Millions of marketers around the world use direct mail marketing to sell products, from insurance and mortgages to cable TV and the Internet, subscription services and much more. Across multiple industries, direct mail marketing is a proven technique for growing your business.
We’ll dive deeper into real estate direct mail marketing and focus on how real estate marketers can use it to get new leads and grow their business.
what is real estate direct mail and how does it work?
Direct mail is mail sent to a specific list of people with the assumption that a percentage will respond to the campaign. chances are you get a lot of direct mail every day in your home mailbox and just consider it “junk mail” and throw it away.
Have you ever wondered why they send this spam? a small percentage will end up responding to the mail, and a small percentage of that percentage will end up as buyers, making your campaign worthwhile. At its core, direct mail marketing is about playing the odds.
here is an example. Wholesaler Kevin is looking for real estate that he can get under contract for little money. however, the mls is running out and good deals are being offered fast, forcing you to look elsewhere. So Kevin turns to direct mail marketing.
- kevin sends 1,000 real estate postcards to a target audience for $1,000.
- of those 1,000 postcards, 5% of people call him back (1,000 x 5% = 50 calls ).
- of those 50 phone calls, kevin filters out the misses, negotiates, and gets the contract on 2% of them (1 deal).
- then, kevin sells the contract to a local house flipper for $5,000.
kevin made a net profit of $4,000 from direct mail. What if he takes that profit and puts it back into another direct mail campaign?
- kevin sends 4,000 more direct mail postcards to a target audience, costing him $4,000.
- of those 4,000 postcards, 5% of people call kevin back ( 4,000 x 5% = 200 phone calls).
- Of those 200 phone calls, Kevin filters out the failures, negotiates, and wins the contract on 2% of them (4 deals).
- >kevin then sells the contracts to local house fins for a profit of $5,000 on each, for an income of $20,000!
kevin now turned that $4,000 into $20,000 through direct mail marketing and could go on to earn even more. Direct mail marketing is scalable, which means the more you put in, the more you get. if you can make those numbers work, you can keep making money.
but there are four metrics to consider:
- cost per direct mail item
- call response rate
- contract conversion rate
- wholesale rate
For a direct mail marketer to be successful, they must master those metrics. what if only 1% of people call about your mail piece? the numbers look very different.
the rate of return will vary depending on factors such as:
- what list you’re sending to
- what your direct mail says
- how good a negotiator you are
- the price range you’re looking at
- market conditions
- the cost of marketing it
What works for one direct mail marketer might not work for another. A good salesperson is always testing, tracking, and perfecting his skills.
who should be your target audience?
Before you start printing your direct mail, you need to decide who will be receiving those letters. instead of reaching every house in an area, send an email to people who fit a certain profile.
according to joy gendusa, CEO of postalmania, “you have to get the idea that ‘marketing is persuasion’ out of your head. you’re not convincing someone to buy from you. you’re showing their card recipient why it is the best option in its industry.”
This quote perfectly sums up why you should be targeting specific lists. In an ideal world, you would only email people who are already interested in what you offer. You can improve your response and conversion rates by marketing to the right people. Find your target audience in the following ways:
- absentee owners: are owners whose mailing address is different from the property address. This situation can be due to several reasons, but it generally indicates a rental property. Many homeowners are motivated to sell because, frankly, owning isn’t easy. other times, absentee homeowners may be property owners who moved from their primary residence but were unable to sell their previous home.
- Inherited – This is exactly what it sounds like: People that you inherited a property but are not motivated to take care of it.
- Eviction Records – During the stress of an eviction, many landlords find that they no longer want to own the property. property.
- probate: when a person dies, their house can go into probate. Often the family needs to empty the house, clean the property, make any necessary repairs, and sell the property. this can be a daunting task, which means probate lists can be receptive to a direct mail campaign.
- previous foreclosures: when someone defaults of your mortgage, the bank will begin the foreclosure process. during this time, the landlord may be contacted and offered help to stop foreclosure and save your credit.
- Expired Listings – When people try to sell their home through a real estate agent but they can’t, the property becomes an expired listing. this is when an investor can come and buy the home from the motivated seller.
- Tax Delinquent: Not paying taxes is an indication that something is wrong and there may be a motivation to do it. sell.
- divorce: When people go through a divorce, they are often highly motivated to sell quickly.
how to build direct mail lists
lists can be created in different ways. Let’s review the three most common.
1. public/county records
You’d be surprised at the amount of information that can be found in public records. Usually, the county assessor’s office is the place to go. If you’re not sure where to access your local government’s public information, check netronline.
2. drive for dollars
driving for dollars is not the fastest way to build a list for real estate investors, but it can be one of the cheapest. it is the process of driving around and looking for properties that indicate a problem, such as tall grass or boarded up windows. By typing in the address, you can search public records to build a list of potential sellers.
3. broker list
Perhaps the fastest (and most expensive) way to compile a list is to use a list broker. There are several large companies that you can buy lists from, but most get their data from the same public sources that you can access. the most used seem to be listsource, melissadata and click2mail.
