How Many Calls to Get A Deal

Question

BP,

I'm a aspiring wholesaler trying to game plan for a marketing campaign I am going to launch at the beginning of the year.

I asked this question in the wholesaling forum and shockingly I didn't get a response.

What is your "calls to deal" ratio?

David Dachtera · Answer

@James Danchus,

This is going to sound kinda smart-ass, but "How many Calls (Does It Take) to Get a Deal?"

As many as it takes.

Learn how to have effective conversations focusing on identifying and solving the other person's problem - it's NOT about you! The more effective your communication the more results you get for your efforts.

My $0.02...

David Dachtera · Answer

@James Danchus,

Then, it's up to YOU to learn how to make your communication sufficiently effective that you get the ROI you seem to be looking for.

There's no magic in the numbers. It's not about statistics, either. It's about how effectively you communicate with people so they will do business with YOU instead of the guy they just hung up on.

Comprende?

Lucas Machado · Answer

I must second the thoughts of @David Dachtera.  I recently read this in How to Win Friends and Influence People, and it re-emphasized to me the incredible importance of the dialogue with our potential clients: "Thousands of salespeople are pounding the pavements today, tired, discouraged and underpaid. Why? Because they are always thinking only of what they want. They don’t realise that neither you nor I want to buy anything. If we did, we would go out and buy it. But both of us are eternally interested in solving our problems. And if salespeople can show us how their services or merchandise will help us solve our problems, they won’t need to sell us. We’ll buy. And customers like to feel that they are buying –not being sold."

You need to generate leads, you need to spend money to generate leads, but boiling it down to "how many letters do you need to get a deal" I'm not sure is making sense.  I can tell you, we generate a probate deal for every 3,000 ($2,400) letters.  We generate a out-of-state absentee deal about 12,000 postcards ($6,000).  I have some other smaller campaigns that have never generated a deal to date.  Our last 4 deals netted $15,000-60,000.

In April-March 2016, we had the sense we needed more volume.  That was true.  I think though our knee-jerk reaction was along your thought process: "how many letters do I need to send to generate XYZ amount of leads." In reality, we mailed harder but not smarter.

There is an excellent podcast, I believe BP Podcast 176 with Tom Krol , where he discusses these topics in detail.  After listening to that podcast, I made major changes to my direct mail postcard campaign that are going into effect with August 1st mailing (fingers crossed!).  Re-focusing half of my campaign on high equity in-state owners to avoid competition, and beginning a tax delinquent test.  This also allowed me to get more strict on my out-of-state list.  I also made other changes based on feedback received on these forums.

Sharon Vornholt · Answer

I talk to a lot of investors across the country and most people are getting no better than about 2% on their direct mail. Some are getting 1% and a few outliers are getting 3%.

For many years statistics said that for every 20 calls you should be able to get 2-4 properties to look at, to get one deal.  I think that depends on a number of things like how skilled you are when it comes to talking to sellers. Getting good at this comes with practice.

Using these numbers, you could reasonably expect to get a deal for every 1000-2000 mail pieces on average.  But like others have said, in really tough markets that might be 3000 pieces.

One thing I know for sure is that you will get better at this in time. You just have to start.

If you don't have a lot of cash there are other ways to get deals. Once you get a deal, then you should put all of that money into marketing.  Don't go buy "stuff".

Rick H. · Answer

"Plan your work and work your plan but don't plan the results."

I've lived by these words and made (and kept) several fortunes by following them.

Can one predict ANY marketing effort? Sure, it's possible. After testing and tweaking, adding data points, capture methods, integrating with reliable Intel, appending data, improving call scripts for call agents, constant metrics analysis and relentless testing.

So many variables.

A friend in my mastermind group tells a great story about how Craftmatic beds used to be sold. Incredible story of phone and in-person selling and conversion. It worked too well until FTC stepped in (probably a good thing).

As to predicting results before you've started, I don't have any idea how you will assign any meaningful number until you DO test.

In direct response marketing there is always a control constant to use as a baseline. It's the tried-and-true methods that, if this formula is used, based on past history, this result will likely occur. Copywriter are challenged to "beat the control."

A great list is better than a great script. Rent the movie Glengarry Glen Ross ;again) and refresh your thoughts about outbound telemarketing and what is most important.

Start with a number, if you must, randomly assigned, as a realistic conversion goal. Run campaigns against that metric and test, test, test.

