Differentiation: How LinkedIn Does It

LinkedIn considers its members to be the most important piece of its value chain. The key service it provides is the ability of members to find and contact other members. Users can create their professional network via LinkedIn, increasing potential in finding jobs and maintaining and managing their careers. Many products LinkedIn offers to members are provided free of charge. Consequently, members frequently update their profile, even when they are not looking for work. The result is a rich information base from their free members, which suggests a vast potential for growth while capitalizing both premium members as well as advertisers and corporations looking to take advantage of LinkedIn’s member base. A few of the distinctive elements that differentiate LinkedIn are:

Focus on the Professional Market

Unlike other social networks, LinkedIn focuses on the professional networking market. They create a space where people can manage their personal identity, search for business contacts, join industry groups, and identify career opportunities. This makes LinkedIn the world’s largest online professional network. On the other side, recruiters and human resource professionals use this network to find potential employees by posting job listings on LinkedIn, creating their company page, so that members can keep updated about the company. LinkedIn now plays an important role for recruiters, with 82 of Fortune 100 companies using LinkedIn as a critical tool in recruiting.

Business Acquisitions

LinkedIn also expanded its business by acquiring small companies that can support the core functions of its business. In 2010, they acquired mSpoke, a provider of recommendation technology, and Choice Vendor, a ratings and reviews provider. They also acquired CardMunch, Connected, and IndexTank. These companies could help LinkedIn achieve rapid growth in the future by further differentiating LinkedIn’s products and providing convenience to its users.

Product Development

With career management becoming a daily and necessary task, LinkedIn has opened up to third-party developers to create interesting products that can make members’ activities more relevant and insightful. As a result, members increase their time spent on the site, helping to attract marketers and advertisers, and enhancing LinkedIn’s revenues.

International Expansion

LinkedIn plans to grow globally. Currently 60% of members are from outside of the US, with revenues from international operations representing 32% of total revenue. In particular LinkedIn would like to capture high growth markets including Asia Pacific, India, and Latin America, so they plan to increase its sales force related to new international offices.

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