Posts Tagged ‘website business analysis’

Commercial functionality within LinkedIn

June 6, 2012

Executive Summary

LinkedIn is well balanced in financial terms, generating revenue through three categories of monetized solutions: recruiting, advertising, and subscriptions. Currently, each of the three monetized solution categories contributes fairly equally to the total revenue number. Accounts in the USA compose two thirds of total revenue, with international accounts making up the other third. LinkedIn also offers four categories of free products to its users, defined as: profiles; networking; information exchanges; and widgets for integration/APIs/mobile applications.

Three solution categories generate commerce

Recruiting (“Hiring Solutions”) grossed approximately $100 million in 2010. This category consists of job boards, talent locators, referral engines, a matching tool, plus a few other products. LinkedIn competes in this market with Monster, CareerBuilder, Indeed, and other businesses providing job search services. Posting a job opening on LinkedIn cost approximately $200 a month in 2009 [Walker 2009].

Advertising grossed approximately $80 million in 2010. Advertising options include pay per click (PPC) ads, targeted marketing windows, a recommendation function… LinkedIn is in direct competition with the broader marketing industry.

Subscriptions grossed $70 million in 2010. Subscriptions are primarily software products, including advanced intranet search filtering capability, an intranet search agent, statistical reporting on profile activities, and a handful of other business- and executive-oriented features.

Role of the LinkedIn site, within its industry

LinkedIn is compared to other prominent social networks in the USA in media articles, analyst reports, etc. although it is often excluded from such comparisons as well. LinkedIn owns the professional demographic however, acting more like a corporate blog that crosses national and business network platforms. LinkedIn’s users go to the true social networks for their social activity, differentiating LinkedIn as their professional network where they maintain higher levels of discretion with their connections and hold higher expectations of trust and security over their profile. While different than Facebook, Twitter and YouTube in terms of social activity it does compete with them in the ad revenue markets [Miller 2011, Vahl 2012].

LinkedIn is also a software company, albeit a non-traditional one in terms of vendor “lock-in.” LinkedIn could be considered slightly competitive to email providers with search capability such as Google or Yahoo, if it decided to expand its search capability outside of its own intranet.

What LinkedIn does

LinkedIn has a number of interesting products and features that allow users to network. Among them are Behance Portfolio Application, cardMunch for iPhone, Slide Share, dashboard analytics, and Groups. Groups are highly popular self-organized communities.

Points regarding functionality of the site

The majority of commercial activity on LinkedIn is generated by a minority of its users. Background research for this report indicates most people that use LinkedIn are not aware of many capabilities and products that are stated in the company’s 10K. This lack of awareness can be attributed to two factors. First, many LinkedIn products are neither promoted nor available for purchase through the website, only through “field sales organizations” of which there are three regional headquarters in the USA located in Chicago, New York, and San Francisco. The Field Sales Organizations perform offline sales operations, by calling directly on their customers.

Imagine a scenario where a new LinkedIn user builds a personal profile and is considering what else the site has to offer for his or her business. They may start looking around the website and checking out available products and considering upgrading to a paying customer. At what point are they able to see the existing inventory or selection of products that are not visible online? Never via LinkedIn; perhaps on YouTube! It would be the same as a car dealer that had half of their inventory on a separate lot, and allowed customers to walk around on the first lot with no idea there were other, possibly more attractive vehicles for sale on an exclusive lot somewhere else. We would think that the car lot was seriously “missing the boat” in terms of marketing their inventory.

The lack of awareness about LinkedIn products can also be attributed to the relative difficulty in locating tutorial information on what products are provided. LinkedIn user guides are only available in two places, on the Learning Center page of the LinkedIn website, and on YouTube. There are hundreds or maybe thousands more tutorials placed on YouTube by unaffiliated individuals that describe how to do something on LinkedIn than there are on LinkedIn itself.

