Starting Up: The Business of Love

IF THE PLETHORA of matchmakers, love doctors, dating web sites and countless reality television shows based on the subject are any indication, finding a date must be a feat of extreme difficulty. And for savvy businesses that offer to help, lonely hearts can be a goldmine.

That's what accidental entrepreneur Markus Frind found when he launched his free dating site, PlentyofFish.com , in 2003 from his home in Vancouver, B.C. The site, which began as a side project for the full-time web developer, "grew by a few thousand people within the first few months," he says. After signing up with Google's AdSense to host ads on the site, he reaped more than 1,000 Canadian dollars in the first month. A year later, as love-hungry users flocked to his site, that monthly figure jumped to more than 41,000 dollars.

Making a bundle in the dating industry, of course, isn't easy for a small player competing against behemoths such as Yahoo! Personals, Match.com and eHarmony. Much as in love, winning an appreciative audience requires dedication, patience — and some clever outmaneuvering of rivals.

At PlentyofFish, which now ranks among the top 10 dating sites in the U.S. for unique visitors, Frind's strategy was simple. "I undercut them on price," he says. (The site's slogan is "100% Free. Put Away Your Credit Card.") As a solo entrepreneur, Frind found it easier to take a gamble on a no-fee site. If big players "lose a couple hundred million dollars, they have shareholders [and employees] to answer to," says Frind.

When it comes to the business of love, newbie entrepreneurs need to figure out a way to stand out in a crowded marketplace. Here's how:

Find a Niche

The beauty of a small business is that it can easily focus on specific market segment, unlike a big competitor that typically seeks a broad audience, says Jeff Williams, a professor of business strategy at Carnegie Mellon University's Tepper School of Business. The advantage of catering to a specific customer base, he adds, is that "your business is so small that it doesn't really pay the big guys to come after you."

People who prefer to date within their own ethnicity or religion have long been targeted by traditional or online dating services. Now, even more narrowly focused niches have begun to surface. For instance, golfers seeking romantic partners who share an affinity for the links might head to golfmates.com , while vegetarians who have the hots for other meat-avoiders might list their profiles at vegetariandating.com .

The best niche businesses are usually started by entrepreneurs who have a deep understanding of the community they want to serve, Williams says. For example, Patrick H. Perrine, a psychologist who spent years studying human sexuality and dating preferences, launched a gay male matchmaking service in San Francisco in 2004. Perrine, who is gay, expanded the service — now online and called MyPartner.com — to a national audience last year. "We discovered quickly that there was no space for gay men looking for a serious relationship on the web," he says.

Undercut the Competition

Charging less than the competition, or nothing at all, for comparable products or services as Frind of PlentyofFish found can attract users and potentially solidify your place in the market. But no matter if you offer discounts or free trials, keep in mind that the idea is to build up as much brand awareness as possible, as soon as possible, says Dominique M. Hanssens, a marketing professor at the University of California at Los Angeles's Anderson School of Management. That way, when others attempt to copy you — and they will — your brand will be too prominent to rub out, he says.

While this strategy may work for some businesses, David Evans, a dating business consultant in Boston and author of dating industry blog OnlineDatingPost.com , cautions that not every business owner can afford to just give stuff away. For example, online businesses might wind up spending thousands of dollars buying traffic in order to build up their user base, he says. That outlay isn't sustainable. Plus, says Evans, when you're spending all your money buying traffic, "you are really becoming an Internet marketer" rather than a business owner.

Add Value

Providing better customer service also can set your business apart from the pack. Christie Nightingale, founder of Premier Match, a New York matchmaking service, sits down with each of her clients (typically, executives who eschew the online dating scene) and goes over their respective dating criteria. "It is all personalized, hands on and very confidential," she says.

Other companies, meanwhile, try clever (and cheap) marketing gimmicks. To compete with the big guys, Sam Yagan, co-founder of free dating site, OKCupid.com , offers users the ability to craft their own personality quizzes, or choose from 30,000 others. Sporty singles might fill in the blanks to "What Kind Of Yankee Fan Are You?"; music lovers might answer "The Beatles Song Character Test." The idea behind the quizzes, he says, is that users will share them with their friends who, in turn, may sign up for the service.

Innovate

To get people interested in your product or service, says Hanssens from UCLA, "you have to get creative." For example, Ralph Castillo, the founder of Cupid's X Factors , a dating site based in Miami that will operate in both English and Spanish when it officially launches on Valentine's Day, devised his own formula for finding love online. His matching tool, which is patent pending, will link users based on 10 factors ranging from age and health to personality and finances, rather than personal preferences, as is a common matching platform used by some bigger sites. "Just because I like spaghetti [and another person] doesn't, doesn't mean we don't match," he says.

Other sites offer speech and video messaging capabilities — and a growing number are taking advantage of the popularity of social networking. Nancy Slotnick, a dating coach and founder of cablight.com , a love life management service, is about to launch a Facebook dating application. "Sometimes people see friends of their friends and it can be embarrassing to say 'hi,'" she says. But now thanks to technology, Slotnick adds that "the friend in-between can be the go-between."