Why You Are Doing Direct Mail Wrong

The question that Zack Childress poses in every podcast is how do real estate investors build real wealth and freedom without access to millions of dollars in capital? His mission is to help you find the answer.

You are doing direct mail wrong—I’m sure of it. It’s a paid lead source. And since you’re paying for it, be sure you’re doing it right.

Within the advertising world, direct mail has the lowest response rate of any advertising method. It’s the nature of the beast.

That’s why you need to focus the list… only mail to certain ZIP codes, only mail to properties that have built up at least 50% in equity.

Mailing multiple times gives you multiple opportunities to follow up. You should link letter 1 to letter 2, and link letter 2 to letter 3. It makes a difference.

Layer the pain of the potential seller. Get a list of out-of-state owners (1st pain layer) who are also about to go into foreclosure (2nd pain layer). The deeper the pain is for that owner, the more likely he is to sell.

Watch and learn:

Listen and enjoy:

What’s inside:

  • Mail to the same people several times
  • Storyboard your message
  • Layer your pain
  • Use your returned mail

Mentioned in this episode:

Transcription:

Download episode transcript in PDF format here…

So, the big question is this, how do aspiring real estate investors like us escape from the rat race and build real wealth and freedom without access to millions of dollars in investment capital and start to live the life that we know we deserve? This is the question and this podcast will give you the answer. My name is Zack Childress and welcome to Real Estate Investing Talk Show.

Zack Childress:             Let’s dig in. Let’s do again, right? Let’s just talk serious really quick about what it is that you’re not doing when it comes to direct mail. And the moral of it is this. Why do we do direct mail? We do direct mail to get more leads, right? We want leads so we can convert them into deals and we want deals so that we can convert them into money, right? I mean that’s the whole purpose. It’s called marketing. It’s the name of the game, right? But a lot of people don’t understand that marketing. There’re two forms of marketing and there’s paid marketing and there’s free marketing, right? And look, we can target free marketing all day long and you should target free marketing if you’re first starting out. Because free marketing is where you can start testing your scripts, you’re calling your negotiations, your ability to communicate on the phone. But once you have gotten under your belt a few deals and you understand how to talk to sellers and you start really working that process, you know, you got to move to the next level, which is paid sources of leads.

Zack Childress:             And one of those is direct mail. I’m a fan of direct mail, I’ve always been a fan of direct mail. I think direct mail opens up a whole other world of lead sources. But you know, direct mail can be your enemy if you’re not doing direct mail. Right? And so, and the reason I say that is because you’re going to spend money on direct mail, you’re paying for a lead source and if you mail out a thousand leads sources or leads, if you mail a thousand prospects, you’re not going to get a thousand leads back. It’s just not going to happen. And direct mail, especially if you’re doing a mass direct mail campaign. You’re probably seeing a one percent, maybe two percent inbound lead source off of that campaign. But there’s ways to create a better response and I higher inbound call from a direct mail piece and we’re going to talk about that today here live on your Real Estate Investing Talk Show with Zack Childress. That’s me. So, there’s four main things we’re going to talk about today when it comes to direct mail. And if you’ll just change these little things, I promise you, you’ll see a huge increase in your conversion from mails to inbound calls. Plus, you’ll see an increase in your communication with these sellers and your response rate. So, the number one is doing what we call mass mailing everyone. So why is that a bad thing to do? Well, number one is it’s very expensive. So, if you don’t have a budget or if you don’t have a budget, then do it. If you have a budget, it’s the wrong thing to do because you can’t mail everybody and think you’re going to get enough time to keep mailing them when you have that big of a list. For instance, pulling all the out of state owners are all the foreclosures are all the equity properties with 50 percent of equity in them, but when we’re doing mass mailing, the problem with mass mailing is we’re mailing every single lead and an entire market and the problem with that is not every one of those leads are valuable to you.

Zack Childress:             So, when you, if you’re working on a budget and you want to get a higher response rate, you follow the market segmentation approach. You follow the zip code clustering approach. You narrow down your cluster zones and you mail directly to those cluster zones. The beauty of that is you can now do mailing on a budget because instead of mailing 8,000 people, you might only be mailing 1000 or 2000 people. And just to give you a cost association. If you’re going to mail and you know, write this down. It’s not in my notes to talk to you about today, but I’m going to write it on here just so that I know I talked to you about it. When you’re mailing a list, you always mail a postcard first, you always mail a postcard first, so if you’re mailing a thousand people, it’s going to cost you about 600 bucks, somewhere around there, five, 600 bucks to get that postcard out to everybody, but the reason that you mail that postcard is because it filters the list.

