‘Hi, I’d like to add you to my professional network” – it’s not a pick-up line you’ll hear too often in the real world, regardless of whether you’re in the bar or the boardroom.
The greeting is cordial enough, but it doesn’t exactly inspire the type of fast and fruitful business relationship that most members want from their time exploring LinkedIn.com – otherwise dubbed “the professional’s social network”.
While increasing numbers of professionals – executives, entrepreneurs, job seekers, recruiters and sales people – are joining at the rate of two per second globally, they’re often content to give the digital version of a limp-wristed handshake that is LinkedIn’s templated connection request.
LinkedIn’s potential as a business tool has progressed beyond its initial appeal as a place to upload a resume and wait for the job offers to roll in.
It has been developed into a virtual place to share content and comment like Facebook, but unlike Facebook it’s also a place to curate business relationships.
So why not think a bit more about your virtual handshake?
Take the basic templated greeting for instance: it’s fine for connecting with your buddies and immediate work hierarchies, but eventually you’ll feel the need to expand your network.
The treasure trove of information available through LinkedIn’s free and premium services bolsters the effect of that traditional “cold call” approach no end because you can provide context for an approach.
Whether it is sharing common connections, belonging to similar industries, attending the same events, or merely belonging to a common LinkedIn group – the information is there to strike up a meaningful conversation.
More than 200 million people worldwide have provided that information to LinkedIn, and now the company is selling back to us – there’s no doubt it’s a valuable model, but is it what members signed up for?
Like the pre-eminent social network Facebook, LinkedIn’s initial focus has been on building membership, in its case through job-hunting and recruitment possibilities it opens up.
A NYSE-listed company since 2011 with a current capitalisation of US$13.3 billion (NZ$15.6b) and a share price which has grown 71 per cent in the past year, LinkedIn has built a network of more than 200 million people globally with more than 600,000 active members in New Zealand.
The company recently reported full-year revenue of $972 million for 2012, up 86 per cent on the prior year, and cleared net income of $21.6m, up 81 per cent from 2011.
LinkedIn also predicted a revenue uplift of 44 per cent to $1.4b for the 2013 year.
Recruitment was LinkedIn’s biggest revenue stream in 2012 with 53 per cent of turnover in the fourth quarter, mostly earned from premium recruitment accounts which range in price from $59.95 to $629.95 per month.
Marketing Solutions, including premium “sales professional” accounts, follows with 27 per cent of revenue in the fourth quarter, while Premium Subscriptions contributed 20 per cent.
In comparison, Facebook’s billion-plus members produced a 2012 annual revenue for the company of just over US$5b but net income of just US$53m [although the figure inflates to $1.3bn when items such as share-based compensation to employees are excluded]. Facebook made 84 per cent of that revenue from the sale of advertising.
However, advertising makes up a relatively small percentage of LinkedIn’s revenue considering Marketing Solutions also includes the burgeoning “social selling” sector which is offers paid accounts for sales people.
Such accounts cost between $20.95 and $125.95 monthly and provide access to special folders for saving and organising the profiles of sales “prospects”, allow the creation of saved searches and alerts, promise connections to prospect companies and provide InMail contact addresses.
It’s a natural progression says Tom Skotidas – a former business development director of the First Rate digital marketing consultancy and now owner of his own business-to-business social media “lead generation” consultancy – Skotidas.
“Two years ago when I was building the category no-one knew about social selling, it was brand new and LinkedIn was still treated as a recruitment tool, just a resume database,” says Skotidas.
Skotidas’ own story is a study in social selling: he had made a few LinkedIn connections without employing any strategy, so when he decided to experiment with some of his own lead-generation tactics on the network he began raking in the business for First Rate.
He claims nearly half of First Rate’s annual client billings can be traced back to meetings and pitches that originated from those social media strategies he employed.
“Through accident and practice I learned that with LinkedIn I could actually search for my prospects and find them there in a very transparent way – I could see their faces, their job titles – it was very transparent as opposed to other channels where you can never really see who’s clicking on your ad.
“Once connected I was able to then add value to them by finding articles and content and sharing it with them which is the key to social media.
“But in doing so I discovered that consistent sharing of content around a particular topic actually associates you with that topic and builds your personal brand.”
It’s no coincidence that his company now bears his name – in the future the value of your people will be what differentiates your brand from the competition, he says.
However, there is a real danger that LinkedIn’s members could grow tired of being hassled by cyber-hawkers, no matter how polite.
The perpetual danger of social media business models is that the reason for the profit is too far removed from the initial reason people joined up.
It’s the kind of balancing act that can only be tried and tested with each new iteration, says social media marketing expert Michael Carney, but for now there is demand from both sides.
Salespeople are once again trying to turn the tables in their favour after internet searchability began allowing every customer to become an instant expert on the price and quality of any product or service, he says.
“It’s all a bit scary really,” says Carney.
“There was a time when the information was firmly in the hands of the travel agent, the car salesperson or the industrial business salesperson, but now it’s quite the other way.”
Clients and customers have the upper hand in many ways, but building a relationship with someone inside an organisation and gaining insights into what specific issues they are facing is where sales staff and consultants are able to add value, according to Nick Toman of the US-based Corporate Executive Board.
But in this nuanced game of virtual relationship building Skotidas’ No 1 rule is to never sell. “I’m not asking for a lead or a sale, I’m not asking you to buy anything, I’m actually asking you to network with me in the context of environmental clues that give you safety.”
It’s not yet a well-known strategy in New Zealand and sales and marketing staff at some of New Zealand’s biggest companies were either unwilling to comment or ignorant of this aspect of LinkedIn.
LinkedIn bills itself as a new age marketing tool which enhances a company’s brand by “leveraging this massive pool of content and to engage with both B2B and B2C audiences at scale”.
The company encourages sales people to build a strong brand and use the platform to “position yourself as a credible and influential source in the industry” rather than a spam-happy hawker.
“We recommend our members connect with people who they trust and we also allow them to control their account settings to ensure they are receiving only the most relevant information,” advised the company.
For now LinkedIn says it’s confident the three interdependent revenue streams make it the most diverse and potentially profitable social web business on the market.
If the company succeeds in creating a new sales ecosystem that could be true, but it depends on whether the value of handshakes and eye contact can be replaced by a carefully calculated digital courtship.
By William Mace – Fairfax NZ News
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