Technology is the great equalizer. It transforms business, revolutionizes industries, and creates economies of scale for even the smallest competitor.
Some industries have benefitted from technological advancement: travel, car rentals, and consumer retail. These days a large percentage of the transactions in these industries either start or end with an online purchase.
Yet, over the decades, the real estate industry was sheltered from the impact and disruption of technology. While the internet made it easier for buyers and sellers to access property information, almost all transactions are still completed offline.
The residential real estate sector is quite slow to embrace technological innovation. This reluctance is due, in part, to a large amount of market control that a few large brokerages have on North American real estate. These big businesses have large marketing budgets which are used to create and maintain the old business model that restricts consumer access to data and information, thereby securing the Realtor’s role as gatekeeper.
But this old-school gatekeeper business model is unsustainable — at least, according to Zillow and Trulia in the U.S., and according to Ryley Best and Jason Billingsley, two of the co-founders for the Canadian real estate tech disrupter Zolo.
Canada’s real estate market ready for change
In a market with 14-million homes, a national population of 36.7 million people, and only 120,000 licensed Realtors, Best and Billingsley and their partner and co-founder, Barry Allen, saw an opportunity for change. They realized that buyers may never feel comfortable with an online house purchase, but that didn’t mean the industry couldn’t evolve to create a better process.
Rather than focus on lowering transactional costs (a tactic offered by discount brokerages) or creating marketing campaigns, Best, Billingsley and Allen identified an opportunity in the way brokerages and agents attract and retain clients.
“We realized if we created a business that delivered the fastest and best user experience for home discovery, especially on mobile, home shoppers would become buyer prospects,” explains Billingsley. “Better still, this business model would off-load lead generation from being an agent’s responsibility, leaving Realtors to serve customers’ needs better.”
In traditional real estate brokerages, Realtors receive brand-marketing and back-office support. However, each agent is responsible for building their own business — forcing each Realtor to take on the roles of marketing director, social media professional and executive planner. It’s a business model that forces most agents — even the successful agents from large, well-respected brands — to operate as a one-person show. For many agents, these additional roles end up taking time and attention away from the integral role of the Realtor: To guide and service their sell-side or buy-side client.
Zolo is part of this change
Zolo’s solution was to develop a business model that concentrated on attracting potential buyers and sellers. These leads are passed on to Zolo Realtors, professionals who are no longer required to chase the next lead and, instead, provide exceptional customer service to their client. The overall intent of this new business model was to shift the focus back onto the end-user — the homebuyer or seller.
For the Zolo crew, this shift in focus makes sense. “You would be hard-pressed to find another industry where the professional tasked with guiding a client through such a large legal and financial decision is also required to actively drum up business,” explains Mustaffa Abbasi, president of Zolo.
What makes the model work is an intuitive, proprietary lead generation system that, in part, imitates a customer relationship management system (CRM). This Zolo system captures leads and contact information from each potential customer, among additional information.
“Our business lets these real estate professionals better serve customers’ needs — and that’s the future of real estate in Canada,” Billingsley says.
New business model results in exceptional success
Zolo’s business model has been successful. Very successful.
Two years after the initial launch of Zolo in 2012, 50 agents were working for the tech-disrupter, generating $2.4 million in gross revenue. At that time, total traffic to the startup was just over 8 million users — a decent draw by anyone’s standards.
By 2018, however, the numbers were even more impressive. The number of agents had grown 900% (to 500 agents working in Zolo locations across Canada). Better still, this online marketplace generated $20.38 million in gross revenue — a 750% increase in just over five years of operations. Visitor traffic also grew with more than 60 million captured users in the Zolo system — which works out to just over five million visitors each month.
Compare this to industry stalwarts, such as Re/Max and Royal Lepage, each with about 2.5 to 3 million visitors per month, or Sutton with 1.5 to 2 million visitors each month, or Century 21 with just over 1 million visitors each month, and you begin to realize how successful the Zolo business model is for this non-franchised brokerage with a national presence.
The secret of Zolo’s online marketplace is simple: Focus on the consumer experience and make it easy for agents to do their job well.
In Canada, the key is to focus on mobile
Headquartered in Vancouver, Zolo is the only tech-powered national brokerage in Canada; it’s also the only Canadian firm to provide proprietary-based real-time trends and data about pricing and transactions.
But the key to future growth isn’t in providing the same data in the same way as every other firm; it’s in providing the best access to all the information a customer could need while on the go.
“Everyone is going paperless,” explains Billingsley, “so we are doubling down on the mobile experience.”
While more and more end-users use mobile for searching and shopping, a real estate customer’s access to information can be mediocre to poor, in most circumstances. Maps are clunky and slow to load; more information requests result in forms that fail to respond and trying to get more information on current or past property sales lead to page-load errors or unreadable pages.
Thing is, few companies in the real estate sector have successfully embraced mobile-first technology, which puts Zolo at the forefront of where the residential real estate market is heading in Canada.
“Real estate buyers and sellers want information,” explains Best, “so we focus on helping them discover the market, as quickly as possible.”
This doesn’t mean Zolo is moving away from its initial focus: a customer-centric approach. The firm continues to use growth managers — successful agents who act as career coaches to all active Zolo agents — as well as online and in-person training.
“We always ask our agents to stop, think, and ask themselves: What’s the problem you’re trying to solve?” explains Abbasi. “Do this, and the focus quickly lands on the customer, who, in the end, is why we are all here.”