Zillow Inc (Z) Zeros In on Mobile

Byrnes: For Zillow Inc (NASDAQ:Z) investors out there, what kind of metrics do you think they should be looking at, as far as how to evaluate the business?

Schwartz: We spend a lot of time talking to investors about the TAM, the total addressable market. In our approach to understanding TAM, we’re at a relatively low point right now — or a youthful point — in our impact on total transactions.

The thing we look at is, how many leads do we generate? We have upwards of 30,000 Premier Agents. We send them about 15 leads each month. We think about 3% of those, currently, convert to a transaction so we’re somewhere between 4 and 5% of the transaction side in the United States today.

There’s a ton of leverage, a ton of leverage, if we can use our investment in software and tools and training for our agents to increase that conversion rate from 3% to 4% to 5%. We’ll impact more transactions, our agents will be more profitable, they’ll spend more on advertising with us, and there’s this wonderful self-reinforcing cycle that occurs.

The article Zillow Zeros In on Mobile originally appeared on Fool.com.

Brendan Byrnes has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Zillow.

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