9-709-424
JULY 1, 2008

MIKOŁAJ JAN PISKORSKI
HANNA HAŁABURDA
TROY SMITH

eHarmony
Greg Waldorf, the CEO of eHarmony, was in his car driving down the Interstate 10 Freeway after a day-long meeting with eHarmony’s senior leadership team. The sole purpose of this October 2007 meeting was to decide how the company should address recent competitor actions. After many deliberations, Waldorf’s executive team was able to identify four strategic options. Now, Waldorf and
Greg Steiner, the President and COO, who was sitting next to him, were debating which option the company should pursue.
As the two whizzed down the car pool lane, passing cars stuck in traffic, they reflected on eHarmony’s success. This online personals site targeted marriage-minded individuals and offered a unique product which combined an extensive relationship questionnaire, a patented matching system and a guided communication system. Despite charging a premium for its services, eHarmony had experienced phenomenal membership growth while its competitors stalled. As a consequence, it was able to increase its paying membership base to slightly less than a half of its largest competitor, even though it entered the market six years after they did.
The success of eHarmony did not go unnoticed. From the beginning, competitors had been copying some of the company’s product features and closing the price gap. More recently, Match, eHarmony’s biggest competitor, had increased its advertising expenditures by 80 percent. Some of the increase was aimed at reviving Match’s sagging growth. However, most of it was spent on supporting the growth of Match’s new dating site, called Chemistry, which like eHarmony was a match-making service. It utilized different matching criteria and methodology, and was priced roughly 10% below eHarmony. To make matters worse, free personals sites and online