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SNHU - IT-210 Business Systems Design and Analysis
Written by: Chris Bell - August, 2012

Technology Firm Increasing Fast 1129% in 3 Years

Introduction

With a three year growth rate of 1129% OkCupid.com made the INC 500 list in September of 2011 however still lacks the potential to become dominant in its industry. OkCupid has made a dent in the industry taking a small percentage of the dating community to its website due to a few features of which one is the option of free service compared to paid service. The free version allows access to most of the sites capabilities with a few added bonuses and perks for paid, "A-list", customers. Even though they were able to attract over 3 million users there are a few main concerns that come to mind including: their competitive advantage, the network effects of competitors and how unique the company is in the industry.

Competitive Advantage

The competitive advantage technique used by OkCupid seems to be signing up for free which means they're allowed to include advertisements on the user's pages and the pages they view. Once you become a paying customer the advertisements are removed and a few added features become available. One of the first large players for online dating was Match.com offering a paid subscription only. After that many "me too's" followed close behind, along with free dating sites such as PlentyofFish.com and OkCupid.com. Not only did OkCupid copy the idea of a dating website without a competitive advantage, they also copied the free dating website idea leaving almost no reason for someone to switch websites when they've already created a usually extensive online profile. Switching credit card companies, social media websites and online dating websites are hard because it entails a lot of work from the customer. In order to get people to switch companies something will have to entice them.

More Users = More Options

The fact that a new user to a dating site would want more possible choices describes the networks effects of Match.com compared to OkCupid. No one would like to join a dating website to only have the option of ten possible matches. With 20 million users Match.com can offer better matching results for each person. Also by utilizing a customer relationship management system they have much more data to analyze and tweak in order to best fit its customers. OkCupid is growing rapidly due to its own network effects however they'll have to do something drastic in order to compete with much larger companies in the same industry because Match.com is already ten steps ahead in all aspects.

Market Share

In order to be the next dominant player to conquer a market your company needs to offer something unique, rare or valuable. The CEO of OkCupid is probably doing very well but that doesn't mean they will become the next Facebook or Google in their market. Match.com was first with the unique idea of a dating website. Eharmony.com came along as another dating website forcing a very extensive list of 100 to 150 questions to be answered about yourself and what you're looking for in a match. Also, Eharmony won't allow members to search for other profiles. That allows those who are timid of showing the world they're single a chance to still meet someone online. OkCupid has failed to show a unique or rare quality other than being free that sets it aside from other dating websites.

Conclusion

Free doesn't mean better to any extent because free services usually come with a lot of advertisements, pop-ups and emails about paying for something else. Free also means that there probably wasn't as much money spent on their initial questionnaire, website development, CRM system and most of all for the dating world a formula for the best possible match. In order for OkCupid to take over the market share they'll have to multiply their user count by 7 when comparing their 3.5 million users to the 20 million users on Match.com nationwide. That's not going to happen with their current business model as it's too close to that of its competitors.