Return Rates on Direct Mail Marketing?

Question

Looking to get an idea of the return rate people are getting from their current Direct Mail Marketing campaigns. I realize there are a lot of other factors that depend on your success (i.e. closing rate, market, competition, systems you have in place, etc), but listening to an old podcast (#81) with Michael Quarles he said that he saw a roughly 8-10x gross return on marketing. Obviously the market and competition have changed a lot in the five years since that podcast was published. But he was saying if you spend as an example $500/month on marketing for let's say Wholeselling / wholetailing you would get $4000-5000 in gross monthly returns, over time.

My market (Savannah, GA) seems to be extremely competitive and active with all sorts of investors, which could be good or bad since you can piggyback off of previous mailings from other people marketing.

Let me know what you think, thanks in advance for any input!

My market (Savannah, GA) seems to be extremely competitive and active with all sorts of investors, which could be good or bad since you can piggyback off of previous mailings from other people marketing.

Let me know what you think, thanks in advance for any input!

Braden Smith · Answer

The REI world is super crowded and competitive in most areas these days. There are a ton of people doing DMM these days. Traditionally direct mail has a response rate of 1-3%, but in competitive markets it may be less than 1%.

If you are going to do any DMM I recommend using very targeted niche lists and totally custom mail pieces as a way to stand out from the crowd.

May Emery · Answer

@Dylan H. 2 more big factors to consider in the success of a mail campaign.

1. The list

2. Message on your mail piece (post card or letter)

When it comes to the list, you don't really want to be maling to the same people everyone else is mailing to. I don't the the piggyback concept will work here. If they got 9 offers this month, and you are the 10th, how will you stand out? Id suggest using some of the new motivated lists such as Owners with Low Financial Stability (FSS) or Seniors with Long-Time Ownership.

As far as the mail message goes - stress how easy it will be to sell their property to YOU! No open houses, no fix up, on THEIR time line, etc. "Fast cash" might not be their primary consideration.

Colby Hager · Answer

When it comes to DMM there are soo many factors.  What list are you mailing?  What kind of mail piece?  What is your message?  What is your goal? (phone call, website visit, text message etc...) All these things could have your results vary wildly.  To think that you can spend a certain amount and get a certain amount back without factoring in tons super important data seems kind of silly.

And what Michael Quarles (who is badass) does to get his rate of return is going to be different than what you or I might do.

I have spent thousands on specialty lists and thousands more on mailing those lists with a zero percent rate of return b/c my mail piece sucked.  No deals, no wholesales, not even a phone call.

Of course, if we could spend $500 and get a guaranteed $4k back we would do that and repeat and scale.  Unfortunately, that is not the way this business works...no matter what people selling something try to tell you.

I actually like mailing, I really do.  It's not my primary source of leads. Not even close.  But it has its place in my bag of tricks.  I would only FOCUS on mailing if you can't afford PPC to get leads right away.  If that is the case and you are budget conscious, don't worry about the rate of return.  Unless you are spending thousands per month mailing to your city, you are mailing on a small level so focus on who you are mailing to and make your message stand out.

No lie, everyone is doing postcards. Everyone!  You aren't going to stand out doing that.  Focus on handwritten if you are going small-batch mailings.  Get the person to OPEN the dang letter.  I can't tell you how often I would show up at an appointment when someone called my postcard.  They would have 30 others on the table and tell me they called the first ten.  Could you be one of those 10?  Maybe.  Do you really want to run appointments where 10 other investors are offering?   Might as well just make offers on MLS properties under that scenario.

Not trying to throw cold water on your question.  Again, I like mailing.  I just like mailing to such small, unique, undiscovered sellers that my competition isn't mailing them and as far as they are concerned, I'm the only one sending a "handwritten letter" to them inquiring about buying their house.

Derek L. · Answer

I tend to agree with the skeptical opinions of DMM. Have tried it in the past with over 4k pieces / mo over multiple months, I had people answering the phones, different mail pieces, different tracked phone numbers, etc., and came up empty handed (which was an accepted possibility). To those who preach consistency, make sure they're not selling you a service (MQ owns YellowLetters.com). Same goes for list brokers. They make money as long as people are mailing letters. This doesn't mean it doesn't work, but you have to go in with your eyes open. Always be aware of incentives and make sure you're aware of any biases that might exist with whatever source you're depending on for information.

The key is to track your metrics. How do you know if what your mailing is working (and what aspects are driving performance)? Are you changing things month to month and observing what happens? Do you know your conversion funnel? You should know exactly how many calls / site visits it would take to close a deal. If you're not getting enough, on average, to make back your costs in the medium / long-term, you either need to make changes or find another tactic to ensure your dollars are in some way putting you closer to the next successful deal.

Lately I've shifted my perspective to making connections with practitioners in the space. While this isn't as sexy as other tactics, over the long-term it will eventually put you in the way of people that might need the skills / time / capital you have to offer. Building up a track record of successful deals done through relationships is one of the best ways to build a business in my opinion.

Jerryll Noorden · Answer

Not sure I follow.

2 + 2 = 4.

No matter how often you write it.

If someone says that 2 + 2 = 5, I will be that kind person to correct them.

Not sure what tactic you are referring to. You are about to make a mistake and I figured I'd warn you. Now you have all the information from different people, it is time to make an educated decision, and I hope you choose the right one.

I can't count how often I tell people they are making a mistake when they pick DMM, and month later they come back to me telling me "I WISH I listened to you 2 months ago, I wasted $4,000 in mailers."

Remember I never said hire anyone, including me. I am saying DO IT YOUR SELF!!

I did it myself, so, you can too!!

As I said, people see what they want to see. I can give 15 independent pieces of proof  my way is better, and DMM simply sucks. Yet people don't care when their mind is already made up.

DMM still has a place, like Colby said. If you have a select VERY special group you really need to reach out personally. But for this group you should have reason to believe they are motivated. Not just using a filter and add people, just because they have 2 houses, are over 40, and they have a dog. That's ridiculous!

Keep us updated!

May Emery · Answer

@Omid Tehranirad I wrote a blog about messages to seniors, but most of it applies to any owner occupied.

https://www.biggerpockets.com/member-blogs/11806/84376-your-letter-to-seniors-offer-them-something-they-care-about

Omid Tehranirad · Answer

@May Emery what content should a personalized card include?

Dylan H. · Answer

Great, thanks @Braden Smith!

And @Jerryll Noorden, do you just post this on anyone's post about marketing? Haha, good tactic.

Return Rates on Direct Mail Marketing?

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