OPW INTERVIEW — Aug 11, 2006 — Great Expectations has been around 30 years and charges thousands of dollars a year for it’s offline, high-touch, high service offerings. I spoke with Robert Fisher, CEO of the Valentine Management Group, one of the owners of a group of Great Expectations locations. – Mark Brooks
How was Great Expectations started?
It was started about 30 years ago in California as a franchise operation and was acquired in ’95 by a group from the Advanta Corporation. When they acquired it they started buying up locations and after a couple of years they divested and it became license based instead of franchise based. Today we have multiple owners but most locations are owned by four main groups of owners who are also the licensing arm of the company.
How large is Great Expectations today?
There are over 50 locations nationwide. I would say there’s between 100,000 and 200,000 members nationwide. Each of the locations are individually owned and operated. From a revenue point of view, we’re somewhere between $50 million to $75 million a year now. Memberships are ~$3,000 each.
What does Great Expectations do differently compared to internet dating companies and why does it work so well?
Online dating's economic appeal was that you would drive traffic to a site and capture customers by providing a no-touch service allowing you to keep expenses down. Unfortunately, customer acquisition costs have risen to a point that many in the industry are struggling to maintain profitability. Along with this, online is so commoditized that prices cannot be raised without significantly changing the offering. Many online executives have told me they tried raising prices and it cost them signups.
We offer the personal touch. Offline dating companies are all about service and touch. So, that’s the biggest difference. Most of the time, the clients are the same, with the exception of those in their early twenties. We don’t typically handle that demographic very well. We have some clients in their early twenties, but not a lot. But, the same people that internet dating companies are selling a $30 a month membership to, we’re selling them a $3,000 membership. The difference is the amount of service the client gets. Also, of the top three offline dating companies, I believe most of their locations offer identity verification and background checks.
By virtue of us having the higher price point, we’re able to deliver a different service. It’s very difficult from an online perspective to truly get to know the client. For example, at Great Expectations, in our locations, we talk to each of our clients once every 60 days. When a client is a brand new client, we make sure, before we put them fully into the system, that we hold their hand with their first few selections. Everybody in the industry has some people who are more difficult to match than others and you can either say, okay I’m not going to worry about that person, or you can say, what can I do to help them? Maybe I’m a bit naive, but I believe that everybody can get out on a date. I believe that if you’re not guiding some people, their fear will keep them from taking the initial actions that will help them be successful. I’ve heard only a small proportion of the people that use an online dating service ever go on a date. Well last month in my locations over 70% of the people went on a date – yes, we measure it. So that’s a big difference, in my opinion, between offline and online dating services.
How are your online marketing efforts working out?
Our online efforts work very, very well. We started marketing online in 1998 and we’ve become really strong with our affiliate marketing.
We have an online dating site, GreatDatingSite.com, that does quite well for us. We offer it through Relationship Exchange and our conversion rates are above the standard at around 11 to 13%. I’m hearing other sites typically convert registered members to paid members at 8% to 10%. I don’t know what brings about that difference.
How has online dating helped your business? How might it help in the future?
We really didn’t get into online dating until 3 years ago. We should have gotten into it much earlier, so that was a strategic mistake on our part. What we have done well is use web marketing to drive traffic to our online sites. I think online dating has helped our service a lot because 10 years ago there was still a stigma attached to dating services. Today there’s not, and I don’t think that offline can take credit for that. I think it’s truly online dating that’s caused the shift. The question becomes today, what is the ultimate dating service going to look like? My opinion is that we’re going to be merged down the road. There is going to be a marriage between offline and online, and I think it will happen sooner rather than later.
Another place that online truly helped us is that it drove some of the competitors in the offline space closer together and as the result we have learned from one another. Today, I count Brad Megahan at Together and Paul Falzone at The Right One as real friends. We talk regularly and Paul's son calls me "Fisherman." That might not have happened had there not been a first IDate Conference. I actually think you will see the offline companies working together to improve their offering and their marketing over the next few years. All of us are working more with some onlines as well. And here is a hint to the others: "Call us, let's talk!"
What should the online personals industry learn from Great Expectations?
Whether it’s offline or online, the thing everybody needs to understand is that if you want to have sustainability in a business model, you’re going to have to deliver something the customer truly wants. We can no longer get by, and in the offline world for years we actually did get by, with not delivering a good service. We were terrible at service. I believe that today you have to deliver a very high quality of service. I think you have to talk to your customer on a regular basis and find out what you’re doing right, and what you’re doing wrong? How are your customers doing? What can you do to assist? We’ve looked at customers, whether online or offline, as revenue numbers too many times. I think that we’ve made a big switch in the last two years. As a result of us really getting strong in customer service over the last two years Great Expectations has seen a tremendous increase in the number of referrals. Our clients are happy. We touch our clients more often, we ask them how they’re doing, and we follow up with them. I think that’s where we’re making big inroads today.
One place onlines and offlines could serve each other is through joint lead acquisition strategies. We have some of these in place with online companies and they are quite profitable for both parties. Unfortunately, some online and offline companies still refuse to even get into a dialogue out of some sense of competition or fear of revealing some presumed trade secret. That is a pity.
What are your plans for 2006 through 2007?
We’ve been working on a marriage between offline and online that will go live fairly shortly. I truly believe that there is a mid-tier space that can be served that’s not currently being served right now. I think both sides, online and offline, are looking for a way to bring all this together. I’ve had enough conversation with enough people in the last 180 days to know that it will happen.
