LinkedIn started out as a small blip in the crowded social networking market but rapidly became the platform of choice for linking professionals around the globe. How does a company with a marketing department of two people and almost zero promotional spending become the world’s most popular business-networking site? Excellent references.
Launched during the social-networking craze several years ago, competition was fierce for the small company in Mountain View, California.
First and foremost, LinkedIn’s founders made the smart decision to spend their marketing efforts on those customers who could generate the most returns. They chose to seek out and recruit those users who were both well-known and sufficiently sought-after that they would act as champions for the service, bringing a large following with them to the site.
LinkedIn’s founders began by focusing on geographies they knew well. The San Francisco Bay Area was their initial target, and they knew that in Silicon Valley and the Bay Area, entrepreneurship and jobs were the hottest topics going.
LinkedIn’s founders reasoned that if they were able to attract entrepreneurs to their site, then they would also attract those seeking job opportunities and with them, recruiters. Since most entrepreneurs are in pursuit of capital, LinkedIn’s founders crafted a strategy that would lure entrepreneurs, job-seekers and recruiters to the site simultaneously: they targeted venture capitalists (VCs).
But to successfully recruit VCs to the LinkedIn network, its founders needed to find a way to offer them value. Since VCs customarily investigate the people behind the companies they back, LinkedIn’s founders set to work developing a site that offered VCs a tool to check the references and business experience as well as the professional networks of new investment candidates.
LinkedIn surmised correctly that recruiters too would find this a valuable tool, and that with VCs and recruiters on board, the rest of the world would follow. In the first six months after the site launched, 8% of LinkedIn’s users brought in the other 92%.
LinkedIn’s founders made use of high-value customers to champion the adoption of their platform in a market where there could be only one winner.
If it doesn’t work the way they need it to or if it isn’t a sound product, buyers will have wasted their money. They will also have wasted time setting it up and learning how to use it. Since not all of us are scientists or C++ programmers, we need indirect ways of evaluating new technology before we commit to a purchase or sign-up decision.
If those we trust (for example, friends, family, leading experts, peers, colleagues) support a new technology, it tends to reduce our perceived risk that the product might not work, and we’ll feel more inclined to try it out. (The same principle applies to movies, wines, hotels and restaurants.)
Identifying qualified champions to evangelize your new technology is key. These “champions” must not only have the (real or perceived) skills to evaluate the new product or technology, they must also have a large-enough following to influence sales. Befriending these individuals early in the product-development process can yield useful insights into the needs of your intended market, and later pave the way for a strong endorsement.
With certain technologies, the value to users may increase as the number of users themselves increases. This is true of a number of platform technologies, such as operating systems, social-networking sites and many other networking applications. This “network effect” is a powerful (and free) driver of future sales. Just ask Microsoft.
LinkedIn successfully achieved market leadership by leveraging well-targeted champions to drive early adoption. Once the company reached a critical mass of users, the network effect associated with using LinkedIn drove further market penetration, installing the company as the definitive leader in business networking.
Seba, Tony. (2006). Winners Take All—The 9 Fundamental Rules of High Tech Strategy. United States of America.