Elite Consulting, Inc.
A Strategic Assessment
Executive Summary
Dear Mr. Waldorf,
This report contains a complete assessment of eHarmony’s strategic positioning. With a firm overview,
and a comprehensive analysis of its internal and external environments, we were able to identify four
potential strategic alternatives. Our consultants evaluated the data to present you with a
recommendation that will be extremely beneficial for your company; facilitating growth, and
profitability.
Elite Consulting recommends that eHarmony develop a branded network of websites with expert
advice, articles, and “struggles to success” chat rooms where other couples can share
opinions. Currently, your company’s core competency is it’s highly integrated system, which is built on
a foundation of in-depth research to help singles find long-term relationships. However, with the
increased rivalry, it is necessary for you to maintain your competitive advantage, allowing your
company to retain paying customers over a longer period of time as well as reach a market of couples
who did not meet on eHarmony. Adopting this strategy will improve growth, and profitability.
We took costs and the time it takes to implement into consideration and kept a focus on ensuring that
both these aspects are kept to a minimum while guaranteeing high impact in other areas that are
important to eHarmony. We are confident that our suggested strategic direction is the best alternative
for your company.
Sincerely,
Elite Consulting
Ms. Greenwood, Ms. Manley, Ms. Spriggs, Ms. Stephenson, Ms. Sutton and Ms. Sutton
Elite Consulting, Inc.
Table of Contents
Elite Consulting, Inc.
Strategic Analysis
Elite Consulting, Inc.
Elite Consulting, Inc.
Elite Consulting, Inc.
Appendix 1:
Firm Overview
eHarmony’s integrated system is focused on helping their clients find serious, lasting love (Piskorski et al.,
2008). This is emphasized in their mission statement, which reads “To empower people with the knowledge
and inspiration needed to grow and strengthen their most important relationships for a lifetime of happiness.”
(eHarmony FAQ, 2013). eHarmony’s extensive research and development capabilities have allowed them to
create a revolutionary matching algorithm that works in combination with an extensive questionnaire and
guided communication to make matches that are proven to be effective. Their attractive conversion rate (three
times the industry average) of active members to paying members is part of the reason behind their impressive
annual revenue of $200 million and their projected growth of 16% between 2007 and 2008 (Kirkpatrick, 2007)
In line with eHarmony’s vision of reducing the stigma
attached to online dating, the company strives to ensure
the quality of their membership pool. This has
successfully been achieved through declining
membership requests from individuals who are
married, underage or divorced more than three
times, as well as homosexual individuals. While
this may cost the company up to $10 million in
revenues every year, eHarmony is willing to
forego short-term profitability that would stem
from reducing these barriers in order to
maintain the integrity of their brand.
Moreover, eHarmony strives to constantly fuel
growth and profitability. The company has done a
remarkable job of doing this, however, their situation is
currently changing as recent competitor actions threaten
to take over the market. eHarmony is second in market
share only to IAC/InterActiveCorp, parent of Match.com and
it’s subsidiary, Chemistry. These companies offer services similar to those of eHarmony at a lower subscription
price and to a larger geographical customer base. Free online dating sites and the use of social networks are
also on the rise, giving those interested in online dating more options than ever before. Moving towards the
future, eHarmony must maintain their high market share through the implementation of a new strategy aimed
at warding off the competition while contributing to profitability and growth and maintaining the integrity of
their membership pool. Our analysis of the external environment, among other things, will aid us in
determining the best alternative for eHarmony to meet their objectives.
Elite Consulting, Inc.
Appendix 2:
External Environment
With a highly competitive market and the fast pace of technological innovation, eHarmony is being impacted
by an array of forces outside the controls of the company. After much analysis, our team has identified the
major external factors impacting your company, using 2 main analyses in our assessment of the external
environment.
In our Porter’s Five Forces analysis, we found all forces to be strong, due to the highly competitive nature of
the industry. eHarmony has numerous competitors, but currently, only one direct competitor, Chemistry.
There is also a vast array of substitutes such as social networking sites, offline matchmakers, free do-it yourself
websites, and of course, traditional dating. With all these substitutes and essentially no switching costs,
consumers have purchasing power. All these forces are being defended against by your core competency, the
matching algorithm. This is what differentiates your company and its strategy from the rest.
Force
Intensity
Summary
Competitive Rivalry
High
Threat of Substitutes
High
Threat of New Entrants
High and Low
Bargaining Power Of Buyers
High
Bargaining Power Of
Suppliers
High
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
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














Large number of competitors
Slow industry growth
Similar size of direct competitor
Generally undifferentiated product
Low advertising costs
Offline matchmakers
Social networking sites
Free do-it yourself sites
Traditional dating
Low switching costs
Low barriers to entry of general industry
High barriers to entry of target market
Extensive investments in research
Patented algorithm
Low switching costs
Magnitude of substitutes
High price sensitivity
Low Switching Costs
Lack of industry experts
Elite Consulting, Inc.
Appendix 2:
External Evironment
In our Strategic Mapping analysis, it became evident that eHarmony has a specialized service for s specific
consumer group with a focus on extensive research and a commitment to high standards of customer
satisfaction. It is vital for the future success of your company, to maintain that competitive edge as
competitors adjust and develop their strategies.
