The Remarkable Rise of LinkedIn to 700M Members: Succeeding with Freemium
Even if you are a frequent LinkedIn user, you may not probably be aware of the mind-blowing LinkedIn statistics: LinkedIn has over 740 million users, with more than 260 million monthly active users all around the world. When you look at LinkedIn’s user growth graphic, you may wonder how LinkedIn has achieved to keep growing users over the years. The Freemium business model is one of the most significant user growth engines.
Structured as a Freemium model, the core functionality of posting job experiences and linking with other people in LinkedIn is free to anyone willing to sign up. More advanced functionality costs money and focuses on recruiting, getting hired, growing network, or other fundamental needs.
How does LinkedIn benefit from going freemium?
Back in 2003, LinkedIn’s primary growth tool is its freemium model. As a professional social network, anyone can join the platform thus enabling its viral growth. Freemium makes it easier to get new customers and possible for implementing viral marketing strategies such as referral programs to increase the number of users.
Freemium helps create a network effect. There is no reason for having a Facebook account when there is no one to connect with you, which is the same as a LinkedIn account. If your friends or ideal company all are using LinkedIn, it is forcing you to use it to stay connected. If LinkedIn was paid products, this effect would not work well because it is always hard to convince someone how knows nothing about your service to pay for it.
So how can we learn from LinkedIn to develop a sustainable freemium business model?
Sustain the high value for freemium and premium customers: LinkedIn continuously develops additional new features and improves the better user interface to sustain the excellent value of their offerings to free and premium users, leading to increased customer loyalty and better customer retention. This is especially important for freemium companies since customer retention rate and customer base are the basic conditions for the success of this model. Succeeding with this strategy requires continuous innovation and investments in research and development.
Gain maximum value from freemium customers: Freemium customers should be regarded as a valuable resource and as a marketing tool rather than as operational costs beyond just been seen as potential paying customers in the future. LinkedIn is good at getting the most out of its users, so it has become an especially good source for discovering leads. HubSpot found that LinkedIn is 277% more effective at generating leads than Facebook and Twitter, which attracts a huge number of marketers to the platform.
Most importantly, keep an optimal balance between freemium and premium offerings: Reaching the balance between freemium and the premium plans is crucial for business with a freemium model. A danger exists when people are comfortable with the freemium offerings, thus eliminating the incentive for users to upgrade to the paid version. LinkedIn does a good job of developing a multi-sided customer segment and providing different value propositions for people and for enterprises. Premium is primarily intended for current job-hunters, recruiters, and those looking to get new clients to their business. For regular users, on the other hand, who are currently employed or are not actively seeking new work, the freemium offering of LinkedIn is good enough to keep them in the business.
Final thoughts:
In my opinion, the key for a business to succeed with the Freemium model is always focusing on the customers and understand how they get value from the products. This will make it possible to strike the right balance between demonstrating the value of your offerings while still leaving free users wanting more.
Hope you enjoyed reading and found it useful. Please leave your thoughts below. Tell about your experiences while using the freemium model.
