traits. This enables the sites to place users into specific demographic groups and target services more effectively towards them (Atkinson, 2003).

What also makes this industry appealing is the simplicity of the conventional infrastructure (Farhoomand, 2004). Users require the basics in regards to Hardware (processor, modem, keyboard and monitor) and Software (Operating software and Internet application), which is virtually available to any citizen within the UK; therefore the potential target population is considerable.

Security

Security within a wireless environment falls behind industry requirements. ‘Network operators cannot guarantee that confidential information will be transmitted in a secure way’ (Farhoomand, 2004 p. 184). Personal data is asked of each user that signs up to an online dating site and therefore it is of paramount importance that this data is properly protected. Currently, security is provided in the way of Internet protocols such as Secure Socket Layer (SSL), which is the most widely used protocol available on the Internet. SSL works by releasing a public key from server to browser when a session is initiated. The browser then generates a second, secrete key that is sent back to the server in exchange for a corresponding key that will enable the session (Farhoomand, 2004).

However, with the introduction of 3G technologies there are increased implications for security. A proposed solution for this the use of a ‘Public Key Infrastructure’ (PKI). This works in a similar way to the above protocol but in this case the public key is bound with a respective user identity. The user identity is issued by means of a certificate authority and must be registered and in turn is unique for each user (Tidd et al, 2008).

Basic security is provided to each user through the use of authentication control. Users are issued with a unique user name and password that should prevent unauthorised access. However, systems programmers and technical support will have access to this data and there is no guarantee that the authorised person is the one using the site (Farhoomand, 2004).

Innovation

New technologies for connectivity and collaboration can be used to enhance service quality found online and provide a platform to maintain or establish competitive advantage (Laudon, 2004).

Within online dating communities, instant messaging is provided as a basic function across the board of competitors. Both DatingDirect and Match.com have formed alliances with MSN messenger and Windows Live respectively, ensuring that their instant messaging is the most technically efficient option available (see appendix 8). Conversely, Allegran has seemingly developed their instant messaging in-house (see appendix 8) and it is therefore considerably slower and offers much more limited functionality. There would be a cost involved in adopting the instant messenger provided by MSN, however, by outsourcing this application means that both DatingDirect and Match.com need not develop a knowledge base in instant communication nor worry about maintaining and updating the application to remain competitive, instead remaining focused on their core competencies (Laudon, 2004). Allegran could potentially benefit from such a partnership as users may become dissatisfied with the quality of instant communication provided and look elsewhere.

A new argument to consider; will e-dating soon become a fad of the past due to the invention 3G mobile phones? I-Date argues that one day this will be the case (iDate, 2008). However, research by eMarketer suggests, that although there are high hopes for ‘mobile dating’, mobile Internet usage only reached 15% in 2007, whilst only 10% of people used their mobiles to send or receive emails and so this is a limited market for online dating companies to consider. However, as 3G mobile technologies are being adopted more readily by mobile operators and in turn making the Internet even more accessible than it currently is (Hotel Marketing, 2008), this is an area many competitors which to pursue.

In 2004, Match launched their own mobile service called MatchMobile where dating applications included the ability to view and edit profiles and photos, as well as send messages back and forth to potential partners; users are also able to flirt via texting. The idea was to the expand the online dating experience and tailor the product towards the youth market, who require instant access wherever they are (McCall, 2006). DatingDirect have also achieved this level of service by creating alliances with Orange and Vodafone, which enables users to access the site via direct links and receive regular updates. Allegran again falls behind the industry standard, as their solution to 3G technologies is to charge users for text updates if and when a user account is viewed or a friend request submitted.

A new potential within the online dating industry is to use mobile Internet connections or bluetooth to allow users to identify if other members are located nearby (Location Based Services). This is ideal for social situations (i.e. when clubbing or sitting in bars) to identify other single people around. However, there are obvious risks associated with this service such as stalking or unwanted attention, which is a significant factor affecting its development within the industry (McCall, 2006).

Graphical User Interfaces (GUI)

All three competitors have similar user interfaces, including a search engine to find suitable partners, a tool bar to locate different functions, photos of potential suitors and windows for advertising (see appendix 9).

User Interfaces are becoming widely acknowledged as CRM systems. An attractive and inviting interface can draw a user in and compel them to input more data. At the same time users will reject a system that takes too long to learn or navigate around. For this reason it is imperative that the interface is shaped for the intended user rather than for the needs of those who design it, which is why users should be consulted regularly. A key strategy for GUIs is to allow the user to tailor the environment to match their needs (Lager, 2008)

None of the three organisations have modified their sites to allow users to customise their own home page. An area of development would be to provide the option to remove unnecessary functions or updates from the homepage to make them more streamlined and personal to the user.

