LinkedIn - Users linking - Money winking

A company's success is largely determined by : Value to users, and revenue. Value to users is what your customers get when they use your product. And revenue is what you get when customers use your product.

Can you keep things free for most users, and still make big money? Well, you should charge exorbitant from those users who choose to pay, and to make them pay, you have to provide services worth paying for.

Think Netflix. A payment barrier stalls all users seeking to find their way in. Even though you're using your friend's account, as most Netflix users do, someone has to spill the cash.

Now think LinkedIn. More than 68% of users don't pay a dime, irrespective of whether they use it 18 hours a day, or 18 hours a year. LinkedIn is sure to go broke then, you must think?

If so, how do we explain Microsoft spending a whopping US $27 billion for acquiring LinkedIn in 2016. LinkedIn revenue clocked at US $6.8 billion in 2019. If everyone's using it for free, where's the money coming from? More importantly, when such a wide range of features can be exploited for free, why would anyone pay? Let's get into the how and why.

LinkedIn's greatest strength lies in the value it creates for the customers. Recruiters get the cream, you get jobs, some of the most knowledge-enhancing content is found here. LinkedIn still continues to be an online resume. Looking up the LinkedIn profiles of your potential interviewers can help you frame your answers accordingly.

Yet, the question remains. Who's gonna ask

Translated : Did you bring the money?

Have a look at the revenue streams.

Talent and hiring solutions? Well, you are thinking to yourself, I might have guessed, but then, what exactly do they charge for? I can look up a number of people's profiles. What's there to pay for?

Think recruitment for a company like Google. People apply by the thousands, every day. Plus, recruiters are always on the lookout for reaching out to new talent. There are at least a thousand recruiters for Google, and about 80000 candidates. You think you can manage all of these through that one free account? And here's where LinkedIn charges, and charges big, so much so that more than 59% of LinkedIn's revenue comes from talent hiring solutions.

And why would companies be ready to shell out the cash?

Remember, LinkedIn is multi-purpose. It is a job portal, a connection platform, and an online resume. If a recruiter wants to check a candidate out, all he'd have to do is go to the profile. Search candidates by roles? Yes. Present employment status? Yes. Sorting by skills? Yes. Sorting by hairstyles? Probably, in the near future.

When spending $10 candidate could generate you benefits worth a 1000, you'd definitely spend the 10. And that's where LinkedIn aces.

LinkedIn has made it damned easy, damned authentic, and damned rewarding.

Next up, Ads!(Raised eyebrows). Haven't seen a lot of Ads on LinkedIn, have we? Not at least, in the flashy way that many other websites show? None of the irritable popups, or clickbaits with every click. Yet, they make up 19.5% of the revenue. How?

Sponsored Messages directly to inboxes, increased page view, sponsored posts, are some of the most major ad forms on LinkedIn. Hmm. Does't seem a lot, does it?

Here's some figures for you to feed on.

CPC(Cost per click) for LinkedIn is an average of USD 5.26.

Against this, for Facebook, CPC on avg is USD 1.6. Hmmm.

Twitter avg cost per click of promoted Tweet is USD 1.35. More Hmmmm.

Instagram is an average of USD 1.1 per click. A lot of Hmmmmmm.

Meaning, LinkedIn charges almost 4-5 times as much, as compared to other socials.

Now think why they're able to afford cutting out the irritating popups? Compensating quantity by quality.

Eh?

LinkedIn headlines read something like

MEAN Stack Developer, Engineer at the-dkp-company, Interested in Angular projects

Facebook headlines read something like

Heart throbber, mind winner, tongue twister, have a husband with 4 legs

If you're selling a tech product, you are looking for ops leads. LinkedIn helps you figure that out by just searching the position. Can you do that on Facebook?

If you want to advertise a product, you know who you're targeting, on LinkedIn. You can easily customize it to show up only for these people, and thus, a much more targeted approach.

LinkedIn is a professional platform, making it a lot easier to target user genres. LinkedIn users are a lot more grouped, and specific, as compared to other platforms, and thus, it is ridiculously easy to target.

Thus, they can charge close to 5 times higher for ads, and people won't complain.

Plus, you can target high ranking officials, such as HR leads, Ops leads, Procurement heads, by just their title, something Facebook can't do.

Finally, Premium. Something we can all relate a lot to. Helps you unleash inMail messages, unlimited profile viewer details, and a bunch of other features.

But remember the stat from the beginning of the article? Only about 30% of users are premium. And remove from this, a sizable chunk of people who get LI premium as part of their promotional efforts. Only about 25% people pay for using LinkedIn.

Now, the cost of premium? Premium Career is USD 30 a month. Business is USD 60 a month.

Talking in INR, that's more than Rs 2100, that's Rs 70 a day! Hmmm?

That is kinda huge, no? Yep, definitely is.

Thus, the model of LinkedIn lives and breathes

Quality over quantity

Charging a lot of money from a very few number of users. And that's what has been working real well for them so far.

Tasty treat here!

One question that I had, and that I think many might. Given the usefulness of LinkedIn, what if they start charging some small amount from all their customers? Let's say only INR 100 a month? That's only 3 bucks a day. Considering 660 million users, you can very well figure where that number is gonna go.

Then, are LinkedIn analysts high? Why won't they do so? This is a thing about customer mentality, that we have to just get into our heads.

PAID IS PAID. DOESN'T MATTER IF YOU CHARGE 1 BUCK OR A THOUSAND. YOU ARE EITHER A FREE SERVICE, OR A PAID SERVICE.

If LinkedIn tries to make its platform entirely behind a paywall, however small, it is damned sure to lose out on the one thing that is its greatest strength : Its cherry cream cutie customers, that'd die for it.

Tell me, what do you think? Should LinkedIn start charging all its customers, would you stay?