Videos and information about LinkedIn’s products that are available on its own website are too hard to find. This explains why there are hundreds of questions from users asking how to do something in LinkedIn on the “Using LinkedIn Q&A” section. Users are asking for help on performing the simplest of tasks on the website. Answers are fielded by other LinkedIn users, with random latency. In other words, their question may be answered in less than five minutes, or possibly never, they cannot know. Where is the company itself in all this? These questions should be getting swiftly fielded by someone from the organization; this is a prime opportunity for a company representative to step in and be of assistance, possibly opening the door to selling advanced services thru a live chat window, or any other means of interaction with users. At a minimum, LinkedIn should take care to have a phone number prominently located on key pages, to facilitate their users who wish to make contact with the website itself for service questions, as The Ladders website does. Please see the accompanying Use-analysis of LinkedIn’s site functionality in Excel.

Part of the attractiveness of LinkedIn is its simplicity. The website has a classic web 2.0 appearance, but there are areas where too much simplicity or minimalism equates to a restriction for commerce. The “Upgrade to Job Seeker Premium” promotion “Unlock Salary Estimates for Jobs on LinkedIn” has small generic bar graph with three unmarked bars that sit statically in an ad box on the sidebar. If this space were used to show a demonstration of the product, with active screens inside the box instead of just a random graphic that has no informational value, LinkedIn users would be able to easily gain information about available products. Presentation slides could be positioned like any other advertisement in the sidebar, or quietly active on some portion of various pages, with an option for the user to turn the audio on when the demonstration catches their eye.

There are other similar situations throughout a user’s experience on the LinkedIn site that have a negative effect on the commercial functionality. Example: when a user clicks on something that is not a free product, they are immediately taken straight to a sales check-out page (a cash register) with a short list of about six features for sale, but the interested party has not been given an opportunity to see any information about these features. LinkedIn is egregiously missing the opportunity to build value in their products. Websites of other companies take advantage of these situations very effectively through chat windows that open up, or interactions with some type of avatar, offering to demonstrate products or answer questions for the buyer. LinkedIn could provide an option to see a pertinent video about the product that automatically loads with a big click to play triangle in plain view for the user to get a demonstration on the product they are interested in. Were this to happen at some point before the customer is forced to decide between buying the product without knowing its benefits, going elsewhere to look for information about what the product benefits are, or just rejecting the product offering altogether, the sale conversion rate for that product would be higher.

Looking forward: improvements for directly or indirectly improving commercial activity

Upgrade email.

Email is an important communication medium for LinkedIn’s demographic. LinkedIn may not endeavor to compete with Google or other email providers, but their users should not have to deal with overtly clunky methods for manipulating mail while they are in the LinkedIn email system.

For example, after reading a message, a user currently has to go back to the inbox just to select the next message in the inbox for viewing. This is an archaic extra step that has been eliminated by the more efficient email providers years ago. Basic capabilities for formatting text would be nice as well.

The future of search:

LinkedIn is clearly aware of the growing importance of mobile solutions. The increasing demand for mobile capabilities will have a direct effect on the type of search functions that result in commercial transactions. As reduction in traditional indexed search usage means shrinking market share for LinkedIn’s competitors that currently survive off of these products, the situations for LinkedIn to step in and find new markets must be appealing. Development of intellectual property should be directed toward the pin-point focused search paradigm, the way information is actually consumed on mobile. Search services of the pin-point nature for the mobile application return actual, direct answers to questions computationally, in the way Apple’s Siri does; not a search result list from which the user has to drill down further by choosing from the selection that was ranked by an algorithm. An example of a response to the question “What is the per capita income for the US, China, and Germany” is here: http://bit.ly/Kw7t1E Interfaces should also be constructed on a control panel model where users stay on the same page, versus the elevator hierarchy structure.

Give premium users more information.

Subscribers would pay for information on how an employer subsequently ranks submitted applications for employment. LinkedIn performs a pre-ranking service for the employers already, scanning the candidates resume or profile for keywords, etc. before sending the employer a ranking based on the results of the character recognition process. The software heavy lifting has already done, and the cost already paid for as part of the job posting service the business has subscribed to. Giving candidates the option to purchase the reused information would result in additional revenue for LinkedIn.

References

Miller, M. 2011. http://blog.hubspot.com/blog/tabid/6307/bid/10437/Study-LinkedIn-Is-More-Effective-for-B2B-Companies.aspx

Vahl, Andrea. 2012? https://andreavahl.com/facebook/linkedin-ads-vs-facebook-ads-a-case-study.php

Walker, M. http://www.inc.com/maisha-walker/2009/08/linkedin_the_11_most_useful_fe.html

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