In conclusion, in order to improve service quality, all three companies would benefit from adopting similar functions to those that appear on social networking sites. Adding a ‘group’ function would allow for members with similar interests to meet and also enable the online dating website to understand their clientele better.

The real time messenger provided by Allegran lags behind industry standards. The organisation could benefit from a potential alliance/partnership with an established messenger service such as WindowsLive, which both DatingDirect and Match.com have achieved. Finally, all three companies could utilise the E-CRM strategy of personalised interfaces for each user to provide a superior quality of service.

10. PROCESS

Match.com

The signing up process for Match.com is extensive and extremely in depth. The whole process is split up in to 3 sections focusing firstly on you, secondly, your ideal partner and finally a written essay describing what you are looking for from the experience as well as a dating headline. The first two sections require you to either select a number of boxes in order to answer the question or complete a written paragraph. Overall, the amount of questions are vast enabling members to establish as much information about each user as possible. Match.com value the service they provide and this is conveyed through uploading a set of directions on how to answer the questions honestly, encouraging you to be inventive and quirky in order for your personality to shine through and enable members to see the ‘real’ you. Additionally, Match.com also provide an advice pop up on what photo to upload. As discussed in the process of DatingDirect, most members upload a photo which further illiterates the trust Match.com promote.

Please refer to appendix 10 for a flow diagram of the signing up process. As outlined in the flow diagram, you are pushed and persuaded to take out a subscription allowing you to use the full service and make the most of your dating experience. If you do not wish to do so, you are able to search for members but will not be able to communicate with them, defeating the object of the service. There are three different ways to search, which are much more advanced than DatingDirect and Allegran. The reverse match search option is perhaps the most appealing, as you are able to differentiate between the users that are looking for people with your characteristics. This cuts down the amount of time spent searching for attributes that interest you, especially if you have limited requirements. Furthermore, you are also able to refine searches based on the information you put in during the signing up process, either eliminating or adding characteristics to suit your preferences. Consequently, Match.com facilitate users objectives of finding the perfect match by implementing complex search options. This is important considering Match.com house nearly 5 million users.

DatingDirect

DatingDirect is a free online dating service available to anyone based in the UK and currently has 5 million users. To make the service successful the process involved is extremely in-depth in order to ascertain as much information on the user as possible.

When signing in, the user is provided with hundreds of tick boxes in which to describe themselves and their ideal match (appendix 11). There is no limit on the amount of selections a user can pick, which enables their final profile page to be incredibly extensive. There is also the requirement to complete a personal ad, which is important for other users as it provides a flavour of what the user is truly like beyond the tick boxes. Finally there is the option to upload a picture, which most users of DatingDirect have seemingly done. This is a good indication of the trust users have with DatingDirect as other online dating service sites such as Allegran struggle to ensure their users upload a profile picture.

There are two methods of searching within the site. The basic search is based on selecting the ideal age range and location of a potential partner and can generate thousands of options. Beyond this there is the advanced search that is based on the criteria input during the signing in process. Therefore you can use this function to remove unattractive qualities in a potential suitor such as if they are a smoker.

Although the site requires new users to input a lot of information it is done in such a simplistic way that still allows it to be incredibly user friendly. The advanced search function makes use of all the information input to help generate the most suitable partners listed on the site, which is vital considering there is at least 20,000 users on at a time.

Allegran

The processes across the Allegran brands are fairly similar with regard to the signing up method, searching for people and then talking with them. The main difference between the agencies is that some provide a free service, such as Quick Flirt, Girls Go Free and Dreams Discovered, whereas a registration fee is required from the others. Please refer to appendix 12, which shows the flows for each of the process outlined previously.

The overall service is straightforward, quick and generally enjoyable to complete (signing up) and use. Due to the sites simplicity, it is extremely user friendly and the games and gimmicks on offer enhance the experience, making it more entertaining. Once registration is complete, you are awarded with a £20 Virgin Wine voucher (appendix 13), which makes the process more satisfying and rewarding. A visitor survey is available to complete which enables users to contact Allegran and make them aware of any problems or difficulties they are having with the service.

However, because of its simplicity, the functions on offer are extremely basic in comparison to Match.com and DatingDirect, which, for some users make it hard to justify the signing up costs associated with some of the agencies. The wine voucher can also only be spent after purchasing £60 of wine online which limits some people with its usage.