High
Upon further analysis we found additional forces largely impacting eHarmony. Sociocultural trends and
changes can have an enormous impact. Essentially what you are marketing is marriage, one of the most central
social institutions throughout the world. The concept of marriage has changed from a functional partnership to
an institution based on love, sexual passion and even close friendship. The historical incline of the rate of
divorce and the increasing acceptance of same-sex relationships as a social norm both present eHarmony with
growth potential.
Complexity of matching method
eHarmony
Chemistry
Plenty of Fish
SinglesNet
Match
Low
Yahoo!
Personals
Facebo
ok
MySpa
Low
ce
BlackPeopleMe
et
Jdate.com
ChristainSingles.
com
HinduExclusivity of Target
Market
Dating.com
Elite Consulting, Inc.
High
Appendix 3:
Internal Environment
Obtaining a clear understanding of how eHarmony currently generates their profits is a critical step in
developing strategic alternatives. Assessing how your company creates value will assist our consulting
firm in the process of determining what strategic alternatives will work best for eHarmony.
Your online dating services firm creates value through the highly researched system. Co-founder, Dr.
Neil Clark Warren, practiced as a psychologist with a specialty in marriage and family relationships for
35 years before starting this successful company (Piskorsko, Halaburda, & Smith, 2008). The depth of
his research is used as a support activity in value creation that drives the primary function of
eHarmony, matching singles to develop successful long-term relationships. Table 1 outlines
eHarmony’s value creating and cost reducing activities which lead into the core competency of the
firm; a highly integrated system.
Table 1: Value Chain Analysis
·
·
·
·
·
·
·
·
·
Value Creating Activities
Cost Reducing Activities
Personality Profile
·
Matching algorithm
Guided Communication
·
Open Communication
eHarmony Labs
Premium Price of memberships
Singles only policy
Expenditure on marketing campaign (42% of
revenue)
New advertisements (increased membership by
over 1,000% from 2002 to 2004)
Not offering services customers seeking same-sex
matches (cost of research too high)
Focus on direct marketing (targeting local TV
stations)
Core Competency: Highly Integrated System
·
·
·
Heavily researched system
Distinguished from competitors
In depth questionnaire, matching algorithm and
researched open communication
(Piskorski et al., 2008)
Our consulting team agreed that it
provide a quantitative performance
would not be useful in this case to
analysis based on our limited access
Elite Consulting, Inc.
Appendix #3:
Internal Environment
to eHarmony’s financials. Being a private company you are not required to publish financial
statements. However, from researching your company’s membership growth, your membership rates
are increasing steadily with expenses seemingly stable allowing us to assume that eHarmony is in a
healthy financial state.
Our consulting group is interested in identifying where eHarmony fits along the product life cycle
(Henry, 2011). It is important to identify whether eHarmony is in the introduction, growth, maturity or
decline stage of the product life cycle due to the necessary implications associated with strategy
development at each phase. Because of eHarmony’s focus on increasing memberships, the retention
of those members as well as the new entrants into the industry such as Match’s branch, Chemistry, we
determined that the firm is at the growth phase of the product life cycle and closely approaching
maturity since the market is close to saturation and therefore has caused an increased rivalry between
competitors (Henry, 2011).
Your company has undoubtedly analyzed and capitalized on microeconomic factors impacting the
relationship-seeking/personals industry. Our team examined a 2001 study which proposed that four
main social pushes appear to be behind the rapid growth of online dating: 1) a growing portion of the
population is now composed of singles; the main group of individuals who date online, 2) many people
are looking for more efficient ways of meeting others for intimate relationships due to an increase in
career and time pressures, 3) demands of the job market have resulted in singles being more mobile,
thus individuals are finding it more difficult to meet people for dating, and 4) workplace romance is
declining due to growing sensitivity about workplace sexual harassment (Brym & Lenton, 2001). It has
also been found that most individuals use online dating sources to find a long-term relationship, as
opposed to logging on to flirt or to find a sexual partner (Brym & Lenton, 2001).
Our consulting group also discovered that the stigma associated with online dating which existed in the
past no longer seems to be the main factor inhibiting people from using online dating services. In fact,
by 2005, 16 million people claimed to have visited an online personals site, resulting in an increase in
its social acceptability (Piskorsko, Halaburda, & Smith, 2008). According to the same 2001 study
mentioned above, people worry that online dating is too risky, or that it is not an effective way of
meeting people to date (Brym & Lenton, 2001).
Your company practices and values align very well with the needs and desires of this growing audience,
who are seeking a loyal, long-term commitment with a compatible partner. Along with offering a
thoroughly researched matching algorithm (credited to eHarmony’s quality research and development
lab), your company’s additional major strength is it’s selectivity. By only allowing single members to
use your services (resulting in a high quality singles pool), the likelihood of securing a successful
relationship with a compatible individual is increased, and thus the belief that online dating is not an
effective way of meeting people to date is decreased. In addition, your offering of ‘Guided
Communication’, an initial set of questions both parties must respond to before they are permitted to
communicate directly (Piskorsko,
Halaburda, & Smith, 2008), has proven
effective in facilitating relationship
development by smoothing the initial
Elite Consulting, Inc.
