CA#1--257(mimimi)
Kanqi88898
TheLadders.pdf
9 - 9 0 8 - 0 6 1
R E V : M A R C H 9 , 2 0 1 5
________________________________________________________________________________________________________________
Professors Peter Coles, Benjamin Edelman, and Brian Hall and Research Associate Nicole Bennett prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illust rations of effective or ineffective management. Copyright © 2008, 2009, 2010, 2015 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business Sc hool.
P E T E R C O L E S
B E N J A M I N E D E L M A N
B R I A N H A L L
N I C O L E B E N N E T T
TheLadders (A)
Already the world’s leading job-search service for $100K+ jobs, TheLadders sought to expand its reach with Fortune 500 companies and other large executive employers. TheLadders boasted more than a million qualified executives ready to work in appropriate jobs. More than 25,000 employers and recruiters were also on board, but some of the largest employers offered only a subset of their executive jobs. Marc Cenedella, TheLadders cofounder and CEO, resolved to improve TheLadders’ presence at these top employers.
In contrast to most other online job-search sites, TheLadders had built its reputation by charging job seekers, while letting employers post jobs for free. Was this still the best strategy? Some senior management at TheLadders felt it was time to begin charging employers—despite the company’s success with its no-cost offering. But such a shake-up in the pricing system could impact growth and drastically alter the dynamics of TheLadders’ employer/job-seeker ecosystem. Cenedella had to decide whether charging employers would create the success and scale that he envisioned for TheLadders.
The Job-Search Industry
American employers sought to hire some 50 million employees per year1—a substantial task that, for many firms, required considerable management time and energy. Some companies managed their searches internally, while others turned to outside screening and recruiting services. Companies typically spent 5%–8% of an employee’s first-year salary to recruit a blue-collar worker. To recruit an executive, costs were typically higher—on the order of 20%–33% of first-year wages.2
Before the rise of the Internet, job listings were typically distributed through newspapers’ classified listings, in the form of “help wanted” entries adjacent to apartments and used cars. Like other advertisers, employers paid by the column inch for the classified space they required.
When making high-end hires such as managers and executives, employers often wanted more control and reach than newspapers could offer. While some companies managed executive search internally, many used outside recruiters (“headhunters”) for their top positions. Some high-end placements began with a candidate responding to a position listing, but often the employer instead
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
908-061 TheLadders (A)
2
reached out to a candidate who was perhaps still happily employed at another firm. For the highest positions, companies sometimes turned to executive search consultants to find and examine suitable candidates. Executive search consultants were paid either on a contingency basis or by retainer. In the former case, the executive search firm was paid only if it filled the position. In the latter case, the firm was typically paid in three tranches: a third when the firm started the search, a third when the firm submitted an initial round of candidates, and a third at some agreed-upon time (not dependent on the client hiring the firm’s candidate).
The web modernized the job-search process by putting many job listings online. Employers would pay to list their jobs at search sites such as HotJobs, Monster, and CareerBuilder. Fees could be substantial: Monster typically charged an employer some $400 to post a single job. Meanwhile, job seekers could use these sites at no charge to find open positions and to submit applications.
Online job searches initially focused on mid-range jobs. For example, as late as fall 2007, less than
6% of HotJobs’ listings promoted jobs with a first-year salary above $100,000.3 High-end jobs continued to be placed through traditional channels—principally recruiters, personal contacts, and word of mouth.
Idea for TheLadders
Marc Cenedella (HBS ’98 Baker Scholar), TheLadders’ cofounder and CEO, began his business career at a company exporting pet food to Japan. After two years working on leveraged buyouts at the Riverside Company, Cenedella moved to HotJobs, where he served as vice president of Business Development, and later, as senior vice president of Finance. HotJobs had been purchased by Yahoo! in 2002,4 just after the dot-com collapse, which sent share values plummeting and made high-end jobs particularly hard to find.
