When I first pitched the idea for Sparkology as an exclusive dating service, the biggest objection was also the most obvious: are you really going to create another dating site? After all, there are thousands of dating service companies operating in the US and a handful of conglomerates have dominated the space for over a decade. Match.com (owns OKCupid), Spark Networks (owns JDate and other properties), eHarmony, PlentyOfFish, Zoosk, True.com… all major companies with big marketing spend and millions of claimed users. How did I expect to stack up and create a profitable business?
Six months later we have a solid team that’s generating real revenue on top of a successful platform. Our client base is growing according to plan and, most importantly, those who use our service have become loyal brand evangelists. Here are some of the strategies we have learned to use:
Choose the Right Niche
This is the only “no-brainer” of the pointers but I would be remiss if I excluded it. You want to choose a niche demographic that the 800lb Gorillas won’t want to touch. For us, it was selecting a demographic that is too small for a volume-based company to focus on. We also selected a population that has high expectations for quality and customer service. Lastly, we chose a demographic that is highly educated and is thus less effected by mass-media marketing approaches typically used by major brands.
However, you should also select a demographic that does not have a low ceiling for growth. For example, one could create a dating website called jewishlithuanianswholovecats.com but that has a very real and very defined cap on the target demographic. Instead, our mission of creating a quality-driven and efficient dating experience for young professional singles in large cities offers room for expansion of the potential market in step with the expansion of the company. A company like IvyDate.com, for example, may experience brand dilution as it has run out of Ivy grads and is no longer true to its name.
Find Their Weakness
If you are innovating in a crowded market, you need to determine and exploit the key common weakness shared by your behemoth foes to make your marketing message efficient. When Chipotle entered the crowded Tex-Mex food market, they exploited the common belief that a typical fast-food Tex-Mex establishment was grimy. When we entered the dating market, we found that the majority of users in our demographic viewed dating sites as untrustworthy and only for runts who couldn’t get a date in real life. If you can focus on the common weakness, you are able to cast a shadow on all of your competitors with one fell marketing line.
Take a Bold Stance
By being small, you have the ability to make bold, controversial statements. If a few years ago the guys from 37Signals said “Salesforce sucks” only their fanboys would take note. If Salesforce.com did the opposite, the negative public fallout would be a PR nightmare, not to mention all the positive publicity that statement would generate for 37Signals’ Highrise product. Your goal as a small company is to develop a core group of Innovators and Early Adopters that are loyal to your dogma and help spread your gospel. However, you need to provide your early clients with a powerful gospel to spread. A guy won’t tell his friend that there’s a “new dating site” but he might tell his friends he’s on a site that lets him “stand out from the losers on OKC”.
Assuming you are trying to shake up an industry, you can use the widespread negative sentiment against the current state of the industry by becoming the anti-status quo. We’ve seen “voting for change” win over a national electorate base and it works the same way with customers. Whether you are the anti-McDonalds, anti-800Flowers.com, or anti-Match.com you can use negative sentiment built by large brands over decades to your advantage. You are changing the industry for the better, and you should motivate all those who believe in a better industry to take your side.
Unless you managed to get a Series C valuation on an Angel round, you simply do not have the capital and manpower to compete on a national or even regional scale. Pick the smallest geography that will get you to profitability in light of your fixed costs and become master of that domain. You will not be able to compete against the marketing machine of a large competitor in all markets, but perhaps your marketing power can match the large competitor in a small geography. After you succeed in one place, you can easily ride the enthusiasm and positive press into other areas.
* The obvious risk is that a competitor launches your exact same product/service in parallel in another area. Your goal should be to reach cash flow positive in the first geography in half the time it took you to develop the company from start to launch.
Embrace the fact that you are a small passionate team. It’s much easier for customers to support the efforts of 5 struggling entrepreneurs than 500 corporate cogs. Make yourself accessible to customers and share your personal story. What made you start this company? What keeps you going? What do you struggle with? Post pictures of your team doing something silly. Send personal gifts to clients. Get your hands dirty in the customer service inbox. Every person on your small team may be a C-level executive… but the customer will still relish a personal response signed by the CEO rather than the intern you hired last week
As a startup, you should be maximizing the personal connection with customers. While live events don’t always have high ROIs in terms of customer acquisition, the rapport you can build with attendees is immeasurable. I can write all over our website that I believe in the modern gentleman and lady… but that belief becomes much more authentic when members see the passion with which I embrace that mantra. Perhaps you can host intimate dinner parties for select customers? Perhaps you can create an invite-only Facebook group for the key influencers? You need to use the low barriers between you and your customers to your advantage.
The Big Guys Are Smart – Learn from Them
Chances are, the incumbent players in your space have been around for a while. They have optimized their platforms for user acquisition, user experience, and user retention. This is not the time to put your head in the sand. Why not take a lesson from the pros? Become a customer of every competitor. Learn what they do and why they do it. I’m not saying you should replicate an entire business model, but at the very least you should understand their rationale for doing X before you do Y. We hypothesize that OKCupid intentionally makes dating into a game to keep users clicking around their website so they can serve as many ads as possible. When we designed a results-driven user experience, we needed to understand this would diminish the time a customer spends on our site so ad-based revenue would be irrelevant.
Competitive tracking also helps Search Engine Optimization. There are a myriad of tools that will expose how a competitor obtains a certain page rank and where they source their backlinks. With this information, you can at the very least employ a strategy to match their SEO status if not beat it.
Perhaps the most important element you possess is the speed with which you can adapt your service. How long do you think it takes for your 800lb Gorilla to roll out a new feature? Even after spending months gathering customer data, defining project objectives, assembling a dedicated team, and all the other corporate muck, they would need to test it exhaustively to make sure it doesn’t interfere with any of the other thousands of features that were added over the last decade; they would need to ensure compatibility across all their platforms, some of which are likely leftover from past acquisitions; they would need to test the update to ensure it propagates properly across dozens of servers; etc. etc. etc.
How about you?
My hope is that you can go from a customer suggestion to a team decision to test environment in 48 hours and get it into the customer’s hands within 3 days. You get instant feedback on the feature’s performance and the customers see continual evolution of the product as well as a barrage of positive product updates to keep enthusiasm high. Make sure to notify the customer who suggested the change after the feature has been implemented. What better way to create loyal customers than letting them take ownership of the product itself?
Divide into two teams of developers. A core, focused team that works on major releases and a smaller scrum team that handles the hellish firedrills.
The Bigger They Are…
Entering a crowded market is a daunting task. However, you are also entering a market where the customer is already “trained” to purchase a product or service type so the risk of building primary demand is gone. By using your small size to your advantage, you can utilize the negativity associated with large competitors to create a core group of devout customers who recognize your value proposition, promote your product, and drive you toward positive cash flow so you can successfully take on the 800lb Gorillas.
Now get out there and disrupt a market!