Appendix #3:
Internal Environment
stage of getting to know one another. These distinct and well-developed services are extremely
effective in establishing your company’s competitive advantage. Although your company’s direct
competitor, Match, or more specifically, their latest brand, Chemistry, now offers a matching algorithm
to their clients, your company maintains first-mover advantage. Additionally, by not offering your
services to just anyone (as Match does), you have succeeded in positioning your company as a
respected personals site that offers higher relationship success rates. Because of these unique
benefits, selling your services at a premium (almost twice as much as competing personals sites
[Piskorsko, Halaburda, & Smith, 2008]), has not impeded the success of your company. Your company
is able to convert active members to paying members three times more effectively than the industry
average (Piskorsko, Halaburda, & Smith, 2008). Individuals are evidently willing to pay the extra cost as
eHarmony has maintained the position of leading matchmaking company in the long-term relationship
segment (Piskorsko, Halaburda, & Smith, 2008), despite implementing marketing campaigns that cost
four times less than competitors (Piskorsko, Halaburda, & Smith, 2008)!
Despite your company’s evident strengths, Elite Consulting did uncover weaknesses that require
attention. Firstly, by only offering services to singles in North America, your company is neglecting to
capitalize on other major potential markets. Considering your declination of membership requests,
resulting in a high profit loss, this might be a matter to investigate more thoroughly.
Further, our consulting team realized two service specific weaknesses. Currently, your members are
unable to set screening preferences, and there is a low distinction between paying and non-paying
customers, both weak points potentially resulting in unsatisfied customers. In relation to competition,
your company’s price point, as mentioned above, is nearly double the industry average, eHarmony
executes limited marketing, and certain aspects of your system are not difficult to duplicate (i.e. guided
communication). Although presently these observed weaknesses are not hindering your company’s
success, it is important to ensure these areas are not overlooked.
After a thorough internal examination of your company, our team noted a few significant matters.
Namely, the increasing competitor aggression in the personals industry – especially your direct
competitors in the serious relationship segment. Chemistry, for example, has started offering very
similar services to your own. eHarmony is admired for it’s unique and expert offerings and it is vital
that we establish a route that allows your company to maintain it’s competitive edge. In maintaining
this competitive advantage it is important that our strategy does not stray too far from your company’s
current standards and practices, ensuring a holistic effect. Further indication of the importance of
preserving your image as a distinct and specialized service provider is your company’s ascent towards a
stage of maturity. The online dating industry is becoming saturated with companies, which explains the
increase in rivalry.
Elite Consulting, Inc.
This leads us to our final matter. Based on increasing competitive threats, it is important that we
implement a strategy that is timely, but also effective in ensuring eHarmony’s long-term success. That
being said, a strategy that would allow us to capitalize on your company’s current resources (research
and capabilities) would be ideal.
In the following section Elite Consulting will introduce our recommendations for your company based
on findings from both our external and internal analysis.
Elite Consulting, Inc.
App#4
On the basis of the information obtained through in-depth company analysis, our consulting team
generated four different options for your company. Each alternative aims to address your company’s
concern of growing competition, as well as your company objectives of increasing growth as well as
profitability.
Alternative 1
Our first option is to reduce your company’s entrance barriers. This would mean opening eHarmony’s
services to more casual daters. In order to avoid tarnishing eHarmony’s image as a respected personals
site for serious-relationship seekers, we suggest to your company only going as far as offering your
services to medium-term relationship seekers. Not only could this tactic expand your company to a
wider market, but it could allow your company to compete more aggressively with competitors like
Match, who offer their services to anyone and who are executing extremely bold marketing tactics
(“Rejected by eHarmony” marketing campaign). Additionally, this option would allow your company to
distinguish itself among competitors like Yahoo! Personals, who offer services to anyone but do not
offer a matching algorithm (Piskorsko, Halaburda, & Smith, 2008).
Alternative 2
Our second alternative is similar to the first in that it requires opening eHarmony’s doors to a wider
audience. With this option, we suggest redirecting your research staff to the task of uncovering a
dependable matching algorithm for same-sex couples seeking a serious relationship. Same-sex service
is already offered by the majority of your competitors, and would open your company to a growing
population (according to DatingSitesReviews.com, the percentage of same-sex couples who have met
online has risen to almost 60% since the mid-1990s). eHarmony is currently failing to acknowledge a
major market. We believe that expanding your services to this market could benefit your company in
three major ways: 1) this strategy would allow your company to maintain it’s image as a personals site
that is confident in it’s matching abilities (maintaining your focus on developing serious relationships
with quality, compatible individuals), 2) it would allow your company to compete on the same level as
it’s competitors who already offer this service (while using your unique, reliable algorithm to
differentiate your company among these competitors), presumably increasing your customer base,
thus increasing company profits, and perhaps most importantly, 3) it would help smooth the negative
attention your company has received due to eHarmony’s lack of same-sex services.