Zack Childress:             So, if I mail thousand people, let’s just say, and I get 300 of them back, that means that 700 of them actually got somewhere, 300 of them were non-deliverable, so I’m not going to mail those 300 in that campaign again. Now I am going to mail those 300, but I’m going to move them into a different category and I’m going to go after skip tracing. I’m going to go skip trace those 300 people. I might end up finding 100 of them. Well now that 100 is a whole new list for me and we’ll talk about that a little bit later. But the number one rule is, especially if you’re working on a budget, is don’t mass mail, don’t mass mail, don’t do it. You’re spending all your money on mass mailing and you’re mailing them one time, and that takes me to topic number two.

Zack Childress:             Topic number two is if you were only going to mail one time, don’t mail at all. That’s part of what you’re doing wrong is you’re mailing them one time, you’re not going to get the response that you’re looking for. You’re not going to get the leads that you’re looking for. You’re not going to get that direct mail to work at the level it should work. If you’re only selling one time. Now I’ve already said you should always mail a postcard first, right, and that’s because it helps filter the list. So, if we mailed a thousand people inside our cluster zones, we’re supposed to, from there, we’ll mail thousand people, 300 of them come back because I’m mail postcard, right? I take that $700 and now I’m mail them a second time with a letter campaign. It’s usually some form of hand written, type letter, and then the third, I always mail a minimum of three times because the third mailing piece is more of a corporate style letter, so I mail a postcard I mail some form of handwritten letter and then I mail some form of corporate letter and that way I’m touching three different types of sellers.

Zack Childress:             I’m touching the hyper seller with the postcard. I’m touching the seller who is not really looking for the corporate type person, but just some local home buyer with a handwritten letter and then I’m mailing a corporate ladder so that if someone is looking for a more professional type company, they’re going to be more engaged in that letter. But the point is I’m touching them three times with three different aspects of a campaign or a letter campaign. And so, it allows me to get a higher response rate over time. So, when you look at that, you’re going to have some cost in it. The postcards going to be roughly sixty cents. Each letter’s going to be anywhere from a dollar to a dollar 50 depending on where you get it at or how you ship it out. So over that lifespan of that campaign, you’re probably talking about $3 somewhere roughly in there, you know, so somewhere roughly in $3.

Zack Childress:             So, if I’ve got a thousand people I’m mailing, a postcard to let’s do the math, that’s $600 for that thousand people to go out, then it comes back and I’ve got 700 left to mail my letters to each letter is going to cost you about a dollar 25 depending on where you get it at. So, you’re talking $2 and fifty cents, right? So, if I take $2 and fifty cents times the 700, that tells me, did that wrong, that tells me I’ve got an additional 1750 on top of that. Right? So, my total budget for that campaign of a thousand prospects to mail them three times is going to be 23.50 23.50. Okay. This is why I say to you guys all the time, like if you’re going to do direct mail, do it right where you can do follow ups because the more times I touched, the more opportunities of deals I’m going to get.

Zack Childress:             That’s why topic two today is all about don’t them if you only going to mail once. So, we’ve covered two topics so far. Number one was don’t do mass mailing if you’re on a budget. Okay? Number two is don’t mail them one time. Mail them multiple times, but you can mail multiple times better because for instance, let’s just look at this. If I was going to do mass mailing, okay, if I was going to do mass mailing to every single foreclosure in my market, let’s say that that’s 4,000 people, well that’s going to cost me 4,000 times sixty cents. You know you’re talking roughly 20 something 100 dollars, 2000 and something dollars. That’s for one piece of mailing, mailing everybody. But now if I take that list and I narrow it down to cluster zones and zip codes and use my cluster areas, I can have a more targeted approach that I can touch multiple times for the same price by doing it that way. Following that methodology.

