Guerilla Marketing, Lesson One
What separates the successful professional investors from those of us who look in the paper every week for a “deal?” The biggest difference is that they seem to attract deals and money while we are stuck in a trap of no or minimal action. So where do we begin? As has been said many times, education and action. With that in mind, lets begin a short lesson in attracting sellers through direct mail.
Step one: Determining your demographic.
If you are saying, I just want to find a motivated seller, then you are going to waste a lot of money in marketing. Instead, determine what specific type of deal you want to do, and the specific condition that you want the seller to be in. Motivated is not enough. Motivated, needing to close by next Tuesday, willing to sell subject to, and having at least $10,000 in equity; now that is a specific demographic.
What is the reason for this exercise? Essentially it will provide you with a good idea of the type of message that you need to send and the medium through which to send it. Different demographics have different needs which need to be addressed to maximize your return.
Step two: Cater your marketing message to your target demographic.
If you know how your customer thinks, you can touch the emotional points that will make them contact you. Customers will only react to emotion, and only move if you convince them that you have something that they need. There is a Maslovian adage that people will endeavor to decrease pain and increase pleasure. With this in mind, fear and greed are the two most effective motivators out there. I use both alternately with the same prospect to incite action from them.
After determining your marketing message, you must determine your marketing medium. Will yo use post cards or envelopes. Both have varying levels of effectiveness depending on their form. A piece of direct mail will on average get about three seconds of attention from your prospect. In that time, you need to make sure that the piece gets enough of their attention that they pay the additional 15 seconds of attention to it that is most common. Envelopes that appear to be personally addressed or hand mailed may get opened where “junk mail” envelopes with bulk mail postage will get discarded without being opened. Post cards with large red print and a simple message are useful in getting attention as well. Personably, I use both with the same prospect at different times to get my response.
It is worth repeating that you prospect will give only a couple of seconds of attention to the piece unless it catches their attention. If you don’t believe me, just keep this in mind tonight when you check your own mailbox. A useful exercise may also be to keep track of which mail that you receive catches your attention.
An important caveat that is overlooked by many trying direct marketing for the first time. Make sure that your message speaks to your prospects in their language. If you are targeting owners of double wide trailers, don’t be afraid to use slang to get your message across. Speak to your audience.
Step Three: Find the list
I use a couple of sources for my direct mail leads. The notice of default and lis pending lists from the county recorder are excellent. I also supplement this list by renting a demographically targeted list from a direct mail company.
Step Four: Fulfillment
Believe me when I say that you will only sit and stuff envelopes once before you figure out that your time is more valuable than this activity. There are many companies that specialize in mail fulfillment that will print your material and mail it to your list. Find one of these companies and pay for their services. It is worth it.
Step Five: What now?
Actually, this is part of fulfillment. When you contract with a direct mail company, make sure that your create a plan and a mailing schedule with them. Ask for discounts for multiple mailings and multiple creatives. When using direct mail, or any marketing for that matter, you must keep in mind that it will take an average of six exposures to a message before a prospect will take action. Therefore, plan to repeated message to your target list. As I said before, I alternate between envelopes and post cards and vary my message to create fear or capitalize on greed.
Step Six: When will the phone ring?
The outcome of your direct mail marketing depends on how effectively you matched your message with the needs and wants of your customers. However, some statistics that you must be aware of are that a direct mail piece with a 1% success rate is considered good, and anything with a 5% response rate is phenomenal. If you get send out more than 100 pieces and get one phone call, you are on par with success so please budget accordingly. Also, your response rate will grow and usually stabilizes at about 3% over time so by the sixth mailing, you should be getting three phone calls per 100 pieces sent.
Essentially this means that if you are serious about attracting customers, you must create a marketing budget that will not cost you more than you expect to make. Choose your targets wisely and planning on making direct marketing a continual investment.
Final Hints:
The objective of any direct mail piece is to get your prospects attention. The use of odd shapes, or sending unique containers will dramatically increase your response rate. Although more expensive, these type of pieces make a great addition to your standard direct mail campaign and generally get a better response.
Barret,
Good synopsis of the results you will receive from Direct Marketing. I've used this in other businesses quite successfully and seen the percentages you mentioned. But I can attest to spending 20-40 hours suffing envelopes during my evenings and weekend time so I would save a dime just to mail 3000 letters.
Thanks,
Robert
Good article! Every word is a gold for those who want to listen.
Let me share my experience with my fellow investors or investors to be:
My last campaign I sent about 60 letters: 12 came back because properties were vacant; I got 23 calls, where 20 were "tire-kickers" who responded to my "compelling" message and 3 were potential deals where for 1 it was too late and 2 others I lost due to lack of experience in negotiating. Practice in negotiating - Lesson number one! Lesson number two: do not make your message compelling to everybody if you do not want to spend time eliminating tire-kickers.
Lesson 3: as it was said in the article, you have 15 seconds to grab attention, so HAVE a HEADLINE.
I spoke to DataQuick sales person (direct mail lists) and found out that they can supply me with prospects according to my criterias. By my first criteria they fetched 1030 records, meaning that now I have to print, fold, handwrite envelopes, stuff, close, put stamp on 1030 envelopes, because if I do not handwrite them they are more likely to end up in the garbage. I decided to go with postcards this time. I am designing several of them to see which one brings more response. Important lessons are:
1. do not waste your time mailing yourself;
2. use listing service; I had 57 prospects after spending about 20 hours searching, creating my database, fetching records online from assessor's offices, etc. vs 5 min on the phone and paying 21 cents per record for 1030 records. Go figure.