Alternative 3
Our third alternative, which we believe to be an extremely viable option for your company, would
consist of creating a brand new subdivision of your business dedicated to understanding successful life
stage transitions (Piskorsko, Halaburda, & Smith, 2008). One of the major benefits of this option is your
company’s ability to base this new business ‘on your current research & development efforts, primarily
your current 5-year study that follows newly married couples throughout their married lives (Piskorsko,
Halaburda, & Smith, 2008). We
suggest that this new division stem from
your current website, and offer expert
advice and support in areas such as
Elite Consulting, Inc.
weddings, pregnancy-fertility, parenting, and elder care (Piskorsko, Halaburda, & Smith, 2008). This
alternative aligns well with your company’s expert image and would allow you to strengthen as well as
lengthen the existing relationships you have with your customers. We recommend offering this service
at a small price for existing members, and a slightly higher price for individuals who did not go through
eHarmony’s online dating process. Perhaps the greatest benefit of pursuing this particular option
would be the advantage your company would have over competitors. Few companies have taken steps
in studying life after the wedding.
Alternative 4
Finally, our consulting team considered the option of geographic expansion, beginning with Englishspeaking countries. Although this would be a costly and timely endeavor, as different countries will
likely require different algorithms, we believe it could be a practical course of action in order to keep
up with competition. Your two direct competitors have already begun expansion into additional
countries; Match offering their services in 30 countries, and Yahoo! Personals in 15 (Piskorsko,
Halaburda, & Smith, 2008). At present, eHarmony is disregarding large potential markets (omitting
potential profits), and leaving these segments open for competitors to take advantage of.
Elite Consulting carefully considered both qualitative (described in this Appendix) and quantitative
evaluations for each alternative. In the following section, you will be presented with our quantitative
evaluation, which in turn leads to our consulting team’s concluding recommendation
Elite Consulting, Inc.
App #5: EVAL AND DEC
Our consulting firm decided to select a mix between our own criteria for decision making as well as
particular forces from Mulcaster’s Managing Forces framework. Mulcaster identifies eleven forces to
be incorporated into the processes of decision making and strategic implementation (Mulcaster,
2009). We decided that four of the recommended criteria would be applicable to your firm for
deciding which strategic alternative eHarmony should implement. The criteria chosen were opposing
forces, perception, holistic effect and value added. In addition, our consulting firm concluded that
potential for growth, timeliness, potential for profitability, research and development, and risk were
necessary to form an infallible decision for eHarmony. Outlined below explains our rationale behind
each criterion, the reasoning for the relative weighting and the scale used to assess the
criteria. Following the explanation, Table 1 is a decision matrix that depicts our results and in turn, the
strategic direction we encourage your firm to implement.
The following points explain the criteria selected to evaluate the potential strategies, their weighting
and the scale used to assess their impact as a relation to each alternative:
Growth Potential: The ability to increase the number of paying customers was the most important
aspect brought to our attention by Dr. Warren. Therefore, we have placed the highest percentage of
20% to growth potential.
Risk: Pertains to the chance that the alternative selected would be unsuccessful. Your company and
our consultants must be aware of the risks associated with each possible new strategy before making a
decision and therefore we have rated this criterion at 10%.
Timeliness: How quickly your firm can implement the strategic alternative. Weighted at 10% because
our consulting firm felt that eHarmony needs to act fast in the competitive industry.
Potential for Profitability: Can the strategic alternative make a profit, and if so, how significant are the
earnings? We weighted this criterion at 20% because maintaining the success of your company in
terms of the bottom line is critical to ensure that your company remains a going concern.
Research and Development Required:
invested to develop the new strategic
How much money and time must be
alternative. Weighted at 5% because
Elite Consulting, Inc.
it is important that the company retains the quality expected when the new recommendation is
implemented.
Perception: How consumers view eHarmony. Earned a weighting of 10% because the quality and
integrity of your firm is very important to the public in order to acquire more customers.
Holistic Effect: How the new strategy aligns with the existing values, mission and business objectives of
the company. Weighted at 10% because maintaining the purpose and values of your company is
something we feel strongly about.
Opposing Forces: Includes any conflicts that could arise; this includes resistance by management,
consumers, costs, barriers to entry, etc. Our consulting firm weighted opposing forces at 5% because
we feel as though components of this criterion have been covered in other criteria and therefore, this
is used to better understand their impact as a whole.
Added Value: Rated at 15%, we feel as though evaluating whether the alternative would compliment
the value chain should be a key consideration before implementing a new strategy.
Rating Scale: Elite Consulting concluded that a rating scale from 1 - 5 would be best to evaluate the
criteria selected. The rating scale was divided as follows:
1 = unfavourable
2 = slightly unfavourable
3 = favourable
4 = very favourable
5 = extremely favourable
Table 1: Decision Matrix
Elite Consulting, Inc.
Criteria
Weight Alt 1
Reduced
Barriers to
Entry
Alt 2
Include
same sex
couples
Alt 3
Life Stage
transition/
branded sites
Alt 4
Geographic
expansion
Growth Potential
20%
3
4
3
5
Risk (1 being high risk, 10%
5 being low risk)
2
4
5
1
Timeliness
10%
5
2
4
1
Potential for
Profitability
15%
1
4
2
5
R&D Required (1
being extensive R&D
required)
5%
5
2
4
1
Perception
10%
1
4
5
5
Holistic Effect
10%
1
5
5
3
Opposing Forces (5
being few opposing
forces, 1 being many)
5%
3
4
5
2
Added Value
15%
1
4
5
3
TOTAL
100%
44%
76%
80%
67%
By evaluating the results of our decision matrix (Table 1), it is apparent that alternative three with an
overall score of 80% resulted in the highest overall rating. This alternative involves creating a network
of eHarmony websites for couples that focus on significant life stages. Falling only 4% behind
alternative three is the second suggestion, which pertains to eHarmony conducting research, followed
by providing their matching services to homosexuals. Significantly lower than the top two scores at
67% and 44% are the alternatives for
eHarmony to expand globally and
Elite Consulting, Inc.
reduce barriers. Appendix 6 will further explore the reasons for these variances between alternatives
and use this information to make an educated recommendation to help your company succeed by
maintaining eHarmony's high quality services to improve growth and profitability.