Cenedella’s friends knew of his role at HotJobs, so they often asked him how to find good jobs during the economic downturn. Cenedella reluctantly conceded that despite HotJobs’ growth, it didn’t have the kind of jobs his friends (largely recent business school graduates) tended to want. “Fancy jobs aren’t on HotJobs because there’s too much demand,” Cenedella explained. “If you put those jobs on HotJobs, there would be thousands of applications. So you can’t get high-end jobs online.” In an interview, one recruiter explained the frustration:
[Free job boards] will take a resume of anyone who can take a crayon and write a resume. You can be a bricklayer, a waitress, all of which are honorable careers. But if you’re a recruiter in a 100K arena, getting mixed up with that group gets a little treacherous. I’ll give you a case in point: years ago I put a posting up on Monster for a VP of sales for Data Warehousing. I put the ad on Monster and I got a resume from a guy who was sure that he was qualified to do this because he had driven a forklift in a warehouse. That’s the kind of thing I don’t need to be spending time on. I don’t have enough cycles in the day as it is without having to take the time to take those people out of the mix.
Inefficiencies on job boards could also taint the experience of job candidates. One Deloitte recruiter complained that the best candidates did not reply to e-mails she sent because they were overwhelmed by unwanted offers: “Everyone [who posts on the free job boards] is being contacted
by so many people that it’s a mess. It’s hard to catch [candidates] at the right time.”
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
TheLadders (A) 908-061
3
But Cenedella’s time at HotJobs had shown him the dramatic efficiencies of online job search. With an online database of available jobs, job seekers could consider more possibilities more quickly, with a flexible search feature to help focus on the best matches. Similarly, online systems enabled employers to review more applications in less time and streamline the candidate evaluation process. Online systems also created new possibilities, like letting employers search the job-seeker database for prospective matches who had not yet applied.
Cenedella was convinced that the efficiencies of online job searches could apply equally well to the executive market. But to build a well-functioning executive job-search site, Cenedella knew he would need to solve the problem of excessive applications. Looking back on his initial strategy, Cenedella explained, “There’s a tragedy of the commons: too many unqualified applicants prevent a listing from reaching the strongest candidates.” By charging job seekers to access the system, Cenedella thought he could deter unqualified applicants. After all, an unqualified applicant would not want to pay a membership fee to join a job-search site where a successful placement would be unlikely.
When Cenedella initially pitched the idea of executive search to colleagues in the online job-search industry, they rejected it as a niche. Only 10% of workers earned $100,000 or more, suggesting that online search services might be better suited for the broader market. But Cenedella was committed. In a pitch developed for the venture capitalists who later supported the business, Cenedella pointed
out that workers earning $100,000+ received 47% of earnings in American firms.5 Furthermore, companies spent disproportionately more to recruit executives, which made the high-end job-search sector that much more attractive.
Initial Implementation and Growth
Since the dot-com bubble had already burst, Cenedella hoped that software development expertise would be easy and cheap. It was not. When Cenedella found contract programmers who seemed suitable for the task, they wanted $30,000 to do the job, and they said it would take three months just to build a prototype. Cenedella remembered his high school days when he was a self- proclaimed “computer geek”—a proud user of a Commodore 64(!). So now, after buying $359 worth of PHP and MySQL books, he decided to design a working prototype himself. On August 22, 2003, just three weeks after Cenedella had rejected the contract programmers, he opened TheLadders to its first subscribers.
Although Cenedella had envisioned charging for access to deter unqualified job seekers, he worried that his hurried code might not be secure. A credit-card breach would discredit the system, a risk Cenedella could not accept. So the initial site did not charge a fee. Instead, the site asked job seekers their current salary and admonished against unrealistic expectations. If a job seeker was currently earning $65,000, a $100,000+ job was probably a stretch. The system offered that warning up front, advising such users that they would be better off somewhere else. Exhibit 1 presents a later version of this warning, as shown by TheLadders in 2008.
By October, Cenedella had hired a professional software developer, and TheLadders began charging for access in January. Initially, TheLadders charged job seekers $25 per month. Fees stayed relatively constant over time. In 2007, the monthly fee was $30, with annual membership available for $180. Interested job seekers could register and browse job listings at no charge, but payment was required before a job seeker could contact an employer or ask to be considered for an available position.
