Zillow Group: Premier Agent Pricing Strategies

I joined Zillow in late 2009, when the company was just about a hundred people and I think it was maybe third or fourth in terms of traffic, among North American US real estate sites. I started out as the Director of Sales Strategy & Operations and, over the course of the next seven to eight years, the business grew significantly and went public. We became the number one real estate website. Our monthly revenue went from in the order of hundreds of thousands of dollars to tens of millions of dollars and I was, effectively, the General Manager of that business.

The core value was really providing leads to real estate agents. Basically, what we would call transaction ready customers; so not just customers who are vaguely interested in buying or selling homes but customers who are actually interested in visiting homes and are ready to purchase or sell a home.

That’s approximately right. Our business model, in terms of how we charged and the mechanism by which we charged, changed a lot over the course of the time while I was there and it’s still changing now. Essentially, that’s right; agents would pay a certain monthly fee up front and, based on that fee, they would get a certain portion of leads.

In the early days, we talked to a lot of agents just to get their feedback on what they wanted and what they were interested in and when I joined, we actually had a different product which was display ads for real estate agents. On the Zillow website, you would see an ad that says, Joe Schmoe Real Estate Agent and it would have their picture and their number etc. What we found pretty quickly is that agents weren’t getting a lot of value from that; customers weren’t really interacting with the ad. By interacting with agents and talking to them, we learned that the value wasn’t there and that’s when we started to switch gears and focus on this new product. We were really focused on leads and transaction ready customers.

A lot of the communication with agents happens through our sales force who try to sell the product and renew the product. So if we’re getting feedback that no one wants to renew then, obviously, we’re going to react to that. That was in the early days. Later on, we built and developed other mechanisms for making sure we had a clear line of communication with agents and we got very constructive, continual feedback.

Typically, their perception is they would not be receiving high return on investment for their leads. Part of the challenge is that many real estate agents aren’t focused on finance or quantitative analysis; they don’t do that. They may make more of a judgement based on the leads they received over the last month versus the value of the leads they would have received over the last six months.