Elite Consulting, Inc.
APP6
The Future of eHarmony: Walking you down the aisle and life after I Do
Our consulting firm recommends that eHarmony develops a resourced-based view to strategy
implementation. Dr. Warren has extensive experience practicing psychology, with a focus on marriage
and family (Piskorski et al., 2008), providing eHarmony the opportunity to leverage his existing
research to develop an online network of eHarmony branded services and personalized couples
counselling. This alternative will help couples work through their real life issues such as the merging of
families, interfaith relationships, wedding planning, the first year of marriage, pregnancy, parenting,
elder-care and life after retirement. Tailored advice from marriage counsellors would be available, as
well as ‘struggles and success’ stories from real eHarmony couples. These alternative services aim to
retain existing eHarmony customers while growing their customer base to include couples who did not
meet on eHarmony.
Alignment of Vision, Mission and Business Objectives
eHarmony is committed to quality, customers, and continued learning.
eHarmony is looking to achieve sustainable growth as well as profitability, however the approach
should not compromise core competencies and must align with your mission and vision (Piskorski et
al., 2008). A branded network of online life-stage services will maintain eHarmony’s differentiated
service with the benefit of customized results. This network of coaching and advice sites would appeal
to existing eHarmony customers as well as expanding their market to new users.
Currently, eHarmony’s most satisfied customers are the ones who no longer need your services, as
they have met their future partner. With the introduction of eHarmony branded network of sites that
aid couples in navigating life after they find their match, eHarmony will be able to retain current users
and grow its customer base. A website offering tailored advice on the first year of marriage, pregnancy,
etc. would appeal to a younger demographic than eHarmony’s current fastest growing customer base
of those 45+ (Piskorski et al., 2008). As well, married couples who met in more traditional ways would
benefit from the use of your firm’s services for the first time.
By charging a low monthly subscription fee to access the resources, eHarmony will earn sustainable
revenues through this new line of business. With the implementation of sites that address the dynamic
nature of life and relationships, eHarmony will be truly fulfilling a needs based positioning by providing
customers the total solution; the tools that empower users to find their mate and then successfully
navigate life’s transitions together with them (Porter, 1996).
Weighting of Decisions - Elite
Consulting Recommendations
Elite Consulting, Inc.
When evaluating the alternatives, we focused on an outcome that was realistic, resource-based and
could increase growth while maintaining the company’s integrity. The first alternative that was
considered was to reduce the barriers of membership. This would include a more general personality
profile to increase the number of approved members. This method would help the company grow in
number of paying members which would lead to improved profitability. However, we felt as though
the integrity of the firm would be jeopardized which is not something we suggest for a firm with a
concentration on maintaining a differentiation strategy. The second option for your firm is to begin
providing services to individuals seeking same-sex relationships. Same-sex marriage has been legal in
Canada since 2005 (Government of Canada, 2013) and according to Freedom to Marry’s timeline it is
evident that each state is slowly but surely in the process of taking steps to increase awareness to
legalize same-sex marriage (Freedom to Marry, 2013). We feel like this option would help the firm
grow, increase profits and stay in line with your values. However, this option requires a substantial
amount of research and development (Piskorski et al., 2008) before you can provide this service which
is costly and timely. Another potential strategy choice would be to grow geographically by expanding
eHarmony’s services globally. This would be an excellent approach in regards to the desire to increase
their number of paying members. However, the research and development needed to obtain
information concerning what predicts successful long-term relationships across cultures would be a
very costly endeavor in both time and money that would not be feasible for the firm at this time.
Based on the information discussed above, we have concluded that providing an online network
guiding couples who have found meaningful relationships through significant life events such as
marriage, pregnancy, parenting, illness, elder-care, and retirement. This recommendation would allow
for sustainable growth since this service encompases events that occur over the lifetime of a
relationship. Paying members would have access to the advice, articles, and chat rooms. In addition to
members who have previously used eHarmony’s services, this service is available to anyone who signs
up for a low monthly membership fee. This will help increase profits over the long-term. Our
consultants felt that this alternative aligned exceptionally well and will most certainly maintain, if not,
improve the integrity and quality of the company. The network of branded websites exceeds the
services of your competitors allowing your firm to increase the gap between your positioning in the
market in relation to all other online dating networks. In addition, the co-founder is an expert in
relationships and has written several relationship advice books which will provide the groundwork for
research.
Recommendations for the Future
Elite Consulting, Inc.
Looking beyond the implementation of Life Stages websites, we give the recommendation that
eHarmony begin the research needed to provide their service to same-sex couples in the next 5 years.
