Why Most Direct Mail Campaigns Fail to Produce Leads

When new investors start their first direct mail campaign, they often set sail with unrealistic expectations. After all, it can be a hard pill to swallow telling someone to spend $1,000+ month to month and not have any deals to close on. But if you mail every month, you will have success in this industry. The two biggest reasons direct mail campaigns fail is 1) they do not mail the leads consistently enough, and 2) they blow their marketing budget too fast.

Why Does This Happen?

I have said it before and will say it again: As an investor you cannot create urgency; you will always be operating on the seller’s time table. Chances are, the first time someone receives your postcard or letter, even if it’s to a highly targeted list, it will go straight to the trash can. But hey, at least they might have seen your company name or logo before it hit the trash. Maybe the next month the same thing happens, but now you are starting to get a few calls. The calls coming in this month are probably from mail pieces you sent out last month. This all has to do with the lead funnel snowball effect, which I will touch on here.

In real estate, it’s all about keeping your lead pipeline full at all times. But it has a cumulative effect the longer you stay in this business. I see a lot of people give up four months in. When I first started in real estate investing years ago, I didn’t close on my first house until six and a half months in. How many of you would have given up by then? And from there, deals started to become far more consistent.

The reason for this is real estate leads and marketing is cumulative. I get calls today from mail I sent out three years ago. Think of it as a snowball: Even if you start out with a modest budget, if you continue to hit the right leads month in and month out, you will start to build momentum like a snowball rolling down hill. The snowball will grow larger and larger and pick up more and more momentum. So too your lead pipeline will grow larger, and you will find yourself getting more calls, appointments, leads, and deals. As you grow, you can expand your marketing budget, target new leads, find new ways to market, and continue to grow.

Don’t Overextend Yourself

I also see people so focused on getting started in real estate that they put up huge amounts of money the first few months because they are so excited and want to get started right away. Don’t do that; don’t burn through what you have. Slow and steady will win this race. I would much rather see you spend a smaller amount of money consistently every month because that’s what leads to results. If you burn through your cash the first few months and have nothing to show for it, chances are you will either 1) get discouraged and give up or 2) you will not have any money left over for consecutive mailings.

Seller’s Time Table

We are operating on the seller’s time table–even if you have a highly targeted list. Just because you are mailing probates or out-of-state owners with a tax lien on the property, it doesn’t mean they are motivated. What we are looking for is a trigger event–something that motivates someone to take action–and there can be lots of things that cause this, from big to small, and more often than not, there are multiple things going on that finally motivate someone to take action.

To put this in perspective, let me give you a few real life examples. Maybe the first time you mail that probate lead, the mother just passed away and the executor is sorting out this mess with their siblings and dealing with the emotional turmoil –and they are not ready to sell now. With the out-of-state landlord with a tax lien example, maybe the first time they receive your mail, they are not motivated. However, four, five, or six months down the road, maybe something happens in their personal life or some other circumstance pushes them to take action. In my business, I notice simple things like around when taxes are due, I start to get a lot more calls because people are sick of owning a vacant house (or whatever the case may be), and they can’t stomach paying another years of taxes. I’ve also seen other simple things: For example, someone was taking care of their parents’ now-vacant house, and they were tired of going out and either mowing the lawn themselves or paying someone to do it. That was what finally encouraged this person to pick up the phone and call me.

My point is, it doesn’t have to be complex for their reasoning; you just need to be consistent so whenever they have a trigger event, you are in front of them or at the top of their mind because you had mailed them consistently. But this is something you have no control over. You cannot create this urgency. Instead, you are operating on their time table.

What has been your experience with direct mail campaigns? Any tips to add?

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.