Here in the Summer of 2005, LinkedIn is challenged with the need to generate revenue quickly. In order to obtain favorable terms during our next round of funding, it is critical that we demonstrate material results within the next three months. In providing my recommendations, I have evaluated the two leading strategic alternatives: 1.
Premium Services Bundle ($15/month)
Direct Contact without intermediaries ($5 -$15 per message)
As your consultant I favor option 1, the Premium Service Bundle, for several reasons. First, I believe it offers our greatest chance for immediate results without risk of alienating our core constituency. Second, the monthly subscription plan provides us with a recurring revenue base that is predictable and scalable. Third, to the extent that our bundle continues to evolve and offer services desirable to the targeted users, the offering will further differentiate LinkedIn from our competitors and enhance the value of the subscription. While charging could slow our member growth rate versus offering these features as part of the basic service, we retain the integrity of our current free membership. Conversely, with option 2, the unintended consequence of permitting unsolicited contacts within our community may be an erosion of our network. Let’s review the implications of this recommendation on each of our three primary customer segments: Relationship Managers, Networkers and Contactors.
The majority (90%) of our network is comprised of Relationship Managers. As we know, this group focuses within their existing first-degree contact circle. The Premium Service Bundle may entice those presently seeking a job, investors or other circumstance prompting them to extend their network reach to subscribe. Since the services offered in this plan do not contradict their principles of respecting the privacy of their network and that of their colleagues, the adoption of these value-added services should increase as potential...
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