We recognize that this alternative is time and resource consuming and does not solve your immediate
needs. For these reasons we can not make this our primary recommendation. However, we feel
strongly that it should be considered as a major activity for future growth and profitability and that to
not mention a future approach to the same-sex market would be antithetical to a complete analysis.
To provide same-sex couples the same quality of service that it confidently provides its heterosexual
couples, eHarmony must begin conducting the research necessary to discover predictive factors of
successful relationships in same-sex couples. eHarmony already possesses both the facilities and
human capital needed to conduct this research, however they are currently in use (Piskorski et al.,
2008). For these reasons we suggest that research should begin upon the completion of your
company’s current couples study, utilizing the same staff and techniques that determined the
underpinnings of love and successful relationships in heterosexual couples. Legislation affecting the
marriage rights of same sex couples is beginning to change and they are a market that is, for the most
part, unserved (Government of Canada, 2013,Freedom to Marry, 2013). By conducting this research,
you at eHarmony will be able to position yourself to enter the gay and lesbian market with the same
strategy of differentiated service and quality product that you currently excel at.
Based on the above recommendations, Elite Consulting has prepared an implementation plan for
eHarmony to ensure that the addition of the Life Stages websites exceeds your expectations.
Elite Consulting, Inc.
APP7:
The following information elaborates on the necessary steps Elite Consulting suggests in implementing
your new business. These steps are divided into four departments: Production, Finance, Marketing,
and Personnel.
Production:
Research and Development
Conveniently, the production of your company’s ‘new business’ will be based majorly on the
company’s current resources, primarily eHarmony’s active five-year study of 400 couples (Piskorsko,
Halaburda, & Smith, 2008). This study began when couples were in their engagement, and has
followed them through their marriage and various life stage transitions. This study has already
suggested extremely valuable findings, and will be the core resource in identifying characteristics and
behaviors predicting successful transitions. eHarmony has an existing lab consisting of 2,000 square
feet of clinical space, several rooms containing chairs and couches, and five research scientists
(Piskorsko, Halaburda, & Smith, 2008). Further, the knowledge and capabilities of Dr. Neil Clark
Warren, stemming from his 35 years as a practicing psychologist focusing on marriage and family, as
well as his published works on love, marriage, and emotional health, will be extremely valuable in
creating and offering valuable and relevant advice to individuals struggling through life stage
transitions.
The task of retrieving, analyzing and organizing information will be delegated among current research
staff. Research will be ongoing, though we believe there will sufficient information to begin website
construction in approximately 6 months. We recommend hiring an additional 1-2 research staff to
ensure that other areas of your company requiring research to do not suffer. This would be this stage’s
main cost driver as there will be no additional costs associated with using existing resources (staff,
interview subjects, research labs and equipment, etc.). Cost estimates can be found in the ‘Personnel’
section listed below.
The sole constraint we suggest your company consider, would be the possibility of delays due to a lack
of useful and beneficial information from research subjects, other existing information sources, etc.
It has been decided that the full undertaking of same sex relationship services will not be approached
at this time. However, once research and formation of your “life stages” website has been completed
and employees responsible for creating this source are available, we recommend they determine the
underpinnings necessary to provide a same sex relationship service that holds the same high
standards of research and offers the same high success rates as other eHarmony relationship
services.
Formulation of Additional WebPages
In addition to the research and development required for production of this added service, we
understand that additional website design and formulation will also be needed. Your company already
has a strong web presence; therefore
we do not presume this activity will be
overly costly. The information
retrieved from research must first be
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categorized into each appropriate life stage webpage (i.e. information pertaining to weddings
organized separately than information pertaining to pregnancy and children). From here, we suggest
incorporating chat rooms and quizzes (perhaps as a later offering) to tailor information specifically to
each client, and to create a more engaging service.
If your company decides to use a blend of internal and external sources in creating these additional
WebPages, the following (approximate) costs will be incurred. These costs are estimates based on
information provided by STRATeCOMM.com.
Strategic Planning and Development
It is important to plan and develop the website’s design prior to actually implementing in order to
reduce overall costs. Your company already has a solid website foundation, so we do not imagine this
will be an overly extensive process. Typically, this stage will take at least ten hours. After consulting
external resources, we estimate that this stage will cost your company approximately $2,000 ($200 x
10 hours).
Project Management
We suggest that the ongoing job of maintaining and managing (i.e. ensuring steps are completed in
orderly fashion, ensuring all details are accounted for, etc.) this particular project be conducted inhouse, delegated among 2-3 staff. Therefore, your company will encur no additional charges.
Database Development
We suggest offering these new services at a small additional cost to existing members. If an individual
is interested in this new service, but is not already an eHarmony member, we suggest charging a
slightly higher price. If a fee is established, an online payment method must be implemented. The
approximate cost of adding real-time Credit Card processing to your company’s website is $3,000.
Website Interactive Figures
These figures would include the above mentioned chat rooms and questionnaires, and would likely
cost at least $1,000.
Multimedia Design: Selection and Usage
We recommend adding a bit of flare to your website by incorporating components like Flash and
Shockwave animation, video streaming, etc. This will be the most costly component of your website
but we believe it is in important in distinguishing your website among others. The approximate cost
of your website’s multimedia design is $10,000.
