For Zillow's Premier Agent program, should we focus on signing up more agents to increase revenue or limit the number to maintain higher quality leads for existing partners?

Introduction

The trade-off we're examining for Zillow's Premier Agent program is whether to focus on signing up more agents to increase revenue or limit the number to maintain higher quality leads for existing partners. This scenario involves balancing short-term revenue growth against long-term partner satisfaction and lead quality. I'll analyze this trade-off by examining the product ecosystem, key metrics, and potential experiments to inform our decision.

Step 1

Clarifying Questions (3 minutes)

• Based on the current market conditions, I'm thinking lead quality might be a critical factor. Could you provide more context on the current lead-to-close ratio for Premier Agents?

Why it matters: Helps understand the current effectiveness of the program Expected answer: Around 2-3% lead-to-close ratio Impact on approach: Lower ratios would prioritize quality over quantity

• Considering our revenue model, I assume Premier Agents pay a subscription fee. Is there also a per-lead or success-based component to the pricing?

Why it matters: Influences the balance between quantity and quality of agents Expected answer: Combination of subscription and per-lead fees Impact on approach: Would affect the trade-off between more agents vs. better leads

• Looking at user behavior, I'm curious about how home buyers typically interact with Premier Agents. What's the average number of agents a buyer contacts before making a decision?

Why it matters: Indicates the level of competition among agents and potential for lead saturation Expected answer: 2-3 agents on average Impact on approach: Higher numbers might suggest room for more agents

• Regarding our technical capabilities, how easily can we adjust our lead distribution algorithm to balance quality and quantity?

Why it matters: Determines our flexibility in implementing different strategies Expected answer: Moderate flexibility with some development time required Impact on approach: High flexibility would allow for more nuanced solutions

• Considering our current team capacity, how much bandwidth do we have for onboarding and supporting new agents versus improving services for existing ones?

Why it matters: Helps determine the feasibility of different growth strategies Expected answer: Limited capacity, primarily focused on existing agent support Impact on approach: Would lean towards improving quality for existing agents