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
908-061 TheLadders (A)
4
TheLadders touted its membership fees as a benefit to subscribers:
Open access postings have created an over-abundance of job applicants who are under- qualified and who will apply to any job out there, no matter how unlikely they are to land it. Who loses? You, the serious job seeker whose resume is buried in a pile of garbage. By charging a nominal subscription fee, we shut out the hucksters who apply to any free job, no matter how far out of their reach—and make sure your resume gets the attention it deserves.
(Exhibit 2 presents additional excerpts from TheLadders’ pitch to prospective job seekers.)
To recruit job seekers, TheLadders needed a roster of high-quality jobs. Other job-search sites charged employers for each job posted, but TheLadders accepted listings for free. TheLadders told job-seeking subscribers, “We don’t accept money from hiring companies—that means you’ll never see crummy jobs” (see Exhibit 3) and repeated that benefit in the company’s Who We Are promise (see Exhibit 4). For employers that didn’t know about TheLadders or didn’t care to post jobs, TheLadders’ staff would “harvest” jobs from employers’ listings and copy them into TheLadders’ database. As of 2007, more than a third of jobs on TheLadders were harvested from public sources, while others were entered by corporate or agency recruiters.
TheLadders began with an emphasis on sales jobs. Later, the company expanded to include additional “ladder” recruiting areas focused on other corporate functions. In 2004, TheLadders added marketing and finance, and in 2005 it added operations, technology, law, and human resources areas. (See the full listing in Exhibit 5.)
To streamline searches for recruiters seeking listings of candidates, TheLadders built a structured database of information typically listed on resumes. Rather than simply uploading a preexisting resume, job seekers entered their work experience, education, and other details into TheLadders forms. Then recruiters could search submissions by keyword and, if desired, request a full resume.
From the beginning, job seekers responded well to TheLadders’ model. The high-quality jobs, the screening process, and the fee-based service all seemed to bolster the company’s credibility. TheLadders grew quickly. By the end of 2005, more than half a million job seekers had registered for the free service that allowed them to screen job listings, and more than one million had signed on by year-end 2006. TheLadders did not report its paid subscriber base, but paid subscriptions saw similar growth in percentage terms. Recruiters were noticing the system and were also signing on—nearly 10,000 by the end of 2005, and more than 25,000 by year-end 2006. (See Exhibit 6.)
The rising number of job seekers and recruiters suggested that the system was working well, and buzz was positive, both in news coverage and on blogs. But TheLadders struggled to quantify its achievements. Identifying and tracking successful matches proved elusive. Employers rarely told TheLadders whom they had hired, where they found that person, or even whether a job had been filled at all. It seemed that many employers did not track the origin of candidate leads, so once an employer got in touch with a candidate, the employer might not even credit TheLadders for making the connection. Recruiters’ search methods contributed to the confusion. It was not uncommon for a recruiter to “discover” a candidate on TheLadders, cross-check to listings on Monster, and then pull the candidate’s e-mail address from a social networking site like LinkedIn or Jigsaw. Other recruiters found ways to dig up candidates’ CVs and contact them directly. Using these tactics, recruiters often bypassed TheLadders’ e-mail service. In such cases, what service should get “credit” for matching a candidate? Job seekers were more likely to credit TheLadders for a match, but they had little incentive to offer this data. Furthermore, when a job seeker applied to an anonymous listing (see
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
TheLadders (A) 908-061
5
Anonymity, below), the job seeker often would not know whether to credit a placement to the TheLadders or some other source.
As TheLadders grew, it assembled a useful database of high-end job seekers. While some recruiters would post listings and wait for job seekers to apply, other recruiters chose to search TheLadders’ job-seeker listings and contact suitable candidates. These recruiter-originated interactions were particularly valuable to the TheLadders ecosystem because they were unusually likely to yield a successful match. Even when a recruiter-originated interaction did not produce a match, such interactions tended to cause job seekers to upgrade to a paid subscription and to increase their engagement with TheLadders.
Although TheLadders had initially been funded by Cenedella and a few angel investors, TheLadders’ growth sparked interest from venture capitalists. In November 2004, TheLadders received funding of $7.25 million from Matrix Partners; as of April 2008, this had been its only round
of funding.6 With this funding and profits from operations, TheLadders grew to 36 employees at the end of 2004, 62 in 2005, 89 in 2006, and 191 in 2007.
