SmartZip has just made a play to boost referrals to real estate agents through recommendations from past clients.
The predictive marketing company has acquired Reach150, a company that offers a referral management system.
At the same time, a key investor in Reach150, Toba Capital, made an equity investment in SmartZip to help integrate Reach150 and SmartZip’s SmartTargeting product and bring the expanded platform to market faster.
Terms of the deal were not disclosed. In an equity investment, the investor takes an ownership stake in the firm.
Inman reached out to SmartZip for additional information, but the company declined to comment on how much SmartZip paid for Reach150, the amount of Toba Capital’s investment, and Toba Capital’s ownership stake in SmartZip.
SmartZip announced it had raised $12 million in debt financing in September, in addition to $25 million in equity financing it had previously raised, bringing its total funding at the time to $37 million. SmartZip declined to comment on the company’s current total financing, but did say that the funds to purchase Reach150 did not come from the $12 million in debt financing.
Avi Gupta
“For relationship and referral-based businesses like real estate and lending, the key to efficient customer growth is to target both new prospects and past contacts with focused messaging that resonates,” said SmartZip president and CEO Avi Gupta in a press release.
“Reach150’s referral engine provides our users a new way to win more business via compelling, original content that can be easily promoted via SmartTargeting’s full-scale marketing suite.”
What SmartTargeting and Reach150 do
SmartTargeting uses data to tell agents which homeowners in their “farm” are most likely to sell at any given time.
In August, SmartZip announced the launch of SphereTargeting (called “SmartTargeting for your Sphere” in their latest press release), which combines predictive analytics and automated marketing with the aim of helping agents get more listings and more referrals from their “sphere of influence” — past clients and contacts.
Reach150’s referral management system includes a mobile app that requests, reviews and publishes recommendations from past clients.
It includes branded profile pages that are continually updated with the new recommendations, “which strengthens the user’s online reputation, enhances search engine rankings and can ultimately yield more clients,” the company said.
In a November 2015 review, Inman tech columnist Craig C. Rowe noted that the Reach150 platform makes it very easy for agents to submit and publish testimonials from clients and for clients to provide that feedback.
“When asked to provide a testimonial, clients are not required to log in or create any sort of account. They complete a couple of simple fields, add their notes and submit. It could be done in under a minute,” he wrote.
“Upon completion, clients are asked if they would like to recommend you directly to other people they know via a large, obvious button on your page.”
Links to agents’ branded profile pages are “ideal social media content,” he added.
Moreover, if a referred prospect browses an agent’s Reach150 page, he or she becomes part of a retargeting campaign, meaning an ad that the agent creates will “follow” them around the Internet, Rowe wrote.
Agents can quickly build retargeting ads from any image on their smartphone.
“As the retargeting campaign kicks-in, the software is actually self-perpetuating your sphere of influence. It’s a closed loop of positivity that gets bigger with every touch point,” Rowe wrote.
“Traditionally, referrals are something most agents love to get, but typically don’t have an actual system for earning. Nor is there are established best practices plan for using them as the basis of your prospecting. Reach150 may be able to change that for you,” he added.
Did NAR get a cut?
Both SmartZip and Reach150 are graduates of the National Association of Realtors’ (NAR) REach tech accelerator. Reach150 was part of the program’s inaugural group in 2013 while SmartZip was the first company chosen to participate in the 2014 class.
Companies that participate in REach are required to give NAR an equity stake of between 2 and 5 percent in addition to paying an up to $25,000 marketing fee.
On March 7, 2013, REach purchased a 5 percent ownership interest in Reach150 for $711, according to NAR’s May 2014 Finance Committee report.
Inman contacted NAR to inquire what happened to its ownership interest when SmartZip acquired Reach150, whether NAR received any money for it and what NAR’s equity stake is in SmartZip.
“We don’t disclose the details of our financial investments,” NAR spokeswoman Sara Wiskerchen told Inman via email.
In an emailed statement, Mark Birschbach, managing director of Second Century Ventures, NAR’s investment arm, said, “One of the significant benefits of REach is the collaborative environment it fosters among current and past REach and Second Century Ventures portfolio companies.
“We feel there is tremendous opportunity for our companies to integrate their technologies or combine businesses to benefit our Realtor members. We believe Reach150 is a great fit for SmartZip and are excited about the services they’ll be able to provide to our members.”
SmartZip did not respond to questions regarding NAR’s investments in SmartZip and Reach150.
In an email, Gupta said the acquisition didn’t have anything to do with the two companies’ participation in REach, “but we were initially introduced to Reach150 during our stint with the NAR REach accelerator, and have come to know the company and its solutions since then.”
‘A natural fit’
Both SmartZip and REach 150 are based in the San Francisco Bay Area. Reach150’s team will be “seamlessly integrated” into SmartZip’s Pleasanton, California headquarters, the company said.
“Reach150 and SmartZip are a natural fit,” said Dan Hodges, the founder of Reach150, in a statement.
“The clients we both serve seek simplicity nearly as much as value from their vendor partners. Our combined company will enable us to provide more comprehensive services with a higher level of support and integration.”
Existing Reach150 customers will continue to have access to the current Reach150 platform while gaining access to SmartZip’s SmartTargeting system and customer support, SmartZip said.
“As a client of both SmartTargeting and Reach150, I am thrilled that these compatible solutions will be merging and providing my agents with one system to identify, connect with, and win new and repeat business,” said Keith Robinson, who represents 260 offices and 1,600 agents as the chief strategy officer of the NextHome and Realty World Northern California & Northern Nevada, in a statement.
SmartZip and NextHome announced a partnership in November.
Not just about real estate
In September, SmartZip said it planned to start diversifying into other industries.
Reach150 appears to fit in well with that plan. Its customer base includes businesses in real estate, lending, insurance, solar and automotive.
“Reach150’s capabilities in referral and sphere management are an excellent complement to SmartZip’s sophisticated analytics platform,” said Vinny Smith, founder of Toba Capital, in a statement.
“Together they make the most intelligent and fully-featured marketing technology available today for real estate and related businesses.
“We are excited by the strategic fit between these two companies and look forward to supporting the combined business in the years ahead.”
Editor’s note: This story has been updated with comments from NAR and SmartZip.
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