Since Zillow rolled out updates to its Premier Agent program in April, agent advertiser churn has been an issue, according to Zillow Group CEO Spencer Rascoff.
The changes to the program meant Zillow first verifying the leads then connecting them directly with agents, as opposed to sending agents a high volume of low-quality leads.
“Our third quarter Premier Agent revenue was lower than our guidance because of higher than expected advertiser churn,” Rascoff said, on the third quarter earnings call. “Not all of the changes we made were well-received by our advertisers.”
The reported churn has led to less than expected company revenue and a nosedive in stock this week, dropping Zillow’s value per share from $40.75 at market close on Tuesday to trading around $30 per share the rest of the week.
Wall Street doesn’t seem to be happy with what the company has dubbed PA4, but how do the actual agents using the program feel about it?
Parker Pemberton, a Realtor with Pemberton Homes Team at Coldwell Banker Burnet, said through PA4, his brokerage has gotten better quality leads, and it has led to better use of his time and systems.
“The leads on PA4 have been much stronger and much more serious,” Pemberton said. “Keep in mind we’ve been on this system since July, so we experienced decreased lead flow like everyone else, but we kept our success up by answering the phone, committing to our follow up and being ready for that lead every time.”
Pemberton also thinks it’s too early to bail on Zillow, especially as it works through changes in order to improve its product and experience for the consumer.
“Having a 48 percent answer rate among Premier Agents is awful, and I understand why they have attempted to go to this system,” Pemberton said. “I’ve been with them for some time and have worked through other changes, and [Zillow] has never let me down.”
VeronicaFigueroa, a broker at RE/MAX Innovation, has also been happy with the changes. She was one of many to express that sentiment in a thread on Inman Coast to Coast that garnered dozens of mostly positive responses.
“Our connections are higher quality, and it’s giving our agents an opportunity to have deeper conversations rather than being distracted with noise,” she wrote on Facebook. “Our agents are excited to answer.”
Micah Harper, a broker at Exquisite Properties, has had PA4 in his Texas market since Oct. 11 and has also seen the expected reduction in leads, but his conversion rate has been high, so he likes the changes.
“Connections started slowly as you would expect since there is a lead time required to qualify buyers,” Harper said. “The flow of connections is now matching the expected volume of 25 percent to 35 percent of our previous raw leads.”
“Overall 70 percent of connections have resulted in appointments, and just over 50 percent of those appointments are in escrow,” Harper added.
Others have had tremendous early success with the program. Melody Smith, the broker-owner of Melody and Associates said her brokerage currently has a 100 percent appointment ratio.
Some agents are split on what the changes have meant for their business and consumers, however.
“I’d say the leads are better quality, however, I’m finding that buyers are really confused by it,” said Emily Kubichko, an agent with Pinkham Realty, said. “They don’t know why there’s a contact prior to talking to me, and they think I’m the listing agent.”
“I mean, they always think we are the listing agents, but I am noticing confusion from them because they talk to someone, wait on hold, then talk to another person that still may not have all the answers about a property,” Kubichko added. “I’ve had to change my initial conversation with them.”
Brandon Doyle, an agent with RE/MAX results, said PA4 recently rolled out in Minnesota, and he believes pricing and projections need to be adjusted because his brokerage is only getting about 20 percent of what it was promised.
“Quantity of opportunities is way down and much less than what they had projected,” Doyle said. “Cost went through the roof, but it is too early to tell what conversion rate will be compared to before.”
Amit Bhuta, a real estate agent with Compass in South Florida is not happy with the changes. He says he had a vetted lead sent to him, and it was someone on the other end trying to sell him a yellow pages advertisement in India.
Michelle Manter, the broker-owner of Manter Realty Group at Keller Williams Realty said her leads are down 75 percent since the change, and she hasn’t found the quality of lead to be any better. At the same time, her spend with Zillow is the highest its ever been with an over-saturated market.
“I was with [Zillow] for 9 years and am now looking to other online lead gen sources to fill the void, no consideration for the agents keeping them afloat,” Manter said.
In response to the advertiser churn, Zillow is making even more tweaks to the program, by reducing the number of screening questions it asks prospective consumers and reintroducing its up-funnel email leads of consumers who are not yet ready to transact, so agents can incubate those leads themselves.