Marketplace Challenges
Overuse
After paying subscription fees to join TheLadders, a handful of job seekers seemed to feel entitled to send out an unusually high number of job applications—sometimes hundreds of applications per day. The problem was particularly pronounced among technology job seekers, who could write crawler programs to submit applications automatically. A typical job posting received 10 to 15 applications, making it feasible for an employer to review them all. But too many bulk applications would make careful review impractical. Andrew Koch, TheLadders’ cofounder and Director of product management, sought to solve this problem and otherwise maintain a well-functioning “ecosystem.”
Some job seekers also sent excessive messages to recruiters. In December 2005, TheLadders launched a system to let job seekers send their biographies to recruiters without applying for a specific position, letting recruiters figure out where a job seeker would best fit. Initially, a job seeker could send a bio to a recruiter with a single click. But determined job seekers clicked their way through long lists of recruiters—generating scores of messages, and diluting messages from job seekers who had chosen to contact only a few recruiters. TheLadders ultimately added a second step to the process, insisting that job seekers add brief cover notes to accompany their bios. The high volume of messages decreased dramatically.
TheLadders’ job application process had long encouraged job seekers to take their time in applying for available positions. Expressing interest in a job required two steps. First, a job seeker needed to find the job in a list (typically after an appropriate search). Second, the job seeker would fill out a short application form, including a brief cover message. Despite the two-step process, some applicants still sent excessive applications. In 2007, two to four job seekers per week would send out at least several hundred applications. So Koch considered a limit on applications—perhaps 100 per day, with more available only if an applicant contacted customer service to explain why so many applications were appropriate.
Occasionally, TheLadders also faced overuse by employers. Because TheLadders did not charge employers for access or posting, some employers posted all their available jobs—even jobs with
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
908-061 TheLadders (A)
6
salaries far below TheLadders’ $100,000 floor. When an inappropriate job arrived, a staff person at TheLadders would call the employer, review the intended focus of the site, and delete the listing. The stray postings generally would not recur.
Anonymity
Due to the sensitive nature of recruiting, some employers and job seekers preferred anonymity in their searches. TheLadders built systems to protect participants’ identities, but anonymity sometimes created complications.
For many employers, the employer’s name was a major asset in getting job seekers’ attention: many candidates wanted to work for top-tier, well-known companies. But other employers preferred to keep their identities confidential. For example, some employers offered TheLadders positions that had not been announced internally. Other employers hesitated to tell their existing employees what salary was being offered to newcomers. Outside recruiters were particularly concerned about anonymity for the postings they placed: they wanted applicants to go through them, not directly to the company, lest the recruiter lose the placement fee.
To satisfy these employers, TheLadders allowed job listings to be posted without a company’s name. TheLadders would route a job seeker’s application to the desired destination, and the job seeker would learn the company’s identity only if the company so chose.
Some job seekers also wanted anonymity. For example, some job seekers might begin looking for a new job while continuing current employment. Such job seekers would not want their current employers to know of their searches. To satisfy these job seekers, TheLadders allowed them to express interest in positions without revealing their full identity, and to conceal their names in TheLadders’ listings of available job seekers.
Despite these benefits, anonymity created challenges. If too many jobs were posted with the company name listed as “confidential,” searching would be less useful and some job seekers might be discouraged. And it was unclear whether anonymity was the right solution for job seekers cautious of upsetting their current employers. A job seeker’s profile was far less persuasive without precise details of work history, position, and specific accomplishments; this was exactly the information a wary job seeker might be afraid would reveal their identity, but just the information a recruiter wanted to see. Furthermore, some recruiters disliked anonymity because it prevented them from contacting an applicant directly, which they could do when using LinkedIn.
Competition
To the delight of senior management at TheLadders, other online job-search sites had not successfully pursued executive search.
Monster’s “ChiefMonster,” which had opened in 2000, initially seemed to be a serious competitor.7 Like TheLadders, ChiefMonster focused on high-end jobs, and Monster’s strong brand in ordinary job listings seemed like an advantage for expansion to executive placements. But Monster’s namesake business appeared to hinder the growth of ChiefMonster: Monster was committed to charging recruiters while offering the service free to job seekers. At least in TheLadders’ view, a successful high-end job site needed to charge job seekers, but ChiefMonster retained Monster’s free approach. ChiefMonster failed to gain traction, and Monster folded ChiefMonster back into the main Monster site in April 2005.