Website Maintenance
Keeping your website’s information up to date is crucial in retaining your customers. We suggest
building into the website an authoring tool to ensure your company is offering the most current
information. This tool would cost your company approximately $1,000.
Online Marketing and Search Engine
Optimization
We
suggest
delegating
the
responsibility of online marketing to
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your current in-house staff to avoid further additional costs. This includes incorporating search
engines, banner ads, logos or URLS, media sources that are relevant to your service, etc.
The total approximate cost of your company’s new website components would be $17,000.
We suggest your company expect potential delays due to content approval, new ideas, priority shifts,
etc. Keeping that in mind, we have allotted approximately 2 months for website formulation.
Finance
We suggest that any necessary finance-related activities be assigned to existing finance personnel. The
sole activities we foresee relate to eHarmony’s financial statements, i.e. adjusting to account for
additional costs and profits derived from new service.
An unlikely constraint your company should consider is the possibility of discrepancies related to
calculations.
Marketing
Keeping with eHarmony’s Marketing Strategy
Being a company that has already produced successful marketing campaigns, we suggest maintaining a
similar theme and format for your new business initiative. This will ensure direct relation to eHarmony
when viewed by potential customers.
We also advise using the same forms of media, i.e. television commercials and online ads. When
beginning a new business segment, it is important to spend with caution. By using forms of media that
have already been evaluated, you are cutting out the risk of spending on a potentially unsuccessful
advertisement.
Your diligence when buying media has proved successful and we recommend capitalizing on previously
researched and used national cable networks (as opposed to broadcast television). We have
approached this advertising strategy with your diligence in mind. This may limit the number of
networks available that meet this price range but it is the most trustworthy route to take at this time.
Depending on your chosen number of commercials as well as the expected conversion rate, it will cost
approximately $110,000 to air a commercial on a national network as well as $3,500 - $5,000 for
production. Production expenditure is based on approximate costs of of a 30 second commercial of tier
1 status (a national commercial involving actors/customers, storyboard and script writing). With this
price range, you will be able to produce a commercial that matches the theme of eHarmony’s past
commercials (i.e. success stories, happy users, etc). This price will vary depending on the size of the
commercials, the number of labour
hours required of participants and any training
that may be required of participants
(customers who need introductory
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lessons on commercial etiquette). It is also important to recognize that consumer success stories will
come after implementation of this new initiative. In this case, a trial-run could be offered to current
eHarmony customers to produce immediate use or willing or interested customers could be used
initially.
We also advise creating banner ads and search advertising as has been done in the past. Banner ads
demonstrate high visibility and offer more thorough reach. Our recommendation to improve cost in
relation to customer acquisition is to practice CPL (Cost-per-lead) as opposed to CPC (Cost-per-click).
The approximate cost is $2.48 per premium lead as well as production costs (number of labour hours
required of web designer, $2,000 - 200x10).
When determining costs, it will be important to consider the amount of commercial and online
advertisements that you wish to see, the locations in which you would like to see them placed as well
as the duration of each (one month, 6 months, etc). We expect that because eHarmony has followed a
similar theme for a number of years, the amount of time to produce this commercial and online
advertisements should take no more than 3-4 months.
Personnel
Ensuring Adequate Support
With a new business initiative, various departments and levels of management will be affected. We
have a few suggestions to help make this transition easier for your company and your employees.
We advise hiring two employees who will specialize in this new area of business. It will initially require
consistent and up to date research to gauge its impact on the company. The approximate cost of two
new employees will be $172,000 ($86,000x2).
Training
We suggest offering training to eHarmony employees who will be affected by this change, particularly
customer service representatives who will need to have adequate knowledge in the area as well as
training of new employees.
Methods of training range and one or a combination of a few may be more suitable than all. Options
include: a professional video (approximate cost $1,000-$3,000), professional slides (approximate cost
$15-$50 per slide), training sessions (cost to be determined by number of hours needed of experts
$4,000 - $200x20, two employees facilitating information sessions). We suggest offering continual
training if needed but initial training
should be intensive and highly integrative for
approximately 1 month.
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Using the Skills of Professionals
To ensure that you are able to provide immediate answers to customer inquiries and questions we
suggest hiring professional counselors. Counselors would be able to address couple concerns and
provide feedback at a much quicker rate. They would also have expertise on topics that may arise as
the site evolves and on topics that are always expanding (i.e. pre-marriage consulting, combining
different faiths, blending families, etc.) The average salary of a full time counselor is $50,000-$65,000.
As new questions and topics are requested they should be added to the site to avoid redundant
customer questions to counselors. An important factor that must be considered is the counselor’s level
of qualification (must have a wide range of relationship knowledge). We expect the hiring and training
process of this employee to take approximately 2 months.
An important consideration when initiating the beginning of this new business segment is the impact
of change on employees. When changes are being implemented into a company, it is important to
recognize that there may be a resistance to change. This is perfectly normal and will generally only be
found during the initial stages of the change. Meetings with corresponding managers should be
offered.
The collective implementation of the above suggestions results in an approximate total cost of
$366,500 for your first year (this incorporates annual salary of new employees for one year) with an
expected timeline of one year.
Our goal is the production and success of an additional business segment in your company. We
constructed the above detailed recommendations on the four major departments (production, finance,
marketing and personnel) impacted to act as a guide and referral should this new initiative take
interest within your company.
