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the challenge

Ali Ajellu, Tarik Gidamy and Rokham Fard are three of the four co-founders of TheRedPin, a real estate brokerage in Toronto.Kevin Van Paassen/The Globe and Mail

Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.

If you ask Rokham Fard, the shortcomings of the traditional real estate industry can be summed up through the process of buying a Starbucks coffee. Visit one of the chain's stores in Amsterdam or Tokyo and that eerie-yet-consistent feeling is there – casually arranged furniture, indie tunes and a blackboard highlighting drink options.

"That's just a three- or five-dollar purchase. Now imagine it's a million-dollar purchase," says Mr. Fard, a co-founder of TheRedPin, a brokerage-meets-online housing database. "If I asked you the difference between Re/Max or Century 21 – two of the biggest brands in the country – I swear you couldn't come up with anything except for the logo."

The flaw, Mr. Fard says, lies in their business model. Agents pay a monthly fee and part of their commissions to associate with a particular real estate brand, and they are free to take their own approach to buying and selling homes.

"There is no consistency, there is no minimum requirement [for customer service], and unfortunately if you are unhappy with that person – tough luck," he says.

It was an observation Mr. Fard and fellow co-founders Tarik Gidamy, Shayan Hamidi and Ali Ajellu made shortly after launching TheRedPin in 2010. A few months in, they expanded from the database of active residential listings – both Multiple Listing Service (MLS) and pre-construction – in the Greater Toronto Area to a fully licensed, consumer-centric brokerage.

The key was to create a team of licensed inside sales agents who work out of the office and get paid salary but not commission.  (They are augmented by Realtors who work in the field and receive a commission plus a bonus based on customer satisfaction.)  While a typical real estate agent will devote anywhere from 40 to 60 per cent of their time on the peripheral aspects of the business – finding prospects, building a website, handling paperwork – TheRedPin shifts those responsibilities to in-house teams focused on loyalty, marketing, technology and finances.

"Their role is to generate leads, qualify leads, and then hand them over to the Realtors, whose only job is to service the client," Mr. Fard explains.

Home buyers are given 15 per cent cash back from the total commission earned on properties purchased through the brokerage.

Since launching, TheRedPin has expanded its services to Vancouver, grown to 120 employees – half of whom are licensed brokers – and bolstered its database to include neighbourhood data such as nearby schools or grocery stores and details such as how long the property has been on the market and what taxes amounted to the previous year.

In the past year TheRedPin has sold $325-million worth of real estate and given $750,000 in cash back.

But there's a challenge the company didn't anticipate – creating an incentive or reward system for its unlicensed employees, who are doing half a typical real estate agent's work, to inspire them to bring in more clients.

How can TheRedPin do this without including financial incentives? According to the Real Estate Council of Ontario (RECO), brokers and real estate agents aren't allowed to monetarily incentivize any non-licensed person to provide a service for them.

"If you refer my friend to TheRedPin and the transaction goes through, I am technically not allowed to even offer you a bottle of wine," Mr. Fard says.

He envisions an "elegant solution" – some sort of program that is scalable and can also be used to reward home buyers and encourage them to promote the service among their friends and colleagues. "We want to offer a consistent experience and to incentivize customers to bring more of their friends and families into our ecosystem."

The Challenge: How can TheRedPin incentivize both employees and home buyers?


Ann Frost, associate professor of organizational behaviour at the Richard Ivey School of Business, University of Western Ontario, London, Ont.

For most home buyers a discount isn't going to be much of an incentive. But what if they could pass it on to somebody? Maybe they know someone in their social circle whom they could give their discount to, and entice them to use the service. Or they could donate it to somebody, maybe low-income families trying to purchase their first home or some non-governmental organization or charity. Tying it to a cause could make people feel like they're doing good by passing it on.

In-house, the company could try having separate finance, tech and loyalty departments – they could pair two or three brokers with their own Web/loyalty/marketing team. Each team would be responsible for getting business and feel more connected, engaged and meaningful in the work they were doing because they could directly see their results.

Stéphanie Lluis, associate professor of economics, University of Waterloo

I recently bought a house and I receive monthly e-mails from my real estate agent about homes for sale in the neighbourhood, which creates a tie even though I probably won't sell for a long time. When you drive by a new listing on your street you want to know about it. It's something TheRedPin could exploit if they wanted to build customer loyalty in the future. Neighbours who have bought their home through TheRedPin could share information about the community.

That's engagement. The home buyer will be aware of what's going on in the neighbourhood, which is quite helpful and builds a sense of community.

Steven Green, founder and president of TemboSocial, a software company that specializes in employee recognition, Toronto

Reputation is really important to people. The whole Web is now about reputation, whether it's Facebook or something more professional like LinkedIn. If people are interested within TheRedPin of developing a personal legacy – of being known as a skilled and capable person in terms of selling new homes or experts in listings – and it doesn't impact internally proprietary information, maybe stories about their sales could automatically be posted to the employee's LinkedIn page and internally. It would help his or her co-workers be able to identify a mentor or learn who has skills they could monitor and learn from.

They could also tie the employee's success to the milestones of customers using an automated system that solicits feedback such as, "How did Denise help you with your dream of moving into your new home?" and having those stories published internally and celebrated.


Incentivize with goodwill

Give home buyers who use the service the chance to pay it forward and pass a discount to a friend or donate to a housing-related cause.

Make home buyers "neighbourhood experts"

To keep someone who buys a home through the service engaged, let them share advice on their neighbourhood or listings in neighbourhoods they've lived in.

Share and bolster reputations

Gather more substantial stories from both employees and home buyers who used the service and publish them internally and externally through social media.

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Interviews have been edited and condensed.