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
TheLadders (A) 908-061
7
Other executive search sites opened over the years, including 6FigureJobs, ExecuNet, ExecutivesOnly, and RiteSite. But these sites never seemed to get much traction. Cenedella came to think that TheLadders’ decision to charge applicants helped to build subscriber loyalty: Job seekers were prepared to pay for high-quality job listings, but they did not want to pay multiple subscription fees to multiple providers. “Because they’re paying, they want just one,” Cenedella explained. Thanks to its database, which had more jobs than other sites, TheLadders seemed to be that one— effectively preventing other high-end job-search sites from gaining traction.
By 2006, TheLadders’ biggest competitor appeared to be LinkedIn, a business-focused social networking site boasting a membership of over 20 million users.8 LinkedIn offered a network where professionals could find business leads, explore contacts’ relationships, and get in touch with old colleagues. Because these features were useful to many professionals, not just those in need of employment, LinkedIn attracted a broad audience of so-called “passive candidates”—that is, possible employees not actively looking for new positions.
LinkedIn members were limited to viewing the full profiles of other members within their personal networks, which encompassed all members within three degrees of separation. (A member’s first-degree connections were direct connections, while second degree connections were first-degree connections of direct connections, and so on.) To make a more distant contact, a LinkedIn member had to rely on a referral from another member with a closer connection. According to LinkedIn, 83% of requested referrals were successful. Beginning in 2005, LinkedIn allowed hiring managers and recruiters to post jobs and search LinkedIn members’ profiles.9 LinkedIn initially charged $95 per job listing, which was later raised to $145 per listing. LinkedIn also offered business accounts, priced from $240 to $2,400 per year, which let subscribers view expanded profiles of members outside their personal networks and send messages without requiring a referral. In 2007, subscriptions generated
45% of LinkedIn’s revenue;10 executive recruiters found subscriptions especially valuable.
Beyond LinkedIn, other competition also offered novel approaches to job searches. For example, NotchUp offered cash payments to candidates who agreed to be interviewed for jobs. Like LinkedIn, NotchUp focused on candidates who were still content with their current positions, which tended to attract passive candidates.
Sites for ordinary job listings continued solid growth. By 2007, Monster boasted 40,000 new
resumes added every day and 23 million annual visitors,11 while CareerBuilder touted 15,000 daily
additions and 21 million candidates.12 Drawing on its many portal users, Yahoo! HotJobs promised more than 100 million passive job seekers, along with 8 million active users.13 Although these sites were free to job seekers, they charged high fees to recruiters. For example, Monster charged as much as $395 to post a single job, and $650–$975 to search regional or national resumes. Despite their success in listing ordinary jobs, these sites did little to expand into executive placements.
The July 2006 Sales “Deep Dive”
Through the second quarter of 2006, growth at TheLadders was satisfactory, but a notch short of management’s high expectations. The subscriber database had grown to include nearly a million job seekers, but job listings were growing more slowly than Cenedella had hoped. Why weren’t recruiters signing on in greater numbers? The job seekers were there, and in Cenedella’s view, the service was best of breed by far. Not only that, but it was free!
In July 2006, as part of a quarterly “deep dive,” Business Development Manager Michael Shafrir helped conduct a thorough investigation into the recruiter side of TheLadders’ marketplace. The
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
908-061 TheLadders (A)
8
inquiry sought to uncover trends in recruiter activity, calculate key statistics, and collect information on the sales team’s interactions with recruiters.14 Ultimately, the deep dive team hoped to pinpoint strengths and weaknesses of the recruiter experience and determine what was motivating their behavior.
The deep dive revealed some telling features of the recruiter base. Only 20% of recruiters were corporate hiring managers, while 80% were from outside recruiting agencies. Furthermore, Fortune 500 jobs seemed to be underrepresented. Since available data indicated that one-third of jobs that
paid over $100,000 were at Fortune 500 companies,15 presence on TheLadders by top companies was unacceptably low. Of the corporate recruiters, few came under any corporate mandate to use TheLadders. Instead, many were “pirate recruiters”—individual users who found TheLadders, loved it, and used it regularly. Managers often did not know their recruiters were using TheLadders, and managers typically had not authorized pirate recruiters to join TheLadders. But that didn’t matter because TheLadders was free.
