Jeronimo Folgueira, CEO of premium online dating platform EliteSingles, discusses the current state of the dating industry and gives his views on going mobile and premium pricing in the digital economy.
The Current State of Online Dating
Online dating in the UK has steadily developed into a multi-million pound industry. And it’s showing no signs of slowing down. By our own approximations, the sector is estimated to be worth around £185 million and is expected to grow by around 6% this year.
The challenge is that the online dating industry is getting crowded. In the UK alone, there are more than one thousand different online dating services. As the industry continues its impressive growth, we need to see consolidation in the market.
Online dating has been around for more than 20 years – meeting a partner online is not a new concept. However, having thousands of dating platforms lacking scale or with similar propositions isn’t logical, nor is it healthy. We need mainstream as well as niche services attending to different market segments and user needs.
So, while the dating industry continues to flourish, I predict that we will start to see the number of dating platforms decrease over the next year.
Excelling in the Saturated Dating Market
The online dating industry is brutally competitive. To succeed, you have to be different; when it comes to product experience, monetisation and marketing, you have to be better. If you don’t excel at all three, you just can’t keep up.
This is why all dating sites and supporting apps must be able to scale; first, to give users the best possible experience by providing enough matches and second, to be sustainable as businesses – small players will never be able to keep up with competition. Consolidation benefits consumers, dating companies and investors.
Going ‘Mobile’
In recent years, we have already seen the online dating industry’s rapid shift to mobile. If a company hasn’t embraced mobile by now, it’s already too late. To be mobile-first is simply not enough. 2017 is the year of the multi-platform user experience.
More than 70% of our new users in the UK now come to the service via a mobile device. For this reason, it’s crucial to provide a smooth user experience between multiple devices. Customers expect flawless functionality from whichever device they are using to access their account. Not everyone wants to use an app all the time; in fact, many people still prefer the mobile web.
Despite the growth in mobile usage, the mobile dating experience is not for everyone. Companies need to make sure they have a strong product across all platforms and offer as many options as possible to cater to all types of users – ensuring the growth in mobile use continues to develop efficiently.
The key is to create a responsive, easy-to-use service, regardless of the device.
The App Economy
It is very easy to launch new dating apps. It’s extremely difficult, however, to grow these and turn them into sustainable businesses. As we move towards a consolidated industry, we will see a major shift in the free app economy – as, quite frankly, current models are not sustainable.
Last year, we saw a number of free online dating services rebrand to offer customers a paid-for service; I expect more will go in this direction. It is exceptionally hard to convert a customer who has enjoyed a free ride into a fare-paying premium user. Popularity doesn’t necessarily equal success – businesses need to be based on a viable model or commercial proposition if they are going to stick around.
Premium Price Models in Digital Business
People are ever more willing to make larger online purchases via their mobile phones. We have the travel, food delivery and online retail industries to thank for this positive shift in consumer mind sets. People are now very comfortable paying out larger sums through mobile channels for luxury goods and services, including dating.
There is an increased sense of credibility associated with brands that provide more expensive services. Established companies including The Economist and Netflix are successfully getting people to pay for premium value-added online services. Although there will always be free alternatives, these are no longer as appealing.
Finding the Niche
Online dating is not just a playground for mobile millennials looking for a casual fling. It’s so much more than that. It’s connecting like-minded people who may otherwise never have had the chance to meet.
The UK divorce rate is rising and the population is aging. As a result, the country is home to an older, single and increasingly tech-savvy population. This segment is breaking down the barriers of online dating.
Our research shows that an increasing number of people over the age of 40 are shifting their social habits and looking online to find love. Not only are they supporting user growth, they are challenging the acceptance of online dating.
After a certain point, people grow tired of casual dating. While free apps are often the mechanic that entices people into the digital dating arena in the first place, particularly when they are younger, they do not offer the same functionality, experience or quality as paid-for services.
How to Grow an Online Business
In my experience, smaller companies are often advised to focus on capital in order to grow. Frankly though, it’s impossible to depend on this approach alone to succeed. A ‘plan B’ for monetisation and to breakeven is imperative. Going through constant financing rounds and making a loss is very distracting for entrepreneurs.
Newer companies in the digital industry should focus on building a successful business for which customers are willing to pay, and not just on equity stories to sell to investors on an ongoing basis.
The crux of success is a solid proposition. The same principles of commerce apply to a digital business as they would for any other: know exactly who you are, what you offer and why people should (and will) pay for your product.
Image Credit: Nenetus / Shutterstock
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