Zack Childress:             Okay. So, let’s talk about topic three. Topic three is something that I think is you, you learn it over time, just starting out in direct mail. You’d never know to do this and this one will share it with you and it’s called story boarding your message. Okay. Why do we storyboard the message? Well, if you understand what storyboarding is, it’s like when you, you lay out like I don’t know, 10 boxes and you say, I want to tell a story from a to z and how am I going to tell this story. Well I’m going to break it up into 10 sections? Right? And so, it’s called storyboarding. You build the story until like 10 different phases. But in our case, we would build it into three. So, for example, when I’m mailing the postcards, I would end that postcard with a message that says something like, you know, if I don’t hear from you, you know, I’m, I’m going to be sending you a letter with more information about how I can help you.

Zack Childress:             So now they’re reading it and they’re going, okay, this guy’s going to send me a letter. So then in 14 or 21 days later when I send the letter, the letter starts with, dear owner, I hope you received my postcard. I’m writing you today in regards to your property at one, two, three, you know, Magnolia Street, and I go through the whole direct mail messaging. And then at the bottom I always put PS, you know, hey, you know, I’m looking forward to communicating with you about your property to get it closed quickly. PSS, if I don’t hear back from you, keep your eye on the mail, I’ll be sending you another letter with more information on my company. So, I’m storyboarding that message. You follow me? So now I’m linking them, I’m linking them together. So now they’re starting to say, man, yes, the reading letter.

Zack Childress:             Oh yeah, I remember Manny sent me this postcard. Oh, and now he sent me a letter and so when they’re done with that letter, they’re reading, oh, he’s going to send me another letter. So now they’re building a relationship with you just through mail because you’re linking and storyboarding that message together across three different pieces. And that’s why storyboarding is one of the best ways to establish a relationship with a prospect before you even get on the phone with them and using creative mailing. I’ll tell you, that’s a great way to establish a relationship because you’ll get a lot of phone calls where people will just be like, man, that was a great message or love that piece of mail you sent me. It really got my attention and so it breaks the ice a little bit. So, when you get into creative mailing though, you can assume your cost is going to go up.

Zack Childress:             But for example, if I’m mailing foreclosures, I’m not going to be doing a lot of creative mailing. If I’m mailing high equity properties with, you know, 100,000 of equity in them or more, I’m probably going to spend a little bit more for my direct mail piece because that is a higher that that is a more valuable lead, I’ll just say it that way. So just remember number three is storyboarding and linking, linking the messages together, building a storyboard so that it’s almost like they’re, it’s almost like a pen pal. Right. Like you’re writing, you’re communicating, you’re talking, you’re, you’re building a message through that direct mail piece that links the message on what you’re trying to create. So, for instance, if I’m mailing to someone in foreclosure, you know, part of my messaging might be why they need to sell quickly or what some of the aspects of mailing or being in foreclosure could be, right?

Zack Childress:             So that’s something you want to think about. So, like in my letter I might say, look, here’s some things you need to be aware of in foreclosure. And then from there I might say, but I’ll send you more information later. So, then the third letter might be more of a message about where I’m pointing out, more things that they need to be aware of. So, you just got to keep that in mind. So, it helps you build that relationship, build that communication so that you’re really engaging the prospect. All right, that’s number three with direct mail. Number four with direct mail is you’re not layering your pain, you’re not layering it? What is a layer pain that some people might ask me? Well, listen, I’m going from a big list down to a small list, but that small list is very, it’s very filtered.

Zack Childress:             It’s very direct, it’s in a very specific area and I have multiple layers of pain when it comes to that type of list. And so, and one of the things that we do to do that is we do layering, for example, we’ll call a list broker will say, look, list broker, I’m looking for prospects and this city in these zip codes that are facing foreclosure. And they live out of state, right? So meaning it’s an out of state owner that owns this property and they’re behind on payments. Well, that’s two layers of motivation, so it’s not like they’re just living out of state. Well, they may not be that motivated, but if they’re facing foreclosure and they live out of state, that could be even more motivation for them to sell. Or I could mail someone that who lives out of state, who inherited a property and is behind on payments.

Zack Childress:             Like that somebody who basically just inherited a property that they don’t even live in the area, now they’re behind on payments because they can’t keep up with it. They probably didn’t want the property anyways. And they live out of state. That’s three layers of pain that would encourage them to want to sell quickly. So, you got to think about that and be creative with it. I have a, a good friend out in the Arizona market. He does a mailing campaign that is just absolutely genius. It’s genius. And instead of mailing people in foreclosure saying, hey, you’re in foreclosure, I can help, I can help, I can help. Which is what everybody else is mailing them. He has an entire campaign that he mails them that says, you know, do you have stuff that you want to sell? We’re, we’re buying stuff in your area. TVs, you know, clothes, chairs, computers, pictures, he basically mails people who were in distress who need money and says, look, we’re, we’re a stuffed buyer.

Zack Childress:             We buy stuff. Right? And what that does is people in that situation, I’m like, yeah man, I need to sell some furniture. I need to sell some stuff. I need to sell this car out back. I need to sell some stuff. So, they call him up and say, yeah, we have stuff to sell. Can you come over to the house and look at it? He’s like, yeah, what that does is it gets him to the property. It gets him in and they buy stuff from these people. I mean as long as they’re getting it at the right price because then they go sell it on, you know, Marketplace on Facebook and some other sites out there. But it gets them to the property when they’re looking at the stuff, you know, they say, well look, you know, we buy stuff but we also buy houses.

Zack Childress:             Would you, are you trying to sell your property? And what it does is it gets them in the door doing something different than everyone else and he’s having massive success with this. And so that again, you got think outside the box sometimes in direct mail. Direct mail isn’t always the same old, same old every single time, like be different, creative a different message, create a different USP. What is the USP unique sales proposition be different in your campaign? Does that mean sometimes you got to test some things? Yeah, it does. And that’s what direct mail and marketing’s all about. Marketing is about testing. Marketing is about trying new things over and over again until you find something that works, that works good for you. Because here’s why. Look, stuff I was mailing last year does not work right now. It’s a different market and look the stuff I’m mailing now won’t work in two years.

Zack Childress:             We’ll be in a different market. So, you’ve got to think about that, keep that in your mind, but just to reiterate the four things, to go back to our point of topic, why you’re doing direct mail wrong, number one, while you’re doing it wrong, because your mass mailing, number two, you’re mailing one, piece. Number three, you’re not linking in storyboarding your messages and number four, you’re not layering the pain, you’re just going to list source. You’re pulling a list and you’re mailing it. That’s not the way that you do direct mail. Yeah, that’s an easy way to do it, but you won’t, you’ll get some results from it, but you won’t get the level of results that you should be getting from direct mail if you don’t treat direct mail like its own little marketing business inside of your business. So, let me just drop another little golden nugget on you guys. Okay?

Zack Childress:             And this is be thankful for returned mail. That is an entire list in itself. Okay? You need to build an entire returned mail database. Any mail coming back to you needs to be put into a spreadsheet and needs to be sent to a skip tracer or you need to skip trace at yourself and let’s say over 90 days you end up with 300 returned mail pieces. If you send that $300 returned mail pieces to a skip tracer, you’ll probably end up with about 100 to 150 that they find. That’s a whole new list. That’s a brand-new list. That’s a list that’s untouched because most people who do direct mail don’t do it like I’m teaching you. That’s why they don’t have a lot of success with it. They send one piece and it’s over. They don’t go after the returned mail.

Zack Childress:             You take that returned mail and then you go skip trace it and you build that list up also, you’ve got a whole new list that people aren’t targeting. So anyways, guys, that’s my message for you today. My message for you today is why you’re doing direct mail wrong. Those are four key points that if you’ll change. Those four points to your direct mail, your game, you will step it up big time. You’ll get a, you’ll get a massive response rate. You’ll see a better communication with the prospect as you move forward. But remember this, direct mail is only one source of leads. Okay? You need multiple sources of leads to be successful in any business, especially real estate, so keep that in your mind why you guys are out there becoming bosses. All right? Remember, be blessed, be a boss and this is your time. Make it happen. This is Zack Childress. I’ll see you guys next week. Bye now.

You’ve been listening to the Real Estate Investing Talk Show. I’m Zack Childress and I’m on a mission to create 10,000 real estate bosses over the next year. Will you be one of them?
Head over to my website, ReiSuccessAcademy.com/webclass, and register for my free web class, where you’ll discover how to escape from the nine to five grind and become your own boss in real estate. See you there.

 

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