To gain some insight into satisfaction levels, the deep dive team looked at retention rates—i.e., how likely it was for recruiters who had used TheLadders in one quarter to return the next. For agency recruiters, retention rates were good—above 80% retention from quarter to quarter. For corporate recruiters, retention rates hovered around 50%. This rate seemed surprisingly low, considering the success they appeared to be having. Shafrir described what he considered a representative example:
In Q2 ‘06, a corporate recruiter for a top technology company hired 15 people using TheLadders. The service was free, so by avoiding headhunters, the recruiter must have saved over $50K per person. She blogged about it, raved about it. How many people did she hire the next quarter through TheLadders? Zero. It turned out her company had made a policy decision not to post on free boards.
A similar picture played out in activity levels. Agency recruiter activity levels were high. But corporate recruiters posted significantly fewer jobs and returned to TheLadders less often. (Exhibit 7 analyzes recruiter engagement for agency versus corporate recruiters.) Furthermore, corporate users tended to post jobs and wait for candidates to respond to them, rather than search the database of job seekers and reach out to appropriate candidates. This difference in recruiter behavior affected match rates: When recruiters contacted candidates, candidates were very likely to respond, and the likelihood of a successful match was much higher.
The deep dive also indicated that corporate recruiters were using TheLadders as one tool of many. Notably, recruiters sometimes put TheLadders aside and occasionally forgot about it. For the typical big company, TheLadders was not an integrated part of its recruiting strategy.
Charging Recruiters
Marc Cenedella was frustrated that despite the excellent free service, and despite high marks from those recruiters who tried TheLadders, corporate recruiter sign-ups remained sluggish. The story of one recruiter was telling:
I’ve signed up for TheLadders and browsed the list of candidates. It looks great, and I have heard that people have had success hiring with it. But we use Monster in our department. Look, I hate Monster, but we have a national contract, so we have to use it.
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
TheLadders (A) 908-061
9
After reviewing the results of the deep dive, Cenedella wondered whether TheLadders actually discouraged corporate use by offering its service for free. Even if corporate recruiters found TheLadders helpful, their companies had no infrastructure to encourage regular use and to develop loyalty. But if TheLadders were a paid service, employers that did choose to sign up would build the fees into their budget, integrate it into their recruiting process, and use it more actively. After all, when you pay for something, you’re not going to throw it away, Cenedella argued. And of course, recruiter fees would represent a new and steady source of revenue.
Charging recruiters would represent a significant shift in TheLadders’ business model. The company would have to devise a pricing structure. Who should be charged and how? Corporate recruiters, recruiting agencies, and small independent recruiters might have different needs and different levels of willingness to pay. Was there a way to charge these users differentially?
It was also unclear what services to charge for. Should TheLadders charge on a per-posting basis? Charge separately for posting, for searching the job-seeker database, and for other services? Offer an “all-you-can-eat” fee that would entitle recruiters to post unlimited jobs and use all the services? And if TheLadders started to charge, would it need to augment its services in some way, or were existing offerings sufficient to justify the new costs?
In addition to the question of which services to charge for, there was also the question of the proper range of fees. TheLadders created enormous value for its customers, Cenedella reasoned. According to internal estimates, Fortune 1000 companies spent an average of $12 million a year on external recruiters. If TheLadders could reduce that cost even partially, savings could easily reach millions of dollars per year per company. If a company made five hires per year using TheLadders, it could save $250,000 in fees to agency recruiters, and the value to the company of making good hires would be far more than that. Furthermore, a high price would signal TheLadders’ position as the premier market for high-end jobs. So charging fees in the six-figure range did not seem out of the question. On the other hand, the company was in a crucial period of growth, and a switch to a fee- based model could significantly curtail recruiter use, at least in the short term. TheLadders could always expand efforts to “harvest” jobs from other sources to bolster its listing inventory. But harvested jobs might not be as valuable as active recruiters who could contact job seekers and otherwise contribute to the ecosystem.