When using list brokers, you can narrow down your list to be more specific. For example, you probably don’t want to email someone who just bought their house last year, because there probably won’t be enough time to motivate them to sell.
filter based on:
- equity
- number of bedrooms/bathrooms
- year built
- year purchased by owner
- late payments
- Notice of Default Filed
It’s easy to get overwhelmed when trying to build your list. direct mail isn’t about getting the perfect list, it’s about continually testing and tweaking it to make it just right.
what to send to your direct mailing list
Now that you know how to build your list, you need to decide what to send to your direct mail list. the following sections will give you a pretty good idea of what’s out there. Please note: You don’t need to choose just one. many wholesalers ship all three types in a rotation.
Which type you prefer, be sure to create a template in word, canva, or your design app of choice to make mass-creating these direct mail pieces easier.
1. yellow letters
The yellow letters are exactly what they sound like: letters written on yellow paper. Usually handwritten, these letters are designed to appear personal and not from a large company. this informal style is designed to encourage the leader to pick up the phone and call you.
Yellow lettering can be done by hand or printed from a computer. (you’d be surprised how realistic a printed yellow letter can be). you can do it yourself or rent it to an individual or large company.
To do this type of direct mail, paper, ink, and envelopes are inexpensive (less than 10 cents per piece of mail), but the costs of preparation and mailing add up. expect to pay 40 to 60 cents to do it yourself or 75 cents to $1.50 if you hire an outside company.
2. typed letters
Direct mail doesn’t have to be casual to be successful. many wholesalers find success by sending more professional letters, complete with a company logo and a photo of the owner or estate.
Perhaps the most common use for formal letters is the probate niche, where a bright yellow piece of paper would simply offend the family of someone who has just passed away. the cost of this type of direct mail is similar to yellow letters.
3. postcards
Postcards can be a cost effective way to reach more people in your direct marketing campaign as they are cheaper to produce and mail. however, many marketers believe that better response rates can be achieved through letters. it all comes down to testing what works in your market.
Postcards can usually be printed for pennies, and postage for a first-class postage stamp is only 36 cents at the time of this writing, which means you can print and mail postcards yourself for less 50 cents each. or you can hire an outside company to do it for you for between 40 cents and $1.
what to write
The purpose of your message is to get the reader to call you. but that is not a simple task. Entire books have been written on the best way to write sales messages. however, most investors would agree: short and sweet is best.
Your message should be simple, to the point and “benefit oriented”. the recipient should be able to clearly know in seconds what’s in it for them. Some of the best messages tend to be under 20 words and say something as simple as “I want to buy your house for cash. I can close in 10 days. please call me today!”
It’s also okay to be creative. experiment!
split test
No matter how smart you are, the fact is you don’t know what’s going to work. Is a message on a yellow sheet of paper or a message on a white sheet of paper going to get more calls? what about a blue envelope versus a red envelope? We can guess all day, but until you get out there and try it, it’s all just guessing.
Split testing is the process of trying different things and keeping track of the results. for example, you might want to set up two phone numbers for people to call. in half of their direct mailers they offer the phone number to with the yellow paper. in the other half, offer phone number b with the white paper. then send them out and see which group produces the most calls.
Small changes like paper color are unlikely to be big, but even a small difference in conversion rates can make a big difference in your bottom line, earning you a lot more money.
In addition, it is important that you allow enough results to consider the test valid. For example, if you send 10 letters to group A and 10 to group B, and group A receives three phone calls and group B receives four, don’t assume that group B was better. with such a small number, it’s hard to get a solid understanding of a “trend.” maybe a couple of people in group a were out of town. we recommend sending at least 500 per group.
A good marketer is always testing, tweaking, and improving in an effort to achieve the highest return on investment. Once you “crack the code” for a successful direct mail campaign, you can increase your marketing and make an incredible profit for your business.
how often should you send mail?
Do you remember the first time you ordered something on amazon? what about ebay? best Buy? Chances are the first time you bought them was not the first time you heard of them. people generally need to build trust with a brand before making important decisions with the company. the same is true for wholesalers.
When a person first receives your direct mail, they will most likely ignore it. however, after receiving several letters, they become familiar with your brand and trust is built. some wholesalers suggest mailing every month to your list. others put their list in rotation.
How often you email will depend on the list you email and your instinct. it can be difficult to “split test” how often to send mail, so you may just need to pick one frequency and run it. then, it continues to send the mail until one of three things happens:
- they ask you to remove their name from your list.
- you buy the house.
- they sell the house to someone else.
- set a budget.
- decide who to target.
- decide how you want to target them (postcards, yellow cards, etc.).
- build your list.
- plan your split test (optional).
- print your letters/envelopes.
- answer calls.
- do keep track of split test responses.
- keep emailing the list on a regular basis.
- get your deal.
only by sending regular emails can you optimize your chances of being the solution the day they need it.
To summarize what you’ve just read, here’s a 10-step process for getting your direct mail campaign up and running:
By following this 10-step process and continually testing and adjusting different aspects of your direct mail campaign, you’ll be able to maximize your return, attract new leads, and grow your business to new heights.
bigpockets note: These are opinions written by the author and do not necessarily represent the views of bigpockets.