Building A Marketing Machine – Part 4a, Direct Mail (Mindset)
Direct mail is one of the most frequently discussed topics when it comes to acquiring great, profitable deals – and for good reason, too. Direct mail has outperformed any of my other lead sources to date and I know many other investors who can say the same. I recently picked up a property through direct mail (Wholesale #16, Acton) and wholesaled it for almost $70,000! If that doesn’t get you excited, I’m not really sure what will. With that said, you should know that there is a lot to consider when it comes to direct mail. Some of the questions people ask are: Who should I mail to? What type of letter should I mail? What should the letter say? Do I have to mail them more than once? If so, how often? Etc. I, myself was very overwhelmed with the amount of things to consider before I even started mailing. My aim with this post is to answer these questions for you and help you to navigate the direct mail world so you have a clear path to follow. And because I want this to be as comprehensive as possible, I’m going break it down into 4 different posts as follows:
Mindset
Before I get into the actual details of direct mail, I want to make sure you have the proper mindset and understanding of what’s required BEFORE you start mailing. I know many people who’ve gone through the work of setting up their marketing and spent good money only to find out that they either can’t afford to keep mailing or just decide they don’t want to continue. For that reason, I want to preface this discussion with some notes on what to expect.
First, consistency is key with direct mail. Don’t think that after you’ve mailed one round of mailers you’ll be cherry picking the best deals. It’s not going to happen. Motivated sellers are usually situationally driven – a loss of job, divorce, their spouse passed away, job transfer, etc. No one can predict when these things will happen so that’s why you will need to consistently mail to your prospects. Also, people generally do business with those they know/recognize or have interaction with. Therefore, if you continuously mail to them, you will build brand awareness and they will naturally think of you when it’s time to sell. You always want to be Top Of Mind with your prospects.
Second, it takes time to build momentum with direct mail. As you continue to mail to the same people, your response rate (and deal rate) should increase. Many big time direct mail marketers say that it generally takes 6-7 touches before your response rates will increase significantly. This is important to understand because I’ve seen a lot of people stop marketing once they get a deal and think they can pick right up where they left off later on. This is the worst thing you can do because when you do start mailing again, you’ll need to spend more money just to rebuild the momentum that you once had. I’d highly recommend that you keep mailing and if you do get another deal, wholesale it to another investor if you can’t take it on yourself.
Third, while there are ways to save money with direct mail, it still requires an investment. Usually, people underestimate the cost because they don’t take into account the commitment needed before it will start producing good results. As I mentioned, you should expect to touch your prospects about 6-7 times before getting some good, consistent results. This means that you should expect to have enough capital to fund 5-6 months of direct mail. If you’re doing it yourself, you can probably create each mail piece for about $0.50-$0.72 depending on the type of stamp that you use. Alternatively, you can outsource your mailings for about $0.80-$1.18/each for a qualitymail piece. If you’re mailing a list of 500 prospects, that will cost between $1,500 – $3,540 to touch each prospect 6 times. Now, that may seem like a lot, but reread my Wholesale #16, Acton post. I’d spend $3,540 all day long to get a $70,000 deal!
Fourth, direct mail is not “one size fits all”. If you want to get the most for your money, you’ll need to test different types of mail pieces, colors, fonts, etc. to identify what works best in your market. Just because one type of mailer works for one investor in one part of the country, doesn’t mean it’s going to work for you. Furthermore, your prospects will respond differently depending on what you send them. I’ve found that white collar people respond more positively to professional, typed letters and blue collar and elderly individuals respond well to handwritten letters. This is why it’s critical to switch up your mail pieces. Also, depending on the real estate market and your prospect, you’ll want to change up your verbiage on your mailers. In a seller’s market, maybe discuss the cost savings of selling to you over an RE agent. Or if you’re mailing to a probate lead, maybe answer some questions in your letter about the probate process or how to sell a house that’s in probate. You can also change up the timing between each mailing to see if it elicits a higher response. Whatever you do, the main point is to experiment to determine what’s working well for you. And if you’re asking yourself “How do I know what’s working and what isn’t?”. Well, you have to track it. Everyone has a different way to track leads, but the simplest method is to use excel. More about this in a later post.
Beginning a direct mailing campaign can be overwhelming. It certainly is not for everyone depending on money constraints, motivation or persistence to keep at it. But if you’re still with me, just wait because I’m going to pave a nice path to get you those big pay checks, and you’ll never look back!
If there is anything specific you would like me to touch on, please comment below and I will be sure to address them.
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