According to direct mail statistics the best response rate you get after 4th mailing to the same person. So keep doing it and do not get discouraged!
Read this article once more an apply.
Best luck
Olga
Dear Olga,
You are mailing too much. Cut your area down to about say Foster City. Then study the maps and get to the point where you can identify streets in order and direction. You might drive the areas and really get to know it. Stores and houses etc., etc. Then on you Dat Quick pull the NOD's confined to your Zip area or if possible by Thomas Guide page and location. Then duplicate the Notice of Default Notice. Envelope and Stuffer. Then insert your own stuffer slightly modified. You offer a free analyse of the property. Then run and bang on the door and there you are ready to advise. The rest is up to you . You have an attractive voice so learn the close. Transaction Transaction. Seduction of Business it is all the same. Let me know how you do. Cheers love to the bably Lucius
Lucius,
I am not targeting foreclosures in my area. They are very rare now. I am targeting homeowners of luxury homes who do not have equity and trying to sell their houses.
I am getting high rate response when I mail, so that's pretty good.
I evaluated your suggestion to mail "undercovered NOD" long ago when you first posted this idea on TCI. The problem with this, in my opinion, is that I do not fit to be foreclosure consultant - I can buy myself or get a buyer, this all I can do.
I am unfamiliar with the "listing service" term you used?!?! I live in a small city of around 100,000+ people. Would this size community have a "listing service"?
Barrett,
My God I thought I was back at Georgetown University attending the formalized education portion of my PsyWar/Guerilla Warfare training. What you say is most correct but there are variations on it which must be considered. Besides, Maslovian Adage, Mail Fulfillment. Yip, But may I suggest that you come on down to the level of us simple people. For Example: Duplication of envelope and stuffer delivered as legal notice of Notice of Default. Modification of stuffer to display the message that they should contact you to correct the default. This of course changes the statistics of contact. It also throws the advantage back to you. I assume that you would then run and visit the property and get into the real transaction.
Having been involved in the creation of leaflets directed to the enemy that entitled them to one free surrender and quick transport to the peaceful camps which would then feed, bath and take care of the carnal needs of the newly surrendered. It worked, but only because the other items present in the conflict were active. Of course I always took great pride in that these small leaflets had a most sanitary effect on the battlefields.
Six exposures to sink the message. I would suggest a different game plan. Why not play King of the Mountain in a most restricted area of which you know everything. Take North Hollywood, learn it like the back of your hand. Buy the Retran Service and run on Notice of Defaults that are within a week of posting for Trustees sale. They are now under the gun. It is the moment of highest fear and an introduction of instability into their psy. So you help and in the process you make money. You of course come to the property wih full knowledge of the default situation and all other recordings against the property including of course the original purchase price and subsequent refinances etc. etc.
This does require that you get off your chair and go to the property. I used to hit them between five and six in the evening. I wore the costume of the area. Shoes, slacks a sport shirt and I looked common and not threatening. Being a lover of all humans I did my best to help adjust their situation. It was fun. I still do it on occasion just to keep my mouth ajar and my cash replenished.
I once in a moment of intense comedy launched a mailer in the Bel Air neighborhood offering to pay $10,000 to their favorite charity or their bookey depending on the truth in their response. Our response rate was 15%. I know impossible. But then you see in this area strange and wonderful things can be done. Just avoid the Maslovian view and concentrate on those methods based on a good look at our normal home owner who is choked on high costs, and a stationary income. He needs you to knock on his door and extend a hand of help.
Cheers Lucius
Olga, you are correct. I think your selection of the high priced over valued property is right on in present time in your area. Please advise me how you do. I too like to learn and in this instant you can teach. Your ultimate buyers are they local in the area or like down here from areas like Jordon, Israel etc. There seems to be an exodus from those areas into California at this time. Probably the result of too many persons wearing high explosives in their vests.
Cheers, Lucius
I do not know what I possible can teach YOU! Have to admit thou that I am flattered, you really know how to talk to women
.
I have been doing nothing for a while because of the finals in college.
My buyers are local homeowners who live in mediocre to good neighborhoods and whose houses appreciated a lot in a last year. Because of low interest rates and the fact that houses in upscale neighborhoods droped in price, they can afford moving to uscale neighborhoods upon selling their current residence.
Olga,
You said that the high priced houses are not selling and are sliding in value. So that those who are in medium levels have a chance now to buy the upper priced houses.
Is this an indication of the top of the spike?? Your market is one of the leaders in the nation.
Such an event appears to be occuring here in Los Angeles. Conformation formation from your area would be of help.
Advise.
Lucius
Lucius,
What happened to you? I think this is 3rd or 4th posting of yours I read with "Advise" at the end. Advise remodeling trailer park, Advise on worker's compensation insuranse, advise on market spike!
You're always been an advisor and now what?
Yes, that's right. Luxury homes go below listing price, some hardly get any offers. I think we discussed this already with you over the phone. Interesting that real estate brokers are trying to get listings till November.
Everybody's waiting for after-election interest rate growth.