2022: Deep dive with luxury portal James Edition's CEO Eric Finnas Dahlstrom

Thank you very much, thank you for having me.

So as you mentioned, we historically come from more than ten years ago working with many other categories, not real estate. Real estate was not part of the site then. We added real estate as the years went, and a few years ago we really started focusing on real estate. So now with a lot of focus on this, we have seen very rapid growth, probably faster than the market. It's hard to say the absolute volumes of how the market is moving, but some trends: this quarter Q1 this year we see growth across more or less all markets. The biggest markets for us, as an international portal focused on luxury high net worth individuals, are often cross-border transactions. For property markets, it's Southern Europe: Portugal, Spain, Italy, France, Greece, also Switzerland very popular this year. Outside Europe: North America, Canada, US, and Dubai, which has been especially interesting this year because of some things that happened in Europe, providing an option for people from Russia to go to Dubai and buy property. So very strong growth overall. We're still seeing late pandemic effects where people can start traveling and visiting properties. A lot of people held off. We've had big growth in leads volume, mainly for houses and villas, not so much for apartments, which is almost flat. People are still looking for additional space for working from home. We'll continue to see those effects throughout the year.

Yeah, absolutely. And I think it was a little surprising for us. I don't know all the underlying reasons, but December, November, December was fairly slow. There were still some restrictions, talks about waves. Second half of last year, literally December 27th or 28th after Christmas, leads just took off completely, including spending and cost per lead, and it's been growing January, February, March. This is anecdotal, but when I talk to many people from Sweden, many had the opportunity to work remotely during the pandemic. Some Swedish companies are now saying it's time to come back to the office, which means some people are at a decision point: should I look for a setup where I can be down here in Costa del Sol? I know people looking to create that setup and move. So each month we're still seeing growth, and I think that is still a driver of more people moving down.

Yeah, so for us, we moved more or less second half of last year. It was very warm compared to what we were used to. The difference from Moscow, which is a metropolitan city with all conveniences, is that in Marbella or the Sol area, there are still opportunities when it comes to conveniences that a family with two working people might have had in a bigger city like Moscow, Stockholm, Paris, London. So it's a period of adoption to a new way of living. But I would also say it's a slower way of life; you enjoy life maybe more than just work. Opportunities for sports, nature, restaurants, everything here is amazing. And then the weather this spring or winter took us a little by surprise, but it also makes you long more for the summer.

Yeah, this is a great question. When we look at the trends, as we're growing rapidly, sometimes the trends are exaggerated. Leads volume for us is growing almost 200% year-over-year, but the market isn't that strong. What we see is that the differences between how buyers and agencies work are key. Some main things: we have a customer success team that works with agencies to improve performance. It's hard to overstate the importance of good images. It sounds simple, but in the reality where people browse on computers, iPads, phones, images are key. We see many examples with too few images. Around 16 to 20 images gives a conversion increase. Above that, no limit. Seven or eight images for bigger properties create confusion. The number and quality of images is a ranking factor for us; we use a listing score based on several parameters plus images. So better images give more exposure and higher conversion rates. The second thing is lead handling. It's a challenge to answer quickly or at all. Many buyers reach out to us after contacting agents and asking what happened. That's a pity because the buyer has gone through the whole journey and then there's no one on the other end. Agencies should distribute resources to listing quality and lead handling. Working faster and more effectively with leads can increase conversion rates a lot. This is not always native to an agency. The initial contact is very important. There is a mentality in the high end that wealthy buyers behave differently. They expect fast and correct responses. It's easy to fall into the trap of thinking wealthy buyers are happy for you to take your time; it's the opposite.

Yeah, that's a great addition. Since late last year, he joined a few months ago and is now leading a new part of the business where we work with agents to improve these conversion points and the service we provide to buyers. This is something I hope we can tell a little more about later; we're still in the early stages of launching this new product. But it's really great to have him on board, and of course nice to have a fellow Swede in the team.

Yeah, yeah. When we meet, yes. But otherwise, company language is English.

