Direct Mail Marketing; Is More Always Better?

June 8, 2016 in Investing In Real Estate

direct mail marketing

 

Direct Mail Marketing….

When you think about how to do more deals in your REI business, most people immediately think about increasing their marketing especially their direct mail marketing.  More marketing typically equals more deals right?

Here’s the question; is more always better?

Will sending out more mail pieces make you more money?  Maybe.  However there are a number of things to consider.

 

Building Well Defined Lists

You get your biggest bang for your buck when your list is good.

Where did you get those additional contacts?  When you decided to send out more direct mail, how did you decide to add those additional names?  Did you just buy another list without giving careful consideration to the criteria and filters for that list, or did you just choose a list and hit the buy button?

You can always get more lists but does that mean they are potentially motivated sellers?

Not necessarily.

Let’s assume you have been doing direct mail marketing to out of state absentee owners, and you decide to add instate absentee owners.  “All” in state absentee owners may not be the best choice. You need to add some filters like these:

  • Home Values:  What priced homes do you buy or do the folks on your buyer’s list buy?
  • Equity: How much equity is in the home?  In most cases you want a home with a chunk of equity.
  • Are there certain counties that you want to omit?  Maybe they are just too rural or there is another reason they wouldn’t be a fit for you.

You want to have a criteria for any list that you buy. The reason for this is because you want to identify homeowners that are more likely to be motivated.  There’s no use wasting your time or your money with direct mail marketing if the folks on that list don’t meet your investing criteria.

That’s the first step to sending out more direct mail in your real estate business. The next step has to do with handling the increased business.

 

 

Do You Have Systems in Place to Handle the Increased Volume of Calls?

Let’s assume for just a minute that you’ve increased your contacts for your direct mail marketing by creating some additional lists for your business. Before you ever start sending out more direct mail there is one more thing you need to look at.

Are you ready to handle the increased call volume?  If the answer is no, you need to stop right here and figure this piece out.

  • Who is going to answer these calls?  If it’s you, can you realistically handle the increased volume?
  • What are my choices if I want to outsource this to a phone answering service?
  • How much money do I have TODAY to spend on getting help with the calls since my deals haven’t increased yet?

 

Can I Expect to Make More Money From the Start?

The natural assumption would be that if I am sending out more direct mail I will certainly be getting more deals therefore I will have more money to scale up.

Well….maybe.Direct mail marketing; is more always better

But …. probably not.

Remember that direct mail is like a tumbleweed.  It takes a while to gain momentum.  Roughly 85% of your deals will come at or beyond the 5th mailing.

Putting that into perspective, doubling or tripling your direct mail pieces will not immediately double or triple your deals or your income. I can pretty much guarantee that.

 

The Downside of Scaling Up Too Fast

Some people are happy doing a few deals a year and that’s perfectly fine.  There is no “one” size everyone’s business should be.

However if growing a big business is your plan, you need to do it in increments. You need extra cash on hand to cover those increased expenses when your income doesn’t (yet) match up with your new level of expenses. Doubling or tripling your direct mail marketing is costly so you need to be able to hang on until it starts to pay off.

Plan to have somewhere between 3 and 6 months cash banked before you hire people that will greatly increase your expenses.  Look at this like you would having an emergency fund in your personal life. A good outcome is almost always about the planning.

 

Want More on this Topic?

Here are 3 great podcasts for you with folks that successfully scaled their businesses up.

Scaling Your Business to 100K with Chris Bruce.

Jeff Kowalczek – How Hedge Funds Help Scale his Business Fast

How to Wholesale 100 Houses a Year with Andy McFarland

 

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