Call it a little Spring cleaning. Redfin announced on its corporate blog this week that it has removed 50 partner agents from its network, a move that CEO Glenn Kelman tells GeekWire will help ensure that the online real estate startup continues to be a “great customer-service company.” Forty two agents were removed for poor performance tied to customer reviews, while eight others were canned because they attempted to game the Redfin system by creating “fake” reviews.
“We have always asked agents to leave for poor service, but fraudulent reviews are a new problem,” Kelman tells GeekWire. “And no matter how often we warned partners that less-than-stellar service would lead to their being removed from the site, they are always shocked by the decision, so the blog post was mainly to reinforce the process to them.”
It is not uncommon to see turnover in the real estate business. But what’s interesting is Redfin’s open approach to a touchy issue. Kelman’s post appears to be a warning to other partner agents in the network to play by the rules and keep the customer experience as the No. 1 priority.
Redfin had about 300 to 400 agents in its partner program before the purge, and Kelman notes that they only accept 35 percent of applicants.
The partner program — as opposed to the full time agents Redfin employs on staff — are critical to the company’s success as it looks to expand into new geographic regions.
However, I was surprised to learn that the program — launched in February 2009 — makes up just five percent of the company’s revenue. Kelman said he never anticipated that it would be a big revenue driver, adding that it has already exceeded expectations.
The key to the program, however, is that it allows Redfin to scale the business by quickly entering new markets on the periphery of the urban areas it serves.
“…We need referrals to build a profitable business, just because it killed our margins trying to put agents in Puyallup, and staffing up for the three weeks in May when everyone wants to tour properties, and always having someone on hand to handle the weird stuff, like acreage for horses,” said Kelman, adding that partner agents make the direct Redfin business much stronger.
Over time, Kelman said that the company — which currently offers its service in 17 markets across the country — will add its own agents in places like Kitsap County. But, until then, it will rely on high-quality partners.
“Everyone at Redfin, and everyone on the board, considers the partner program a huge success, in its own right, and for what it did to our direct business,” said Kelman. “…One day, when there’s enough demand in Kitsap, a Redfin agent will be over there, to give customers that choice too. Redfin will grow slowly compared to some online businesses, but it will never stop growing.”