TRP027: Mailbox Money – Using Direct Mail for Your Rehabbing Business Part 1

February 17, 2016

In this episode I’m talking about the importance of using direct mail (DM) marketing for your real estate investing business. Without marketing you have no deals. Without deals you have no business. Part 1 talks about what DM is, the principles of it and how it applies to your rehabbing business. Follow-ups will get into more nuts and bolts.

Show Notes

What it Direct Mail:

Common, practice for marketers world-wide of sending mail advertisement to a specific list of recipients with a request to do something unknown as the call-to-action (CTA).You know this as junk mail | another one of those “love ‘em or hate ‘em, they work”

List can comprise of:

  • People who live in a specific area
  • People who expressed interest in a particular svc/product
  • People of a certain age range, gender, etc.

The CTA is usually to buy something such as cars, homes, furniture, appliances, electronics, insurance, financial services, etc.

Truths about :

  • Proven to build your business if you commit and stay consistent over a longer period of time
  • Send mailers out consistently knowing that a small percentage of recipients will response with an assumption that a small percentage of respondents will eventually buy the product or service
  • The sales from that small % is worth more than money spend on the direct mail campaign
  • It’s a numbers game – the more you mail – the more respondents you get – the more sales you make. The key is understanding the numbers and conversion rates from one stage to the next AND the cost – benefit of your mailing campaign
  • Example A: You send 1,000 pieces. 5% or 50 people call from you. You weed out the tire kickers and bad deals and get 1 deal (2%). The one deal nets you $8,000. You sent $1/ mailer ($1,000). Pretty good right? Reinvest and do a bigger, better campaign. Repeat this process over and over to create a steady flow of leads.
  • Example B: You send 1,000 pieces. This time you produce a higher quality list and resend to previous recipients – but your response rate you get at 5% or 50 people call you. Assume now assume the quality of your list and your closing skills are better so you get a deal conversation of (4%) or 2 deals this time. As you can see, you doubled your result with a better list, resending to recipients (consistency), and improving your negotiation skill level. Get the picture? Reinvest and do a bigger, better campaign.
  • As with any marketing, it starts slow but gains momentum if you don’t quit. Commit to at least 6 to 12 months.
  • Still more effective than digital marketing (email, mobile, social media) in terms of response rates and competitive in terms of cost per acquisition according to the 2015 Direct Marketing Association (DMA) Response Rate Report. To the contrary, its cost per response is competitive to digit mediums such as cost-per-click – so it very cost effective even considering postage and all. This also according to the DMA.
  • Response rates – depending on the source range from 3% – 4.5% typically. By comparison email response rate or in the 0.1% neighborhood.

How it Applies to Real Estate Investing (Rehabbing)

Accomplishes your objectives of:

  • Get motivated sellers to call you
  • Get leads and deals on houses you can fix and flip
  • Build your name/brand
  • Fuel your business

As a follow up I’ll share some actionable steps to building and launching your DM to get your phone ringing with deals.