Yeah, this is a great question. The main package we have is simplified: you upgrade to a paid subscription and get additional exposure for all your listings. That's the basic option most agencies use. Then there are agencies that want to push specific properties or their brand. We have our newsletter with about 350,000 subscribers where we can push specific listings or articles in our journal or blog. That combination integrates the article on the site permanently and also pushes it in the newsletter. So you can talk about several properties, your brand, or a region.

So we have some on-site positions as well, which we call the hero spot. That's the big banner on the top when you go to the site. It's very effective if you want one listing with a lot of page views and additional leads. That's usually sold on a monthly or longer basis. Then we also have a single listing promotion in the regular feed. If someone searches for Marbella or Paris, that listing will be on top of the search results to drive additional traffic to that listing.

Yeah, no, I already mentioned some things we've done this year which are quite interesting. We believe we have a strong position in luxury international real estate for a specific market. The markets where we are have a lot of international buyers, so we bring that traffic. But we also understand that agencies work with many different portals. We integrate with different CRM systems. What we want to do is simplify the work as much as possible while providing as much information as possible to buyers. This year we launched image recognition on images. When you upload listings, we go through all images with image recognition and identify property features such as mountain view, sea view, school views, fireplace, high ceilings, etc., and tag the listing. So users can filter by them or have that information on the listing. That's one direction we're working on, and we'll continue to launch features this year to help agencies become better with as little effort as possible, because we see that has a big payoff for conversion rates.

Yeah, from two perspectives. Some agencies, when they join the portal, might have an expectation of how many leads they will get. That's not exactly the right comparison. James Edition might deliver more leads for sure, but the price ranges are one thing, and the quality of those leads is another. We pre-moderate all leads before we send them forward to try not to send through spam or scams. We identify that through behavior on the site or context of the lead. But we try not to be too harsh because we see some really high-quality leads coming through with email addresses like 'something123' which can be very relevant. We try not to discriminate. Then secondly, the leads that go through should be worked on. The expectation from an agency is how many leads will I get, but when we review after a few months, many agents say they didn't see those leads or should have called that person. So because of the mix of portals, some agencies treat leads in a less effective way than they should in the high end.

Yeah, absolutely. It's a great question and a great point. This is a lot of how we talk to agencies. If there was a portal where you could pay an amount of money, even if very high, and you know you will make sales of five or six million euro properties, then no one would do anything else than be on James Edition. But it's still advertising; it's a probability. When you show your properties here, you might get leads that might convert. There might be many reasons why those leads don't convert or take longer. It's a probability game. When we formulate the price of a subscription, we try to exceed that in value many times. Compared to many national portals, we are even more expensive, but the value we potentially deliver is several times more valuable than that cost. We see about 5% conversion rate. Some agencies say they have more than 10%, but we don't know. 5% is a good benchmark: if you get about 20 leads, you should probably make a sale. If you don't, we have a discussion with customer success and look through the leads. I know American portals say you need up to 26 attempts on a lead to make a sale. That requires a lot of time. But if you send one standardized email, it might make sense to make a second or third attempt.

This was a switch we did a few years ago when we started looking more at real estate. We wanted to step away from selling visibility, which as you correctly say is typical for big national portals. They often become almost monopolistic and have almost all audience. We have access to a very specific audience focused on the higher end of the property spectrum. But we still want to take the discussion to leads. We feel it's our responsibility to deliver leads, and we try to help the agencies. We see big differences with the listing score. If the listing score is too low, we don't publish listings. There is a lower cap where we say this will not sell. We talk to the agency and say it's better to publish these ones because they are great quality and relevant for our audience. Then we talk about leads. It's hard for us to talk about conversions or sales, but we try to keep the discussion.

Yeah, yeah, this is a good summary. And also what we see in general is that people who filter, I mean buyers, they are more prone to converting. So if you aren't within those filters, people won't see you, and then it becomes more difficult to show up independent of listing quality. So it's exactly a great point.

Thank you, thank you very much for having me.