Good day!

This has been on my mind to discuss as I get asked this question often. Why is this important? Simply put, you can overspend on your marketing campaigns if you're pulling a new list of 10,000 sellers weekly. Also, if you're pulling too few seller records then it will take you longer to generate a sufficient amount of leads in order to close one deal.

A key indicator to know if you need to change your marketing list is if your response rates start decreasing. Even if you're getting a lot of "no" responses or "not interested" responses, you're at least getting feedback from your marketing list.

For every marketing channel, especially text messaging, you will experience the most responses the first time you market to your list. For instance, if you send out 1,000 text messages, you can expect 50 responses (5%) on a brand-new skip-traced list. If you message these same sellers next week or next month then your response rates will likely be around 3% then drop to 2% and eventually nobody will respond back. This is normal attrition, and this is why it is imperative to reload your proverbial rifle with new bullets every month. Essentially, skip trace new records and upload them into your texting tool or dialer. If you're having trouble in your wholesaling business, please look at your marketing first as this is likely the root of many of your issues - especially if you are new or closing less than 2 deals per month. It's important to stabilize your company first before thinking about adding acquisitions managers, virtual assistants, and JV partners. Get your house in order first and focus on the fundamentals, which is marketing.

Let's get into the numbers:
Direct Mail - You can target the same list of sellers for 3-6 months before your response rates decrease significantly. Average response rates are .5% - 1%. Expect 5 - 10 responses. The average lead temperature is "warm" for direct mail and it takes about 40 leads to convert one into a deal, so it is not worth your time to do direct mail unless you can commit to at least 4,000 mailers per month. The good thing about direct mail is that the lists don't burn out as quickly, so you can market to it for 3 months, easily.

Texting Messaging: Cold text messaging is risky these days if you aren't using tools specifically designed for cold outreach for investors. Most tools that aren't part of our industry are cracking down big time on cold text messaging and the TCPA laws aren't helping our efforts either. Text messaging is best for new investors looking to get their first deal but it is not scalable. Honestly, I don't feel safe building my marketing campaigns solely on text messaging because, like Facebook ads early on, there are a lot of adjustments being made to ensure people aren't abusing this marketing channel. However, it is excellent to use to get your first deal. Lists do burn out VERY quickly, so view your texting lists like a "blast" rather than something you'll hit every week. Use texting to reach out to low-hanging fruit. And also, it is totally fine to text your list at the same time you're cold calling it. Yes, some sellers will get double-tapped but these same sellers are likely getting called by other investors. If you're taking the time to segment your list like this, sellers won't even notice. It'll just put more work on yourself.

Expect a 5% response rate on your first text messaging campaign on a newly pulled and freshly skip-traced list. So if you're messaging 1,000 sellers then expect 50 responses back. I'd wait at least two weeks before hitting these same 1,000 sellers again. Truthfully, my texting lists are one-and-done. After I message them, I rarely message them again, unless 6 months have elapsed. Even then, I found that the phone numbers typically are bad and I need to skip trace it again. By this time, I'm better off just pulling a new list and skip-tracing it. You can expect to convert 1 out of 25 / 50 leads (if a new wholesaler) with text messaging. I have another KPI I track with texting called my "Motivated Seller Response Rate". This is the response rate of "yes" or "interested" responses. It's quite low but has stayed true for years - .2% - .4%. So if you send off 1,000 messages, expect to get 2 interested responses. If you're getting 2 "interested/yes" responses per day, you can expect to contract a property using text messaging marketing within 3 weeks of your first campaign. It's important to note that you cannot target the same combination of sellers per day. This is where text messaging can get costly. You'll need new data every single day you target, which is why I recommend new wholesalers start off with a 10,000 records list, so they're not scrambling for data in the middle of the month. You could end up pausing your campaign and significantly stalling your momentum. Although your numbers may look different from mine, I'm sharing with you the average estimates I have in my database going back to the Summer of 2018, when I sent my first text messaging campaign to a list in Tampa, FL.

Cold Calling: This is by far my favorite marketing channel. A list of 10,000 sellers typically lasts for 45-60 days. Right now, I'm using Batch Dialer and seeing great results. It does take about 2-3 days for my dialer to "warm up" on new campaigns, but once I'm rolling it is very much a hands-off experience. The KPIs and lead flow I experience from cold calling have just been so consistent over the last several years. I started cold calling heavily in 2019 and decided to make it my primary marketing channel. I'll admit, the majority of the leads are cold and I need to follow up with them but if I pull 10,000 records, I've found that this gives me enough opportunity or "luck" to find at least one seller looking to sell for my cash offer and willing to sign a contract with me once I reach out. These sellers typically have been hit up by investors for years and you're piggybacking off of other investors' cold-calling efforts. Think about this: If you're calling a list of sellers and over half of them are on other marketing lists, this can work in your favor. Some wholesalers call these folks once and give them an offer and never follow up. By now, most people are outsourcing their cold calling, so legit all of our companies sound the same to the seller. It's too easy to slide in a call and the seller mistakes you for another company they spoke to. This happens a lot and I just go with it. I've gotten so many contacts this way. Expect 50 - 100 leads needed to close a contract cold calling. It sounds like a lot of leads but most investors are outsourcing cold calling just like their direct mail.

The image below illustrates the main points I'm touching on. We can see that direct mail gives us the most bang for our buck long term, but the leads will trickle in slowly. Again I prefer cold calling because it's right in the middle. The list lasts longer than a month and I'm able to generate guarantee a sizeable number of leads from my marketing efforts. Texting is always a short-term play and not a foundational piece of my marketing campaigns. If I get deals from it, great. If not, it's not necessarily the end of the world for me. The health of my marketing campaigns is dependent on how well my cold-calling campaigns are doing. More cold-calling leads usually result in a better month deal-wise for my team.