Finally, any attempt to charge recruiters would require a challenging transition—both internally and from the perspective of the community. Internally, the sales team would need to quickly shift from “selling” a free product to marketing a premium-priced product. In the eyes of the recruiter community, the move could be seen as downright radical. To date, not only was it free to post job openings, but TheLadders had also heavily marketed this feature. (See Exhibits 2, 3, and 4.) Cenedella knew of numerous free-to-pay transitions that dramatically reduced sign-ups: Yahoo Auctions, Salesforce, New York Times Select. Cenedella worried: “Once users expect to get something free, they are not happy about paying for it. Our reputation is on the line.”
Cenedella reviewed the recruiter and job-seeker growth charts (see Exhibit 8) and took a deep breath. They didn’t look bad and they never had. But could TheLadders do more? Cenedella wondered aloud, “Is this the step we need to get to the next level?”
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
908-061 TheLadders (A)
10
Exhibit 1 “What if I Make Less than $75K?”
Source: TheLadders.
Note: This window appeared if an applicant reported current earnings below $75,000.
Exhibit 2 TheLadders Works for You (December 2004)
A jobs site for the serious $100k+ job seeker
TheLadders works hardest for you, the job seeker. Unlike other job boards, we don’t charge employers to post jobs on our site. This benefits you because it allows us to choose the best quality jobs from the largest pool of employers. We’ll never post phony ads or non-existent positions—just real, open, high-level $100k+ jobs.
TheLadders gets your resume to the top of the pile
What’s a recruiter’s number one problem these days? Too many resumes. Open access postings have created an over-abundance of job applicants who are under-qualified and who will apply to any job out there, no matter how unlikely they are to land it. Who loses? You, the serious job seeker whose resume is buried in a pile of garbage.
Our Premium service, only $35/month, is geared towards the active, high-level job seeker and offers over 600 high-caliber jobs every week. Most importantly, it keeps out the non- serious, unqualified job seeker. By charging a nominal subscription fee, we shut out the hucksters who apply to any free job, no matter how far out of their reach—and make sure your resume gets the attention it deserves.
Source: Excerpted from TheLadders website, http://web.archive.org/web/20041209041432/www.theladders.com/learn more.phtml, December 9, 2004.
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
TheLadders (A) 908-061
11
Exhibit 3 “Paying to See Job Listings Gets Me Down”
Ask Marc – The Customer Service Blog of SalesLadder.com – January 22, 2004
Marc,
I have to say, your website is somewhat discouraging. You see a job you like, and there is really no way to get access to it except for paying. So, I have to pay to keep applying to jobs. It doesn't help when you are unemployed.
Karen
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Hi Karen,
You cannot use free methods to get a $100K+ sales job.
Just like a company needs to invest in great, talented salespeople to get their best results, YOU need to invest in marketing YOU to get the best results on your job search.
So please bear with me a moment and let me explain why it’s better for you to pay than the company to pay, and how our system ultimately saves you time and makes you money. . . .
When the employer is paying, they make the rules:
Your resume goes where they want it to: the black hole.
Sure, you can apply for jobs for free, but then so can Doug the Dishwasher. And the problem is, he does. So your great resume is stuck along with the 999 wrong ones.
When you pay, we make the rules:
I won’t accept any jobs under $100K. Each week, we get dozens of submissions, I reject about 25% of them because they are not $100K+ jobs.
If they don’t check the $100K+ box, the job doesn’t even get in to see me.
We don’t accept money from hiring companies—that means you’ll never see crummy jobs on SalesLadder because we wanted the fast buck.
Because SalesLadder subscribers are higher quality than those on the big job boards, recruiters pay attention to our resumes first. That works in your favor.
We save you time, money. If you’re making $120K / year, being out of work 1 month costs you $10,000. The most expensive mistake you are ever going to make is UNDERSPENDING on your job hunt. For each month you stay out of work, you’re losing yourself $10,000.
Source: Excerpted from “Ask Marc (blog), January 22, 2004, http://web.archive.org/web/20040130022310/askmarc .salesladder.com/.