My challenge: just do something now and ramp up as you get better.

Wendell De Guzman · Answer

I agree with Larry.

It's measurable.

Here's the answer to your question: It depends. But if you want a quick answer, anywhere from 1 out of 50 to 1 out of 3.

It depends on the following:

1. Your mailing list - how motivated they are and how exclusive the list is. For instance, our mailing campaign recently to out of state landlords have gotten us an 8% response rate. On the other hand, our code violations mailing list has a 35% response rate. Landlords with code violations are more motivated and very few investors mail to them. Out of state landlords - the list is readily available and so you have more competition.

2. How well you talk to people - one of my acquisition folks talked with 50 sellers and did not close a single deal. I talked with 6 and closed 2 sellers, each of them have 2 houses.

3. What are your acquisition and exit strategies. If you only know one way to buy houses - offer you cash by low balling you - and you only know one way to sell or make money with properties (say all you know is rehabbing), then your conversion rate will be pretty low. 1 out of 50 leads sound about right if you are not very creative and if you're new to the game. If you are more experienced, 1 out of 20 or 1 out of 10 is good. But if you're creative AND experienced, you can get to 1 out of 3.

and lastly, 4. Do you have a follow up system? If you follow up, your conversion ratio will also go higher. Honestly, I am not very good at follow up because I guess I get enough leads and turn them into deals but this is something my operations President - @John Matthews is implementing now to see how much higher we can push our conversion numbers up.

Rick H. · Answer

@James Danchus Beginning of the year? With that sense of urgency, it'll never happen.

Why not start in the next few days! Yes, you'll make mistakes. So what?

Start with a piece of paper and physical write down notes.

To organize your thoughts, I like to use a lead sheet. It has gone thru countless changes and evolved over the last (30) years. I now have pre-printed a few more good questions to ask on back side of sheet, in case I forget, so that the nuance is achieved.

Putting this off means perfectionism. You are not going to get it perfect, so don't use that as an excuse.

You don't have to get it perfect, you just have to get it going!

Lucas Machado · Answer

It's a very difficult question to answer because deals come months if not years after calls.  Not only that, some investors have different margin objectives.  You can churn out 30 deals for $5,000 each, or 10 deals for $15,000 and net the same amount.  We often ask the question: is it worth it to get involved in this deal for $5,000-$10,000?  Sometimes, yes, sometimes, no.

To answer the question directly, I average a closed deal approximately every 50 leads.  Working on some new business ideas at the moment to convert more leads, as I'm not satisfied with the 50 lead number.

Account Closed · Answer

Fascinating points of view on this thread, so many to choose from.

As a Wholesale Entrepeneur myself, the numbers are only somewhat reliable. Like @David Dachtera made eloquently clear in multiple responses, us human beings are not machines. Although we may integrate our businesses with technology and use data to extrapolate from, the bottom line of business comes down to working with and for people.

The better you can do that, the better your business will be. Period. You can send out $1,000,000 worth of direct mail to all the highest converting lists but if your people skills are a crock of shit, you wont get any deals. Maybe a few percentage points of that million would be desperate enough to deal with whomever walks their way but thats up to chance.

With that being said, there are certain lists that tend to be more motivated than others, and nothing is either fully this way or that. So im not saying here that statistics cannot be used in direct mail; rather, I am saying that it may behoove you to find the lists that have a higher percentage of motivated sellers and then go from there by improving your interpersonal tact and willingness to go WAY above and beyond to solve people's problems.

Then, and only then, you're conversion rate will be both trackable and higher than average.

And remember, when in doubt, 10x your skillset.

Larry Turowski · Answer

@James Danchus I'd have to disagree with @David Dachtera.  This is definitely measurable and it has to be in order to build a business.  Just search here and listen to the BP podcasts.  Lots of investors / wholesalers track this sort of stuff and know exactly what they need to do to get the volume they need.  In fact, the limiting factors is often their market size.

But you need to do the measuring based on your area, your marketing piece, your target market (owner occupied, non-owner occupied, etc), your ability to negotiate and close, and your desired profit margin.

I haven't got a ton of experience, and honestly I don't track things at this point, I just know it is  working.  But I've heard you need to spend about $3k in marketing to get a deal and that seems about right to me.  (I've also heard about $1k or even $500 to get a deal.)  I don't care about call volume.  I care about ultimate return on marketing dollars.

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