Parship CEO, Dr Arndt Roller - OPW Interview

OPW INTERVIEW -- Sep 30, 2006 -- Parship is Western Europe’s ‘eHarmony.’ It’s the leading internet dating site focused on long term relationships and currently operates in 10 Western European countries. Parship started out in Germany, Austria, Switzerland, Belgium and the Netherlands and more recently extended into Italy, France, Spain, and now into the UK in 2005 and Sweden in January 2006.  Here’s my interview with CEO, Dr Arndt Roller. - Mark Brooks

What is Parship’s founding story?
Parship.com was founded in 2001 by two managers of holtzbrinck networxs, the venture capital arm of Verlagsgruppe Holtzbrinck, a very quality minded publishing house (they own e.g. Macmillan Publishing) publish “Nature”) with roots in Germany. Holtzbrinck demanded a quality minded approach to the online dating classifieds. When they looked at the market they saw a lot of services that were oriented towards flirting. That’s when they met Professor Schmale, the scientific mastermind behind the Parship concept, and we started our service. From day one, Parship was oriented towards long term relationships. Parship is based on a mandatory, scientific matchmaking process, plus integration of personal preferences. We do things very different from the industry norm. For example, you won’t see “picture galleries”, not even pictures on profile pages until the time that the other person allows exactly that to happen.. This might look very odd when you look at the entire industry where pictures are everything.

Who are your competitors?
In the premium or long-term segment, Parship enjoys a very dominant market share. Havng said that, across Europe there are about 10 copies of the Parship service from small players. Some of them are former employees of Parship that have just set up their own service. But they have shown limited growth. One is a service called, Elite Partner, which was started by a former Parship marketing manager, and one is called be2, launched by a former Managing Director of Parship, who had to leave after very short time in the job. They all try to look very similar to Parship and are basically imitations.

How do you market Parship?
Many online dating companies seem to rely on keyword advertising predominately. For us, we’ve traditionally always worked very heavily with quality-newspapers and -magazine brands. Parship is integrated into their online-sites. We have 190 different corporate partners across Europe. Parship has a very good reputation in the B2B community, it´s been been built over 5 years and that helps us now as we approach more and more potential partners. In addition to that, we have significantly increased our brand marketing.

How did the UK launch go for you?
The UK market is probably the most expensive to enter, together with the German market. The big advantage we have is that we’re basically competition free in the long term relationships segment in the UK market. From what I can see, eHarmony has little impact in the UK and Europe. 

Could you give a couple of examples of how the UK and German markets are different from each other?
There are many elements. One obvious area of difference is the different use of payment methods. In the UK there’s a significant amount of people using credit cards. In Germany there’s much lower credit card usage. In many European countries credit cards are either not accepted in general or they might be accepted but not over the Internet. Second, the big media portals behave in very different ways. So, striking deals with them can be difficult and expensive. 

How does Parship pricing vary across Europe?
It depends on market pricing sensitivities. Price points vary as the result of our marketing experiences in each market. The same goes for many of our European competitors. In Germany we have membership choices, based on monthly pricing;, a 3 month membership costs 120 Euros, 40 Euros a month. A 6 month membership, which most of our subscribers use, costs 179 Euros, 29 Euros per month.  The 12 month costs 263 Euros, 22 Euros per month.

What advice would you give to the CEO’s of U.S. corporations interested in entering the European dating market?
Spend a lot of time in Europe first and don’t look at Europe as one market or as one big country. I mean, most Americans I’ve met apart from those that have lived in Europe for a long time can’t help but look at Europe as one country.  As long as you have that mindset, don’t go to Europe.

From what I’ve heard about China and India that is also not ‘one’ country. The same with the U.S.A. actually. New York is not ‘just like’ San Francisco. Baltimore is not Little Rock, Arkansas. I’ve got tremendous respect for people entering the U.S.market from the outside because I think that’s a very, very difficult thing to do successfully. The same applies for companies from the US or Asia trying to enter Europe with its 10 -15 relevant local country markets.

When we look back at the last 10 years, there must be a reason that so many American online companies that decided to enter the European market have failed.

So what would you say would be the biggest market investment that you learned in the last couple of years with Parship?
Quality might take a little longer but will definitely reap much bigger rewards than a quick and dirty approach that many people follow. That’s a lesson across Europe. 

What do you mean by quick and dirty?
Going into a market not really caring about the quality. For example, taking money from day one. Not looking after user complaints. That kind of approach is what I mean. That sometimes seems to work for some of our competitors but we’ve learned that e.g. waiting longer before asking people to pay and investing more time before you launch a service pays off.

Does Parship’s matchmaking profiling really work?
Yes, definitely. And we are continuously improving the matchmaking process. For the first half of 2006, 38% of our subscribers tell us they left the service because they found the love of their life. Cynics tell us that with such strong success rate we might destroy our future market chances. That´s of course completely wrong. Such success leads to a very high customer satisfaction level, which is important in many industries but is absolutely the most important key metric in our business, since it builds trust, confidence and positive word-of-mouth. As long as a user is really looking for a long-term relationship, in Europe, Parship is the best way to find the right partner. If they are looking for casual date we are just not right.

How fast will Parship grow over the coming year and what are your goals?
We will grow between 50% and 70% over the coming year, faster than market growth and despite increasing competition.

First of all, internationalization is an ongoing process for us. Launching a country doesn’t mean there is no further work to do. So, developing and growing all our Western European services is our goal. Then there’s a commitment from all of us at Parship that we will focus only on long term relationships. Like I said, we have no interest whatsoever in going into flirting and dating. We’ll leave that to the experts in that field. That leaves us with some interesting opportunities around the quality and premium approach.  We are currently working on new business developments that we’ll talk about once they’re launched. I don’t want to talk about things we haven’t really done yet.

Are there any countries outside of Europe that you have your eye on?
Yes.

USA, per chance?
First and foremost, we consider ourselves a European company, with roots in Germany.. We are the number one premium service in Europe. To maintain that and benefit from the fantastic growth opportunities will keep us very busy. But if there is an interesting and compelling opportunity outside of Europe, we will definitely go for it.