A young Treasury economist eventually found a way to create “a perfect market” with his fledgling online business. The hard part was learning about business.
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Entrepreneur: Justin Butterworth
Company: Rent-a-home.com.au
Business type: Online, short-term, furnished property market
Founded: 1999
Employees: 4
Head office: Sydney
Contact details: +61 2 9319 0888
The Rent-A-Home Story
Before the 2000 Sydney Olympics, Justin Butterworth noticed that hundreds of Sydneysiders wanted to hightail it out of the city and lease their homes to visitors. But they had no simple way to contact visitors looking for rental accommodation.
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Key learning points:
- Continuous improvement - Sit with your clients and watch how they use your service. Keep asking: “How can it be better for you?”
- Sales efficiency - Do your systems tell you how efficiently you convert enquiries into sales? If not, how can you do it?
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So Justin left his job in the research department of the NSW Treasury and set about creating a market for short-term furnished properties. He says: “My colleagues were just shaking their heads thinking, ‘Oh, he was such a promising young graduate. Every year he was promoted and he was going to be something’.”
Justin’s market became www.rent-a-home.com.au - a website that connects suppliers with consumers and also provides a payment system by holding the clients’ money in a trust account. This differentiates rent-a-home from its competitors because customers can deposit funds directly with the company, which settles with real estate agents on their behalf. Justin believes this increases reliability and accountability.
The Challenge
As a treasury researcher, Justin was far more experienced in quantitative and qualitative analysis than in web-based business or the real estate industry. He says: “There was a lot of learning by doing.”
Justin bought Australian Bureau of Statistics data to help analyse gaps in the property market and find good locations for his product. But nothing could have taught him how to develop relationships with agents, how agents and consumers would use the website, or how to turn browsers into purchasers.
The fledgling internet in 2000 also limited Justin’s young company. Dot-com companies were notoriously unstable and search engines were still in their infancy, making it difficult to develop a brand or raise awareness.
The Solution
When Justin realised that he needed real estate industry experience, he began working closely with managing agents. He would sit with them to monitor their use of the site and talk to them about how it could be tailored to their needs. He still makes a point of reviewing each of his suppliers’ wishlists for his site regularly.
The company developed a website performance report, showing the number of page views, number of quotes, bookings, and conversion rates. “Monitoring the website enables us to really monitor performance. It also creates a perfect market because [we] can see what price the property would have been taken up at and the level of supply, enabling us to locate the equilibrium point - the price at which demand matches supply.
Business picked up in 2001. The real estate industry was becoming web savvy; Realestate.com and domain.com were becoming widely used, and agents had access and the skills to use the technology. Approved managing agents could now log on to rent-a-home and list properties without any contact. Justin says: “Our site is now a bit like eBay - property managers can join and set up shop straight away.”
The business also began to use technology more efficiently. It upgraded to broadband, which improved productivity. It began to run common words and phrases used in other countries as key words in search engines, such as the American colloquialism “vacation rentals” or the British “holiday letting”. It discovered that SMS technology was an effective form of communication for its clients (mainly executives and business travellers). It also has a free newsletter, which keeps clients informed about specials and new tools on the website.
Rent-a-home’s business systems have steadily been automated, allowing the business to cope well with the increased workload. “We now do in an hour what we used to do in a month.” Its web-based application system tracks each client’s history, enabling rent-a-home to provide personal service and encourage repeat business.
The Result
As at August 2006, Rent-a-home.com.au now has 5000 properties, 20,000 site visitors a week, 450 property managers and 28,000 clients. Justin says: “We are running on 100% growth on last year, and that’s our target, that’s what we are comfortable with.”
Justin constantly monitors its progress and develops the website to make it more profitable. He says that the success it has achieved relates to the ability to quantify the conversion rates of each property and respond to results. The business was winner of the Australian Government Micro-Business Award at the Telstra Business Awards NSW in 2006, the Real Estate Institute web site of the year in 2002 and 2004, and finalist in the Telstra Small Business Awards in 2005.