Case Study: MyFamily

The year 2000 was a tough one for MyFamily.com. The company's far-flung strategy of marketing to families wasn't working. As the Internet bubble burst, ad revenues plunged. Layoffs began that pared its 400-person workforce to less than 200. The MyFamily network of sites lost $72 million.

Originally, its strategy had looked like a winner. The Provo, Utah-based MyFamily offered families a free Web site as a kind of virtual gathering place, allowing family members to chat, post photos and share news. The site sent out notifications about birthdays and anniversaries -- along with a wish list of what gifts family members wanted for special events. The hope was that families would buy those gifts from MyFamily's extensive e-commerce catalog.

The problem was that the site's e-commerce approach tried to be all things to all people, says Scott Sessions, MyFamily's commerce director. "We were selling computers, scanners, printers. We were selling, dare I say, summer time blow-up swimming pools." What happened, says Sessions, was that people would look at the wish list, then click over to Amazon to buy the gift, "because Amazon was so established."

To spur sales, the site was "couponing people to death," according to Sessions. The site offered coupon offers like, "Spend $25, get $20 off," but the method wasn't profitable.

Accentuating the problem was the company's strategy. "We just spend everything we want, and make as little as we want, as long as people come to the site," Sessions says. "We were just driving ourselves into a hole."

A Hard Look in the Mirror
After the Internet downturn, the company was forced to rethink its strategy. One feature that had always performed well was the site's genealogy database, which contains a wealth of family records culled from census reports and historical archives. Users pay a subscription fee to trace family genealogy.

The number of genealogy subscribers had climbed rapidly since the company began charging for access in 1997; the site claimed 200,000 subscribers by July 2000. "We had this ancestry business that was doing great, but it wasn't the focus of the company," says Mary-Kay Evans, MyFamily's public relations director.

The fall off in ad revenues prompted a hard look at company strategy. "Obviously, the answer was, focus the business on our core, which is the subscription business," Evans says. The decision to focus on genealogy has been a good one for MyFamily. The company now has two sites dedicated to genealogy: its flagship site, Ancestry.com, and Rootsweb.com, a free online community for family history buffs. According to comScore Media Metrix, the two sites combined had 9.6 million unique visitors in January 2003 -- making them the category leader.

MyFamily's subscriber base surpassed the 900,000 mark in December 2002. It has increased its staff level back to about 400 employees. Instead of 2000's $72 million loss, in 2002 the privately held company made a profit of $5 million on revenue of $47 million, Evans says.

Hooking Subscribers
Ancestry.com's experience reveals the essential ingredients for an online subscription business. The most important factor, Evans says, is unique content, something that you can't find anywhere else -- especially anywhere else online.

With that as the basis, Ancestry works on finding hard-to-access genealogy data, digitizing and cataloging it into an easily searchable form. The most recent acquisition was the 1930 U.S. census. When the government released it last April, it lacked an index for the 124 million U.S. residents listed. Ancestry created one, allowing subscribers a keyword search.

Another key part of Ancestry's subscription strategy is -- paradoxically -- offering free content. More than half of the content at Ancestry is free, Evan says. "So when you get to our site, you're not immediately hit with 'sorry you can't do this, you've gotta pay.'"

Instead, users can search for ancestors in the free area, and chances are really good you're going to find a record you can access at no cost. It gives you a taste of success.

"It's offering of value for free that is the hook," Evans says.

Hooked, indeed. Ancestry has some of the highest subscription fees of any site, ranging from $79 to $189 a year. "Our most popular subscription is the most expensive subscription," Evans says.

The site is constantly seeking customer feedback about its subscription model. "One thing we think a lot about is making sure we're offering all the right stuff and for the right price: Do we have enough data and is it the most compelling data that's free to get people to click over, to get over the wall," Evans says. "I wouldn't say we've found the threshold on price. Sometimes we think we have and sometimes we're not so sure."

But most important, she says, is not so much the price but the value, the success that subscribers receive. "If you can package it correctly and you offer something that's unique and valuable, they're going to pay for it," she says.

Effective Selling Techniques
When the site changed its approach to focus on genealogy, it also revamped what goods it sells. Gone were the scanners, computers and blow-up swimming pools, all the items Sessions calls "superfluous, third-party stuff."

In their place are CD-ROMs and books about genealogy. Of the company's $5 million profit in 2002, $2.3 million came from sales of goods through the site. The site's demographic is older and skewed female, and even though they have subscriber access, they want to know they have that data forever and put it into their family history files, Sessions says.

The site has several effective sales techniques, one of which is how they run their in-house call center. Some sites outsource their phone order staff; MyFamily keeps it in-house. Since the site's demographic skews older, the phone continues to play a larger role in order taking. And keeping phone staff in-house means MyFamily more closely controls staffers' messaging -- which pays off in greater sales, Evans claims.

With outsourced order takers, "One minute they're selling Visa, and the next minute they're selling MyFamily," Evans says. With an in-house staff, "They know the products, they know our customers and they know how to sell it."

The other effective sales technique is an e-mail newsletter with streamlined links to buy products. Sessions, after examining the newsletter, realized that every click is one more click away from making a sale. So, the mass mailing was revamped. "We took our weekly product offering and made it a one-stop shop. You receive that product offer, you see what you want, you click a check box saying you want this, this, and this, and then you check out. The next screen is: you're giving us money." Sessions says this has increased sales by about 30 percent.

As Always: Focus
As MyFamily looks for ways to continue its turnaround efforts, to build a bigger business, it has many possibilities. But the central concern remains the same. "It's the focus issue -- focusing in on what's going to benefit our customers the most, and provide the highest return," Session says. "There are so many products we want to bring out. We've got lots of big dollar ideas and it's 'Do we work on this one vs. this one -- what's the quickest ROI?'"