The Closing of Zoocasa: A Lesson Learned

Posted by:

A real estate service (brokerage) as an online platform lacks the one key ingredient that it needs to gain traction, increase revenue and build a profitable business – personalized customer service. By not focussing on the relationship building aspect of the business, and relying on a discount and incentive structure to attract buyer and seller clients, Zoocasa created a “one-off” model of trying to build their business based on the individual transaction and one-time client and not the comfortable and personalized experience that most successful realtors create to build their business.

Real estate brokers that own their own brokerages understand that there will always be competition but by establishing a reputation for excellence in customer service and creating a business that is built on high standards, and not discounts and incentives, provides the foundation for their business to become successful.

While there can be no doubt that Zoocasa’s “hand-picked agents” from across the country have successful real estate businesses of their own, by essentially purchasing leads and offering rebates, the process is not built upon continuity and referral. The Zoocasa model of business usually ends up consuming itself by not creating the happy, engaged and returning clients that provide valuable referrals to their brokers. They are always chasing new business and not building the foundation that sustains and grows a business. It’s the 80/20 rule where 80% should be returning customers and referrals and 20% should be new clients that sustains a brokerage business.

The control of the buyer-seller process that Zoocasa attempted, and failed, to dominate in its respective markets should be a wake-up call to every brokerage does not personalize the experience through the customer service focus that should be the foundation of every brokerage.

While realtors rely heavily on technology to smooth the transaction process, to generate the reports that help to set selling and offering prices, it is the one-on-one experience that builds a consumer’s confidence and allows realtors to build their businesses.

An internet platform in and of itself cannot provide a viable substitute for this personalized experience that is demanded by today’s consumer. Online testimonials have little weight when compared with people talking amongst themselves and when they are seeking a reliable referral to a qualified real estate broker, which is the goal of every successful real estate sales representative.

There is no doubt that a home purchase is often the largest transaction a consumer will make in their lifetime. The reliance on the professional advice, guidance and experience of reputable real estate brokers drives the home ownership process to successful and happy conclusions every day. Happy people like to talk about their positive experiences to their family, friends and co-workers. This creates a referral network that builds a realtor’s business that is based on the positive experience of the client, long after the thought of a discounted commission or rebate has faded away from the client’s memory.

A real estate broker’s own brokerage, and name, allows them a greater control of their business, direction and future. There will be challenges ahead. Over time we have seen that long-term challenges are not based on the competition created by incentives and discounts but in building a sales team that endeavours to always creating a happy client experience that builds the business.

What we know from reports
Rogers Communications states that “Zoocasa is no longer a good fit with the company’s core focus area” Allison Fitton and will be shut down (website and mobile app) on June 22, 2015

Zoocasa was sued by Century 21 for scraping their listings. Their model was intended to be “performance-based marketing opportunity for high performance, customer service focussed agents”.

John Andrews, a professor of real estate at Queen’s University, said Zoocasa was the most likely of alternative agencies to succeed and its demise points to the dominance of the MLS system. “I’m not really surprised by the [shutdown.] The MLS system really had a very strong market share and the various alternatives to listing don’t necessarily provide the whole host of agent services to their markets,” he told CBC News. Selling or buying a home through a service such as Zoocasa can take a lot of legwork and relies on the homeowner or buyer knowing their local market, Andrews added. “The fees they were charging were really very low, so unless they were able to penetrate that MLS market to a great extent, their revenue was pretty limited,” he said.

Losing an estimated $1 million a month for technology and platform costs, revenues did not grow to offset the costs.
Rogers purchased Zoocasa in 2008 as a listing service and in 2013 became a brokerage and started the referral side of the business matching clients with hand-picked real estate brokers. It ran afoul of TREB rules by posting “confidential sold information” on its website, a practice said to violate the privacy of sellers by making the information open and accessible. Realtors are allowed to privately communicate the same sold information to their clients via phone, email and fax.