The behavioural economics of online dating
Category: Blog & News
St Valentine’s Day is looming so it’s a good time to have a peak at how online dating sites use behavioural techniques to advantage.
Valued in excess of $120 million in Australia and $2.5 billion in the US, online dating is big business with more than one out of every five 18-40 year olds having used a site or App. So how do a couple of Australia’s leading sites, eHarmony and RSVP get customers to pay?
Customer acquisition strategy
For both eHarmony and RSVP, getting people to join is the first task. However, they approach customer acquisition in slightly different ways.
With over 2 million people on their books, RSVP offers low barriers to entry to acquire users. People can search, view profiles and express interest (by sending a “kiss”) for free. Only when they wish to augment their profile or interact with someone do they need to pay.
At an estimated 1 million, eHarmony has fewer customers than RSVP. In part this can be explained by their pricing model which provides a much more limited experience for non-paying customers. While people can set up a profile and receive potential “matches”, customers have to pay before they can view pictures.
The lesson? Make it easy for people to join, and that means low/no cost, obvious benefits and limited hoops to jump through.
Converting free to paid customers
Once people have joined, the online dating sites work hard to convert them to paying customers.
1. Using tension to drive conversion
Both eHarmony and RSVP use tension to drive conversion from free to paid. How? By withholding something of value.
eHarmony withholds access to photos and RSVP withholds the ability to correspond.
The lesson? Offering a level of service for free can be a great way to get customers psychologically invested in your product. The key is to hold something back that customers value so you can entice them to upgrade. Too many businesses give themselves nowhere to go because the free service is more than satisfactory (news sites, Evernote and LinkedIn are examples of being caught in this bind).
2. Contextualising price
Both eHarmony and RSVP have been careful about how they present pricing options to their customers. Rather than spelling out the total price, customers are presented with the cost per month (eHarmony) and cost per bundle of “stamps” (RSVP).
In Figure 1’s images A and C below, you will notice that both sites diminish the perceived cost by using a unit measure. In mock-ups B and D you can see how the full price would likely impact customer selection.
The lesson? Your customers make snap decisions about value which means you have a decision to make about how your pricing is communicated. While ethically and legally you need to ensure your customers understand how much they actually have to pay, consider how you get them to select an option in the first place. Use sequencing and cost per unit to advantage where possible.
3. Using design to attract attention
You’ll note in example C above that RSVP deploys the “Best Value” icon to attract attention. They also use the social norming tag “Most Popular” (below) to help the customer choose, and even default to this selection.
Elsewhere on the site RSVP also use a more vividly coloured and boxed design to drag customer attention toward the Premium membership on the right (below).
The lesson? Experiment with the look and feel of how you communicate options, making sure the option you prefer customers to choose is the most engaging.
4. Using guarantees to nullify anxiety
A great way to overcome customer anxiety about a purchase is to offer a guarantee. In fact, having a guarantee policy has been found to increase purchases (read here). RSVP has recognised that one of the points of anxiety for their customers is sending a stamp to a prospect that doesn’t respond, which is why they offer to refund a customer’s stamp if it is not read within 30 days.
The lesson? Look for points of anxiety that might be putting your customers off. Can you offer a guarantee so they feel they have nothing to lose?
This article also appeared in Smartcompany.
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