Building a Marketing Machine – Part 1, The Basics

Marketing is not a difficult task to accomplish. It does, however, take time, persistence, and fine-tuning in order to get good results. This is likely one of the most frustrating things about marketing – commitment and most of all patience are necessary in order to build a successful campaign. Whether you realize it or not, as a real estate investor, marketing plays a key role in the success of your business and there are many forms to consider, which I’ll discuss over the next few blog posts. This post will provide the groundwork for what you should be thinking about when implementing your own marketing plan.

Diversify – A diversified plan is a smart plan. Avoid spending your entire budget on one form of marketing because there is no one method that will work best for everyone or put you in front of your entire audience. Take the time to determine who your target audience will be (sellers, RE agents, wholesalers, etc.) and what the most effective method of communication would be for that group. For wholesalers and real estate agents, the best method would likely be either phone or email since they heavily rely on both every day. For sellers, this could include anything from phone (cold calling) to direct mail to word of mouth through their friends. You can even take this a step further and think about what format would work best for each type of person within each audience grouping. For instance, say you want to use direct mail to reach out to sellers. Would you use handwritten letters or typed letters? From my experience, I get more responses from seniors when I send them handwritten letters but hear from professionals more often when I send typed letters. This is why it’s important to switch up your message and format.

Momentum – Build momentum in as many forms of marketing as you can to achieve multiple lead generation sources. In general, marketing is a business activity that should be performed at all times. It’s not something that you only focus on in competitive markets or at various times throughout the year when you need to find another deal. It’s often said that someone who has terrible marketing but is consistent will outperform someone who has excellent marketing but is inconsistent. The main reason for this is that it takes time to build momentum. As you continue to market you will begin to build awareness amongst your target audience. For instance, if you attend a networking event, people may not notice you or engage in conversation because they don’t recognize you. However, after you’ve been to the networking event 3, 4, 5 times you’ll notice that more people will start to approach you. This is a very literal example of what happens even if you aren’t personally in front of your audience. Take direct mail as another example. People may likely discard your first letter because they don’t know who you are but after subsequent mailers, you’ll find that more people will call you. Typically, you’ll need to touch each prospect about 5-6 times before you see your response rates significantly improve. This means that it could take up to 5 months to see good results if you are mailing each prospect once every 3-4 weeks.

Budget – While the principle of momentum is easy to understand, I see so many people quitting after only spending a couple of weeks marketing their business. Now, I understand that some people run out of money and have no choice but if you truly want to be successful, you should set aside enough capital to market for at least 6 months. Additionally, there are plenty of marketing options that cost nothing (i.e., cold calling, door knocking, responding to craigslist ads, calling RE agents, etc.). Make sure you understand your budget in order to determine what you can successfully devote your time and resources to over the next 6 months.

I’ve often been asked the question “How much money should I spend on marketing?” This is a difficult question to answer because my answer would vary depending on where the investor is in their business cycle and what their goals are. One of the data points I think about is that the best companies in the world spend around 18-20% of their expense on marketing. Even Coca-Cola, who is probably the most recognized brand in the world still spends ~18% of their operating expenses on advertising and marketing.

Stand Out – I don’t think anyone can refute that there has been a lot more investor competition over the last couple of years and finding a deal seems to be more difficult. That’s the bad news. The good news though, is that 95% of real estate investors are lazy in their marketing approach or don’t even have one. How many times do you hear people saying – I use yellow letters, I use bandit signs, I mail to absentees…? When you notice trends like this, what should you be thinking? How about…”I need to try something different!” ? I’m not saying that those methods don’t work, I’m questioning that if you’re doing the same as your competition, how will you ever stand out from them? Strive to be creative or different than your competition and I guarantee you will see better results.

Look where your competition is not – Another important aspect of marketing is to figure out how to find good leads. Where do you find the real estate agents who work with real estate investors? Who are the homeowners who may need to sell? Where are the probate attorneys that have clients who need to sell a home? Again, I hear a lot of the same talk about how to derive a list of leads, but remember, you want to go where the competition isn’t. Think outside the box.

Track your leads – Once you have a marketing plan in place, you’ll need a way to handle the calls and track your leads. This doesn’t have to be fancy. When starting out it could be as easy as directing people to your cell phone or email address and filling out a Telephone Questionnaire Form for each lead. However, as you step up your marketing, you should have a way to track each marketing campaign and each lead. The best and most efficient solution that I’ve found is through a CRM (Client Relations Management system). There are many types of platforms out there but I have been using Zoho and really like the functionality (oh, and you can also start with a free account). There are really two main reasons why tracking this information is important. One, you want to know which marketing campaigns are working the best and which are not yielding results. Based on this information, you can allocate more money to the high performing campaigns and cut the underperforming ones. This type of fine tuning will ensure that you’re getting the best result for your marketing dollars. And two, follow-up is VERY important. If you don’t have a system that tells you when to follow up with leads, I guarantee you’re missing out on quite a few deals. Again, this can be as simple as writing it in a calendar. But once you have a good lead flow, you should consider investing in a CRM.

Test, Reevaluate, Modify – Finally, once you have everything in place, you should be constantly testing and modifying your marketing plan to find what works the best. Some forms of marketing may work really well in a buyers’ market but not so much in a sellers’ market. Other factors that may play into how well a campaign works is demographics, the age, the situation, and the timing of when you reach your audience.

Now that you have a good understanding of the areas you should consider when developing your marketing plan, I’ll dive deeper into the different methods of marketing in my next few posts…