In an announcement to the City, Purplebricks confirmed this morning that it is changing its business model.
The announcement reads as follows:
Purplebricks, the UK’s leading tech-led estate agent, announces that it intends to move to a fully employed model for its Field sales agents, with the transition commencing today.
Updated business model to support growth
Since its foundation in 2014, Purplebricks’ disruptive model has resulted in the Company achieving the position of being the best-known and largest estate agency brand in the UK in its drive to deliver on medium-term market share targets.
The Company launched new pricing structures in July 2021, including a Money Back Guarantee and a simplified two-tier proposition. The national roll-out of these structures is underway and, as previously guided, the Board remains confident that these strategies will accelerate revenue growth, increase market share and drive progress towards the Group’s medium-term targets over the coming years.
The move to a fully employed model for Purplebricks’ agents represents a further enhancement to the Company’s business model, following a review of how the Company can best serve its customers, support its field teams in the future, and meet the demands of a strong market.
Strategic rationale for move to fully employed status
The Board now believes that moving to a fully employed model will ensure that the Company can scale up quickly to meet consumer demand and, to that end, the Company has already created a talent pool of over 100 of the best agents in the industry who are ready to join it as opportunities arise.
Having ownership over the recruitment, training and management of a unified high-performing team will support the delivery of a consistently high level of service to Purplebricks’ customers across the country, including an enhanced opportunity to increase ancillary revenues.
Additionally, it will provide greater security and benefits to incentivise Purplebricks’ agents. The Company’s newly employed sales team will enjoy a highly incentivised package with the ability to work flexibly and remotely, in keeping with the Purplebricks entrepreneurial ethos and changes to ways of working that have come about because of the pandemic. Agents will also benefit from the rights that come with employee status as well as having access to many new opportunities for career development and growth.
Outlook and guidance
As guided in July 2021, it remains too early to quantify the benefit from the new pricing structures to the current financial year.
As a result of the move to a fully employed model, the Company is expected to incur exceptional non-recurring costs of c. £3-4m in FY22, with ongoing administration costs expected to be c. £1m higher in FY22 and beyond to support the increased size of the team.
The Board is committed to driving market share growth and there will also be significant increased investment in a new marketing campaign later this year, with the result that marketing costs for FY22 are expected to be c. £3-4m higher than previous guidance.
The Company’s medium-term guidance remains unchanged, and the Board continues to expect Purplebricks to be able to deliver annual revenue growth in excess of 20% in the medium-term, with confidence in the Group’s ability to deliver against its growth strategy.
Commenting on this announcement, Purplebricks CEO Vic Darvey, said:
“I am proud to be announcing plans to make our sales team permanent employees. The pandemic highlighted the challenges of being self-employed for many people – which is why we created the £2.2m fund to support the agency field during recent challenging times. As normality returns, we believe that moving to a fully employed sales model will benefit and support our people and make Purplebricks fit for the future.
Not only will this enable us to better protect and incentivise our agents, it will also allow us to scale up quickly to meet consumer demand, and continue to deliver a high quality, locally based service for our customers. It will also ensure that we can continue to drive a more consistent, high-performance culture and experience for all of our customers, helping us deliver a next generation estate agency service to buyers and sellers alike.
The Board strongly believes this move will increase market share and enhance performance in the coming years.”
How Property Industry Eye and Russell Quirk scooped this story yesterday: