Business Process Analysis
The Event Simulation Flowchart illustrated in Figure 3 represents the new Virtual Assistant and Premier Agent Assist service for Zillow. The service is an attempt to help agents who are overwhelmed by the volume of sales leads coming from Zillow ads (Wiggin, 2015). L'Eplattenier (2018) explains that Zillow visitors will often contact multiple agents in a sitting, so it's important to respond right away and beat out the competition. These new services aimed at helping agents convert leads into clients (Wiggin, 2015). According to Greg Schwartz, Chief Business Officer at Zillow Group, if we want to sell agents more ads, we have to make it easier for them to operate these leads (Wiggin, 2015). Converting leads will improve the agent's Return on Investment (ROI) (Wiggin, 2015).
The Virtual Assistant service will send a pre-written email or text as soon as the lead comes in (L'Eplattenier, 2018). The email or text message is a short message to introduce the agent to the prospects and asks to set up an appointment (L'Eplattenier, 2018). The Premier Agent Assist will schedule email marketing campaign into the agent's Customer Relationship Management (CRM) system targeted at Zillow leads and contact those lead via phone or email up to 15 times within 30 days (Wiggin, 2015). The service is to provide a substitute for hiring inside sales assistants to convert online leads into clients (Wiggin, 2015).
Figure 3: Event Simulation Flowchart for Virtual Assistant Service and Premier Agent Assist Service
SALES STRATEGY
The sales strategy for these new services is to introduce it to existing Premier Agent subscribers. The initial target is 10% of the total subscribers which equates to 8,914 Premiere Agents (based on 2017 Premier Agents subscription - Zillow.com, 2018). This small number of users will provide feedback on the services' feasibility and viability in the market based on their (Agents) improved ROI and bottom-line revenue. Furthermore, to forecast the additional revenue for these new services, the company utilized a Monte Carlo simulation using the following assumptions:
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Number of Premier Agents = 8,914
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Price of Virtual Assistant = $100/month
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Price of Premier Agent Assist = $500/month
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Number of Assistants = Avg:445 Employees, Max:891 Employees
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Assistants Salary = Avg:$23,000/year; Max:$28,000/year
The Monte Carlo simulation tool simulated 10,000 scenarios. Figure 4 illustrates the statistical summary of the result. The company has a 5% probability of increasing the bottom-line by $428,663,145.00 and 95% probability for $442,026,442.00. Figure 5 displays the normal distribution of the estimated additional revenue.
NOTE: Technology, Equipment and Marketing expenses are not included in the calculation
Figure 4: Monte Carlo Simulation Summary Statistics
Figure 5: Normal Distribution of estimated additional revenue
According to the Data Analysis results, the company has a 78% probability of increasing revenue at a minimum of $430 million and a maximum of $440 million with the addition of these two services shown in Figure 6. The small target of 10% of total subscribers for the initial release of the service is a significant revenue increase to the current advertising service. It will be a win-win for both the company and its current Premier Agent subscribers.
Figure 6: Monte Carlo Simulation Data Analysis
PRICING ANALYSIS
The Virtual Assistant and the Premier Agent Assist will be priced at $100 per month and $500 per month respectively. These new services are an additional charge to the Premier Agent services. At the introduction of the service, the company will offer a three-month free service to current Premier Agent subscriber for both plans - a savings of $1,800. The introductory program will give Agents a chance to use it and realize the value of the service. According to Wiggin (2015), the program should generate a conversion rate of leads to conversations higher than 26 percent. The company's short-term target for subscription is 10% of the total users.
Figure 7: Causal Loop - Zillow's Business Model
Figure 7 illustrates the company's business model in the United States. The main loop of website relevance is the focal point of the company's business - Freemium model. It allows consumers and agents to list properties for free and provide free real estate market analysis using multiple external data. From the website relevance loop, it branches off to add the Premium Services loop where the company makes its revenue with advertisements. It serves Agents/Brokers, Lenders, Builders, Brand Advertisers and Property Managers for promoting their products and services. From the sales of ads, company revenue increases as well as the company's market share. The outside loop of competition could decrease the number of subscribers which then affects the company's revenue. Lastly, as market share and revenue increases, the need for current technology also increases. The demand to provide a highly available and resilient website becomes a necessity.
INTERNATIONAL EXPANSION:
According to Cook (2013), International expansion is something that the Zillow executive team has contemplated over the years. However, it is not in the cards at this point as there is a lot of opportunity in the United States and Wall Street also agrees (Cook, 2013). If the company were to expand internationally, Figure 8 illustrates the international model using stock and flow diagram. Using the U.S model as the foundation of the system, the global expansion will require the company to create new relationships with the international industry - Listing Providers, Data Providers, and New Sales team. Furthermore, the company has to build a new brand along with growing the site traffic to gain market relevance (Cook, 2013). Cook (2013) added that the competition overseas had copied Zillow's U.S. model - Zoopla in the U.K. and Zoocasa in Canada, which boasts a Zoopraisal.