houzz

Businessmodel of Houzz

Customer Segments

Houzz has a multi-sided market business model, with various interdependent customer segments. Its customer groups include the following:

  • Homeowners – People who seek home improvement professionals, products, and resources.
  • Home Improvement Professionals – Design and construction professionals who want to promote their services to homeowners and purchase products.
  • Home Product Sellers – Businesses that want to sell products to homeowners and home improvement professionals. ### Value Proposition

Houzz offers three primary value propositions: accessibility, convenience, and brand/status.

The company creates accessibility by providing a database of home improvement professionals for homeowners to evaluate. The selection includes a wide variety of roles, ranging from architects to designers to contractors. Homeowners can easily contact them when they are interested in obtaining their services. Houzz also increases accessibility for pros by giving them a dedicated consumer audience, enabling them to showcase their work, and allowing them to exchange ideas.

The company offers convenience by gathering a wide range of home improvement resources in a single channel. Its website includes product information, design ideas, photos of completed remodels, renovation tips, DIY tutorials, house tours, professional reviews, industry-focused articles, and recent trends. Moreover, visitors can purchase items they see directly from the site.

The company has established a powerful brand because of its popularity. It claims to have the largest residential design database globally. The site has over one million professionals and reaches over 40 million homeowners from numerous countries.

Channels

Houzz’s main channel for homeowners is its website. Its main channel for home improvement professionals and home product producers is its direct sales team. The company promotes its offering through social media and television advertising.

Customer Relationships

Houzz’s customer relationship is primarily of a self-service nature. Customers utilize the service through the website while having limited interaction with employees. The site includes a “Support” section with answers to frequently asked questions. That said, there is a community component in the form of a forum where users can obtain advice from peers and a personal assistance component in the form of e-mail support.

Key Activities

Houzz’s business model entails maintaining a common platform between three parties: homeowners, home improvement professionals, and home product sellers. The platform includes its website and its set of mobile apps.

Key Partners

Houzz maintains the Houzz Affiliation Badges program. Through the initiative, it enables professionals in its database to highlight their affiliations with organizations involved in the home design and remodeling industry. Specifically, the professionals can add a “badge” to their profile in the database showcasing the connection. The badge also serves to promote the partner organizations, which typically offer advocacy and support for the pros; they include the following:

Professional Organizations

  • The American Institute of Architects (AIA)
  • American Society of Interior Designers (ASID)
  • American Society of Landscape Architects (ASLA)
  • The Association of Pool and Spa Professionals
  • British Association of Landscape Industries
  • Design Institute of Australia
  • Landscape Association of NSW and ACT (LNA)
  • National Association of the Remodeling Industry (NARI)
  • National Kitchen & Bath Association (NKBA)
  • The Society of British and International Design
  • Builder’s Association of the Twin Cities (BATC)
  • Dallas Builder’s Association
  • Greater Atlanta Home Builders Association
  • Home Builders Association (HBA) of Alabama
  • Home Builders Association of Greater Cincinnati (HBA Cincinnati)

  • Home Builders & Remodelers Association of Central Connecticut Schools

  • Auburn University CADC
  • Kansas State University
  • New York School of Interior Design (NYSID)

  • Rhode Island School of Design (RISD) Nonprofits

  • Rebuilding Together
  • Public Architecture ### Key Resources

Houzz’s main resources are its human resources, who include the technology employees it uses to update its platform, the sales/marketing staff used to sell and promote the service, and the customer service staff used to provide support. As a relatively new start-up it has relied heavily on funding from outside parties, raising $213.6 million from 17 companies as of October 2014.

Cost Structure

Houzz has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is likely sales/marketing expenses, a fixed cost. Other major drivers are in the areas of transaction expenses and customer support/operations, also fixed costs.

Revenue Streams

Houzz has three revenue streams:

Transaction Fees – The company charges product sellers a 15% commission to list their offerings in the website’s “Houzz Marketplace” for homeowners and professionals.

Subscription Revenues – Home improvement professionals can be listed in the database for free; however, the company offers a Pro+ program through which they can receive additional benefits (heightened visibility in search results, more creative opportunities to highlight work) for an annual subscription fee. Subscription rates can be obtained by contacting Houzz’s sales staff.

Advertising Revenues – The company charges third parties such as national retailers and product manufacturers a fee to advertise their offerings on the website and in its mobile apps. Current advertisers include Lowe’s, Kohler, SubZero, and Behr.

Written on October 25, 2017