As important as it is to consider new business initiatives, it is also extremely important to consider
possible impacts on the implementation of this plan. We have constructed a thorough contingency
plan (Appendix 8) that is meant to address the trigger events (as unlikely as they may be) and reduce
the uncertainty of this new business segment.
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App8:
In order to ensure that the implementation of eHarmony’s selected alternative runs smoothly, we
must consider events and trends that could negatively affect the success of the implementation. We
have conducted a thorough scan of the internal and external environment to uncover any possible
events of this nature. The analysis of these events combined with our outlined response to each will
allow eHarmony to be prepared if a given event were to occur. The six trigger events are as follows:
1) Internet Advancement
Likelihood: Moderate
As the Internet continues to expand, it will likely begin to offer new services and systems to benefit the
everyday individual. Some of these services may offer personal expert advice and community support
for key life decisions, similar to what will be offered by eHarmony. Furthermore, access to these
services may not require the purchase of a subscription, which would be even more threatening to
eHarmony. It would likely take several months or even years for Internet advancement to reach a point
where eHarmony’s services are directly threatened. Therefore, while the likelihood of this occurring is
quite high, the likelihood of it affecting the implementation process of the alternative is low. It is for
that reason that we considered the likelihood of this event to be moderate.
The occurrence of this event would decrease the amount of subscriptions to the sites, threatening the
growth and profitability of eHarmony. The most realistic response would then be for you to continue
your implementation of this alternative and offer these services but to focus a portion of your efforts
into implementing another strategic alternative as well. For example, you may begin conducting
research for providing your service to same-sex couples. This will ensure growth and profitability
despite the effects of Internet advancement.
2) Information becomes Obsolete
Likelihood: Low
This idea involves numerous trends focusing on couples that could possibly emerge in the future. For
example, couples, on average, may stop getting married or having kids. In order for this to be a
significant threat to the implementation of the selected alternative, these trends would have to
emerge at a rapid pace. The likelihood of that happening is quite low.
The occurrence of this event would render the services offered by eHarmony obsolete.
Consequently, decrease the demand for such services would decrease, threatening the growth and
profitability of the company. The most realistic response to this occurrence would be to increase
research and development efforts in order to be able to offer services that align with the new trends
surrounding couples.
3) Competitors Act First
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Likelihood: High
Match.com or Chemistry, for example, could act quicker than eHarmony and implement a similar
strategy based on life-stages. This would allow the competitor to achieve the first mover advantage,
costing eHarmony the profits as well as the title that come with being the first mover. In such a
competitive industry, occurrences such as this have happened in the past. This, in combination with
the fact that the selected alternative would be easy to imitate, makes the likelihood of competitors
acting first to be quite high.
The most realistic response in the event of competitors implementing the selected idea first would be
to reassess the implementation of this alternative and consider other alternatives, such as offering
services to same-sex couples. This is not to say that you should cease the implementation of the
selected alternative altogether, as it will still be profitable. You should simply consider additional
alternatives in order to hold an advantage over competitors while ensuring sufficient growth and
profitability.
4) Recession
Likelihood: Moderate
The occurrence of this event would the decrease the disposable income of consumers. Seeing as the
proposed service is not considered a “necessity” for consumers, less people would be willing to pay
subscription fees. Furthermore, recessions have been tied to increasing divorce rates (Rogers, 2011).
This will further the decrease in subscriptions for the service as it is not applicable to couples going
through divorce. Due to the nature of the economic cycle, the likelihood of a recession at some point in
the future is inevitable. The likelihood of a recession occurring during the implementation process of
the selected alternative, however, is quite low. It is for that reason we considered the likelihood of this
event to be moderate.
The most realistic response to this occurrence would be to lower your subscription costs, allowing
consumers will low disposable income to utilize the service. Furthermore, it would be wise to offer
advice on the proposed service geared towards couples whose relationships are suffering due as a
result of the recession.
5) Internet Crash
Likelihood: Low
The occurrence of this event would cease operations throughout the entire company, not just the
selected alternative. The severity of the impact of this occurrence depends on the duration of the
crash. eHarmony growth and profitability would undoubtedly suffer, potentially pushing you into
bankruptcy. However, the likelihood of the Internet crashing during the implementation of the
selected alternative is very low.
If this event were to occur, the most realistic response for eHarmony would be to cease investing
further resources or efforts into the selected alternative for the duration of the crash. If the Internet
was to start back up again, you should
pick back up where you left off and
proceed with the implementation. If
the crash was irreversible, however, it
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would be wise to liquidate the company.
6.)Obsolescence of Television
Likelihood: Low
In the occurrence of this event, the proposed television ads for the selected alternative will not reach a
sufficient amount of viewers. This will lower the amount of subscriptions to the sites which will
negatively affect growth and profits. While it is possible that with the growing impact of the Internet,
society will eventually watch less television, it is unlikely that this trend will emerge during the
implementation of the selected alternative.
The most realistic response to this event would be to lower the amount of commercials that eHarmony
airs on television for the selected alternative and increase the amount of advertisements on the
Internet. This will ensure that your advertising budget gets used efficiently and that a sufficient
number of consumers will be exposed to the advertisements.
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