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
908-061 TheLadders (A)
12
Exhibit 4 Who We Are—June 2004
We don’t accept money from employers. All bona fide $100K+ jobs are accepted for publishing in the newsletter.
Why is that important? That means we are never tempted to take shady jobs from shady people. That means that you see more, true, $100K+ jobs from across the country and across the globe sooner than on any other site, in any newspaper, or from any headhunter, anywhere.
Source: Excerpted from TheLadders website, “Who We Are,” http://web.archive.org/web/20040610014634/www. theladders.com/about.html, June 2004.
Exhibit 5 TheLadders’ Function-Specific Sites
TheLadders
FinanceLadder
HRLadder
LawLadder
MktgLadder
OpsLadder
SalesLadder
TechnologyLadder
UpLadder
Source: TheLadders website, November 2007.
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
TheLadders (A) 908-061
13
Exhibit 6 TheLadders Growth
Subscribers Paid Subscribers Approx % Growth*
Recruiters Job Listings
December 2004 219,591 2,009 87,243
December 2005 617,543 200% 9,506 243,031
December 2006 1,129,295 60% 25,825 349,594
December 2007 1,738,091 80% 39,242 454,697
Source: TheLadders.
* Paid subscriber quantities are confidential. Percent growth is approximate.
Exhibit 7 Recruiter Engagement
Recruiter Type Average # Sessions
per Recruiter Avg # Clicks per Recruiter
Avg # Seconds per Session
Avg # of Jobs Posted
per Recruiter
Agency 21.93 25.38 912.92 12.58
Corporate 10.40 23.68 853.06 5.12
Source: TheLadders.
Exhibit 8 Number of Applications per Job
0
1000
2000
3000
4000
5000
6000
7000
8000
0 1 2 or 3 4 to 7 8 to 15 16 to 31 32 to 63 64 to 127 128 to 255
Number of Applications
N u
m b
e r
o f
J o
b s R
e c e iv
in g
t h
a t
N u
m b
e r
o f
A p
p li c a ti
o n
s
Source: TheLadders.
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
908-061 TheLadders (A)
14
Notes and References
1 John Wohlford, Mary Anne Phillips, Richard Clayton, and George Werking, “Reconciling Labor Turnover and Employment Statistics,” Bureau of Labor Statistics, 2002.
2 CareerXRoads.
3 Casewriter analysis based on hotjobs.com.
4 See Kathleen McGinn and Nicole Nasser, “Yahoo!: Becoming a Competitor in the Career Listings Space,” HBS No. 903-071 (Boston: Harvard Business School Publishing, 2009).
5 TheLadders analysis based on internal research; and Emmanuel Saez and Thomas Piketty, “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118, no. 1 (2003): 1-39.
6 “TheLadders Secures $7.25 Million in Expansion Capital,” TheLadders press release, November 8, 2004.
7 Online Recruiting Strategies—February 2001, http://www.hunt-scanlon.com/newsarchives/orsarchives/ 2001/feb.htm.
8 Self-reported on LinkedIn website, http://www.linkedin.com/static?key=company_info.
9 “LinkedIn Launches Relationship Powered Job Network,” LinkedIn press release, March 1, 2005.
10 Aaron Ricadela, “LinkedIn Reaches Out,” BusinessWeek Online, January 29, 2007.
11 “Hiring Products: Why Monster?” http://hiring.monster.com/products/WhyMonster.aspx.
12 “Solutions for Employers”—CareerBuilder, http://www.careerbuilder.com/jobposter/.
13 “How Does Job Posting Work on HotJobs?” http://hiring.hotjobs.yahoo.com/hjss/how-it-works.html.
14 Although TheLadders did not charge recruiters for access to job seekers, TheLadders used the term “sales” to describe its relationship with recruiters. Recruiter liaisons were said to be “selling” recruiters on TheLadders approach, even though recruiters were not charged to participate.
15 Internal TheLadders estimates based on data from the Bureau of Labor Statistics.
For the exclusive use of y. zheng, 2022.
This document is authorized for use only by yunyin zheng in Marketing Strategy - W22 taught by SUBRAMANIAN BALACHNDER, Purdue University from Dec 2021 to Jun 2022.
