We Turned Our Revenue Model on Its Head to Save the Company
By Caitlin Elsaesser
Sara Sutton Fell founded FlexJobs in 2007 when, upon re-entering the workforce after staying at home with her children, she discovered just how difficult it was to find quality telecommuting job opportunities. Based in Boulder, Colo., FlexJobs provides job seekers with vetted opportunities for telecommuting, part-time, freelance, and flexible jobs. Today, with the help of a staff of 17, the company has over 25,000 subscribers and a total of 5,000 job listings.
The Problem:
Fell launched the company using the standard business model that almost all job websites use: Revenue would come from charging the employers to post jobs. However, within a few months, Fell realized the model just didn't work. In a market where the number of job sites had exploded, Fell had difficulty reaching HR departments to find quality jobs to post. On the job seeker side, because it was free and easy to join, applicants on the site were generally of low quality and they applied to every job on the site -- including ones they weren't qualified for.
The Background:
In the first few months of the company, Fell tried to make the revenue model work. She had a background in the employment industry, and at her previous company, some employers paid five figures to post a job for a year. But that was years ago. In the time since she had been out of the employment industry, the number of job sites had ballooned. She found that companies concealed the names of their HR employees to avoid being inundated by requests for job postings.
Fell eventually realized that the standard business model for job websites simply didn't apply to FlexJobs. In her previous work for an employment site, finding her target customer was easy -- she could research the companies that employ a high number of entry-level jobs. However, for the category of flexible jobs, there was no one company to target.
"For every real flexible job opportunity out there," says Fell, "there are 10 scams. I realized we could provide a real service by finding quality flexible job opportunities and serving them up on a platter for our users."
The Solution:
Fell decided to turn her revenue model on its head: charge job seekers a monthly fee --$14.95, which she determined by looking at other similar companies -- and allow employers to post for free. FlexJobs would provide a database of flexible jobs that had been researched and screened.
Though confident in the idea, Fell was well aware of the challenge of communicating the change to her users. "The change was a delicate process," she says. "Job seekers are in a tough spot, so we went about it with as much sensitivity and compassion as we could."
Current users were grandfathered into the new system; they received the first three months of service for free. If they liked it, then they would pay to keep using it. The company also decided to advertise a satisfaction-guaranteed policy to users. Anyone unsatisfied with the service could ask for a refund.
Though Fell received a few angry emails from customers, the new model was a success. The quality of users increased dramatically. Before the switch to paid subscriptions, FlexJobs had about 20,000 users. In 2008, the first year of the transition, FlexJobs went from zero to 1,700 paid subscribers. In 2009, there were 14,000 subscribers. Today, FlexJobs has over 25,000 subscribers.
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