Comment by 10000truths 2 days ago
This is often parroted, but the reasoning is flawed. The vast majority of the platform's growth will come from new users, who are entering the dating scene. If they fail to capture that audience (say, by having a reputation of not performing as advertised), then no amount of upsells or string-alongs of existing users will sustain them, as their user base will only ever decrease, and investors will see that and withdraw accordingly.
Happy in terms of being a customer of the app perhaps.
Match's growth peaked a long time ago. The site is now trying to grow by "offering new products" and "cutting operational costs."
The relative newcomers - Bumble and Hinge - grew by trying to offer a better experience, especially for women, who are traditionally overwhelmed with unreciprocated interest on conventional apps. Both seem to have admitted defeat now and moved to the usual model.
In terms of revenue, the incentive to keep millions of users spending is far higher than the nominal gains from persuading friends of a successful couple to join up. Given that most users aren't successful, that network effect is tiny.
There's an opposing network effect of *keeping customers unmatched, because this provides gossip and entertainment among friends, which gives them a reason to continue using a service.
We know that string-alongs are a real thing on dating sites - especially, but not exclusively, for men.
There's also a small but not negligible subculture of (mostly) women who use dates for free meals and get a good return on their monthly subscription.
And a lot of sites - not just Tinder - overlap hook-up culture with people seeking marriage and kids. If anything the former is a more popular option now.
Wrong claim: "There's an opposing network effect of *keeping customers unmatched, because this provides gossip and entertainment among friends, which gives them a reason to continue using a service."
No, this is implying they are doing it with intention - which they dont even have to insist on! They can keep the users, because matching based on an app does not work for 99.99% real cases. So if you treat them well, they will stay anyway, unless your product is shitty.
I don't think this counterargument holds. It's a hell of a lot easier to get a customer who already paid once to pay a second time than it is to get a customer to pay for the first time. Also, I think most people are well aware that by and large, dating apps have a very low success rate for the majority of their users. People use them anyway.
Since your marginal costs per customer are veeeery low, you can hammer thm with 50-60% discount, which ends up on most platforms at 10 - 20 bucks per month, and if you make 3 - 4 dinners, you get much more out of it than an evening in the cinema
And to add to that- seeing a real world friend go on dates or start a relationship because of an app is better than any marketing you could ever buy.
If you want to drive top-of-the-funnel growth, make the product good even it causes some folks to drop out once they’re in a relationship.
They don't need that. What option do most young people have?
Most young men can't approach women, most young women can't handle being approached and we don't have shared spaces where people can get to know each other and pair off anymore. Young people think the apps are dumpster fires, they hate them, but the alternative is sadly worse.
> The vast majority of the platform's growth will come from new users...
Userbase expansion is new users less leaving users for a time period. So there are two factors, not just "new users."
In any case, Match Group apps are well into the phase of focusing on extracting the most money possible from their paying users as opposed to gaining new users.
After all, infinite users are useless to a company, even if it costs nothing to support them, if none of them pay.
Everything about this is wrong.
1) The platforms aren't growing that impressively. Most of their users have been on the platform for a while, were previous users, etc.
2) It doesn't matter how good the app is, you need a network effect. New users are going to go to where the potential dates are.
3) Marketing does wonders. An app can suck and have great marketing. It will get users over an app that actually works and doesn't have good marketing.
4) Lots of people on dating apps are looking for dates (hookups), not partners. If the apps can keep you getting dates, not partners, they can keep you on the app and happy.