Zillow: 2020 Genius Awards Finalist (Marketing Analytics Growth)
This is the sixth in a series of 12 blog posts showcasing the achievements of the finalists of the 2020 ANA Genius Awards, presented by Neustar. The 2020 Genius Awards winners will be announced at the 2020 ANA Masters of Marketing Conference, held October 21-23.
CATEGORY: MARKETING ANALYTICS GROWTH
It may be the on-demand age, but not much so for real estate. That is until Zillow rethought and expanded its business model to evolve beyond the "search and find" status quo of digital home selling and searching.
Here's how Zillow leveraged marketing analytics and insights to generate a new billion-dollar line of business, exceeding every target the company set.
Creating a new, analytics-driven line of business to deliver a more holistic, customer-centered home-buying experience
Until recently, Zillow's thinking around data centered around housing—not home buyers or sellers, explained Aimee Johnson, Chief Marketing Officer, Zillow. That all changed in 2017 when the company set out to launch a new line of business. They weren't sure what they would offer, but they knew they wanted to start with customers—specifically with solving their customers' problems.
To do that, they needed to gain a deeper understanding of the customer and their biggest challenges.
Through in-depth research, the real estate giant discovered that the biggest pain points boil down to stress and timing. For sellers, specifically, the main stressors involve having to be ready to show their house for an indefinite period of time, while at the same time being up against the constraints of needing to sell their homes within a certain window of time.
"Powered by a lot of insights that came out of a marketing and analytics collaboration, we started to take a broader view of what Zillow could and should do for consumers and really frame up an entirely new business line based on helping them with the actual transaction—how to make the buying and selling process a lot more seamless," explained Krishna Rao, VP Zillow Offers Analytics.
Based on these insights, a new business idea came to light: Zillow Offers, a new program that would allow sellers the opportunity to sell their homes directly to Zillow rather than to buyers directly, enabling more flexibility on the timing of selling their home while reducing the hassle of having to show their home to potential buyers.
Using analytics as the foundation for the new Zillow Offers marketing framework
For the idea to take off, Zillow knew they would need to rely on a world-class marketing program—one that could differentiate Zillow Offers from the larger Zillow brand—to connect with the right customers and that marketing analytics and insights would be the foundation of such a program.
Zillow brought together a cross-functional team that worked together to develop the framework for Zillow Offers over the course of four phases:
- Conducting research and analysis using internally available sales data combined with externally available industry and census data to determine the total available market to make the case for creating a new line of business
- Enhancing the company's existing home data with robust customer data to improve their analytics
- Conducting a series of analytical exercises to inform the marketing program, including developing and executing a custom media mix model (MMM) to optimize budget allocation, integrating machine learning-based property transaction scoring to guide direct mailing efforts, and more
- Creating a comprehensive segmentation study to identify clusters among the estimated 200 million adults responsible for moving decision making, and using this data to enhance the company's analytic models to lay the groundwork for a longer-term goal of achieving $20 billion in revenue
"In a concept test we conducted among target customers, the Zillow Offers concept scored higher than any previous concept we have tested," said Richard Mroz, Director of Marketing Analytics, Zillow. "Customers found the concept so appealing that they immediately wanted to check if it was available in their market."
Based on concept tests and propensity models, the company was able to estimate Zillow's potential share of the estimated $2 trillion potential market.
To improve the company's internal customer data, Zillow promoted a new initiative—encouraging homeowners to "claim" their property on Zillow to help improve their Zestimate, an estimate generated by Zillow's analytics based on publicly available data and proprietary algorithms. This helped generate a pipeline of prospects for Zillow Offers while also improving home data insights powering the overall Zillow Offers program.
Generating $1.4 billion in revenue from Zillow Offers in 2019, compared to $40 million in 2018 and exceeding Zillow's total 2018 revenue
The new Zillow Offers program has exceeded every target the company set—generating $1.4 billion in revenue in 2019 and $52 million in 2018.
At the tactical level, some of the strategies that helped Zillow achieve this success include using survival models to track lead mix quality and return on ad spend (ROAS) and optimize SEM campaigns—boosting budget efficiency by over 25%, and developing a feedback loop with customers based on their customer satisfaction scores (CSAT) to drive ongoing improvements to the Zillow Offers program.
When analytics and insights are the starting point for marketing and business initiatives—as opposed to an afterthought or supplementary tool—they can be used to help identify business opportunities, inform product and marketing efforts, and, as a result, drive growth.
From identifying and forecasting strategic market opportunities to facilitating advanced modeling techniques to guide tactics, marketing and analytics are critical for supporting brand growth.
More about the 2020 Genius Awards Finalists