You may not know much about Classmates.com, the service that brings together high school and college alumni, but certainly you have seen the company's ubiquitous (nay, relentless) online pitches. In what must be one of the best testaments to the enduring power of the much-maligned banner, Classmates.com purchases five to ten billion ad impressions a month…a strategy that works. "It's very wise for us," says CEO and president Michael Schutzler. "We've built a national brand in the space of 18 to 24 months. Our brand has over 50 percent unaided awareness." Imagine that, and without having done a single, insipid and cryptic Super Bowl ad.
Unlike many well-branded Web failures, Classmates.com actually converts the massive traffic generated by that banner campaign, 2 million uniques-a-day, into cash money: 1.7 million paying members (at $36/year). That arguably gives them the largest subscriber base of any consumer site online. Virtually all of Classmates.com's stats swim against the current ebb of the Web tide. It doubled its staff, from 115 last year to 220 in 2002. It has been net-income profitable for more than eleven months running. And even its ad revenue, while only 20% of total income, is up from zero just two years ago.
There is no great secret to Classmates.com's success; it follows a principle that continues to elude so many traditional publishers online. People will not pay for online content that simply mimics offline media. The not-so-secret secret, says Schutzler, is "finding content that is sufficiently unique, that you can't get offline." But most of all, Classmates.com proves that person-to-person contact is the medium's native strength. Classmates.com members get access to their fellow alumni's profiles, a complete answer to "Whatever happened to?" They get to send email to one another and enter messages in the forums. "Our fundamental value proposition is bringing them together and helping them communicate," he says.
Converting visitors to paying customers is also not so secret a secret. Give them free access to as much of the site as possible to see for themselves the depth and breadth of services available. Anyone can view Classmates.com's list of registered users from their own high school or college classes. Over 31 million people have registered for this free aspect of the service. Anyone can see the first few lines of a detailed user profile or peruse the message bases. Many content providers demure at giving too much away for free, but Schutzler insists that "very few companies have ever been successful by going straight for the subscription." While other sites restrict access to more and better content, Classmates users pay for the real value proposition—emailing other members, reading full profiles, and contributing to forums—making contact with others.
Despite having no serious competition, Classmates faces challenges other subscription sites will certainly encounter as their user base matures. For instance, Schutzler won't disclose the retention rate on those 1.7 million paid members, but clearly the company is thinking hard about this issue. After all, once a site such as this has saturated its market, and its members have re-connected with all the school chums they like, how do you keep the base?
The retention strategy at Classmates revolves around piquing what Schutzler calls the users' "expected future use," or "anticipative regret." By tracking how individual members use the site (email exchanges, forum posts, etc.), the site can slip in appropriate messages around renewal time that encourage more of that activity or remind the member of the subscription's value. Likewise, the site just started a print magazine that compiles the human dramas of reconnected family and friends that the site generates. This value-add goes to paid members and helps make tangible a sense of what they lose if they decide not to renew.
Classmates.com is expanding internationally as well, but one of the more promising areas of growth lies in drilling this massive base of members and registered users for additional affinities. When this many users come together in one place, they discover common interests and backgrounds, so again, the company is hoping to facilitate those connections with a new search engine that finds these affinities and matches like-minded users with one another.
Other publishers could do this with their own user base because, like any magazine, a popular Web site is really a collection of like-minded users. Rather than asking what other content we can throw at these people, perhaps we should be asking what else would our users like to be doing with one another? Like the Web's true killer app, email, and another winning fee-based sector, online dating services, Classmates.com demonstrates that the Internet is not just a publishing platform; it is a people platform. Connections, not content, are the real king here.