As the sites focus upon niche markets within the industry, the number of users who are signed up and use the site on a daily basis pale in comparison to that of Match.com and DatingDirect. This has a direct impact on the experience of using the site as clearly if there is only a small amount of people online, this will have a direct effect on the chances of a user finding a potential partner. In turn this can create dissatisfaction for the user, which can ultimately result in the user either not visiting the site at all, or leaving and joining a rival site.

11.0 CONCLUSION

Allegran

Allegran is extremely successful at identifying new niches, spotting those opportunities to bring together people with similar interests and lifestyles e.g. dating for parents. However, the organisation struggles with their marketing strategy, which is the main source of revenue for online dating companies, and has had to form an alliance with AIM to hopefully make this a profitable part of the company. They have also failed to fully establish themselves within the industry by having a ‘trial and error’ approach to new brands, with some being removed shortly after creation (e.g. Pocado). Allegran spends too much time on making the brand grow instead of concentrating and improving upon the existing subsidiaries by drawing in new members and improving functionality. If this was successfully achieved they could potentially role out these niche services to Europe or even Globally.

Match.com

Match is the current global market leader with millions of users. The organisation is renowned for their passion in helping bring people together, stressing the importance of finding love which is evident in their marketing campaigns e.g. ‘find love in 6 months or have your money back’. At the same time the company needs to embrace technological innovations more. With the creation of 3G phones they could do with forming a partnership with a network provider to help offer new and exclusive services to their clients, in a similar style to DatingDirect. These extra services are crucial considering the organisation charges the most expensive subscription fee. In support of this, the product range could also be expanded to include free psychometric testing to users as standard and regular social member events to compete with the likes of E-Harmony and DatingDirect.

DatingDirect

DatingDirect is definitely the most innovative organisation out of the three competitors. This can be seen through their vast product range including: mobile dating via Orange and Vodafone, Member meet and great events and the creation of dating affinity (personalised coaching and advice) all of which increase turnover. They have also managed to successfully keep marketing costs down by creating ‘white-label’ deals across Europe to target new customers. In addition DatingDirect is the only completely free service and surprisingly this does not impact the functionality of their websites. However, it has recently become apparent how poor their customer service is. If a user does manage to get in contact with the organisation the communication flow is strictly one-way and they fail to seek our customer feedback as a way of improving their service. This has a significant implication for customer retention, as users of online dating agencies generally want to feel cared for.

Industry

A significant concern for the online dating industry is the safety of the users, considering they populate personal information and entrust it will be secure. A definite industry recommendation would be to introduce criminal background checks as standard (as done in the US) to ensure all users are vetted and deemed safe. Another problem affecting the industry is the users who create false/jokey profiles, implicating the intended purpose of these sites, trivialising them. This could be overcome through both the above criminal checks and also by charging a standard subscription fee, hopefully weaning out those who don’t wish to use the service as it is intended. Finally, all online dating services would benefit from benchmarking their services against those of social networking sites, which could have a significant input towards the future of the industry. Features available on these sites such as groups, blogs and extensive profile pages would help improve the functionality found on online dating sites.

Overall, all three competitors have a significant presence in the online dating industry which is only expected to grow in the next 5-10 years. Each has the potential to improve upon their services offered in order to outshine the remaining competition. The low barriers to entry within the online industry means all three will have to continue to develop their services in order to survive newer, more innovative entrants.

12. FUTURE IMPLICATIONS FOR THE INDUSTRY

There are numerous possibilities when considering the future of the online dating industry, however, a significant implication is the standardisation of criminal background checks globally. These have the potential to be set in place to protect the consumer, which will also help improve the reputation and genuineness of the industry. These checks would create barriers to entry for the industry and could push out many of the smaller players, leaving a few strong market leaders left to compete in an oligopoly. The most likely contesters within the UK are Match.com and DatingDirect. Conversely, if these checks are not forced upon the industry as standard regulation there is the opportunity for niche services to exist and thrive within the market.

But this is unlikely to occur without fierce competition from the main players who will inevitably adapt their services to make them more personalised and incorporate greater functionality. The online dating industry is only expected to grow in the future which is a prophecy we definitely support. The changing demographics of the population now mean that an increasing number of people are becoming dependent on technology and have less time and ability to meet new people. As investigated, the increase in divorcees also has a significant implication for the online dating industry as more people view these services as a platform to meet new people. In the next 10-to-15 years we predict the majority of the UK population will perceive such services as a standard and attainable method of meeting new people.