Real Estate Marketing

5 Direct Mail Metrics Every Real Estate Investor Should Track Religiously

Expertise: Personal Development, Real Estate Wholesaling, Real Estate Investing Basics
90 Articles Written
direct-mail-metrics

Hopefully those of you who made a real estate resolution to start your direct mail campaign have.

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Unfortunately (or maybe fortunately), this post is not about your New Year’s resolution, your goals or your desires for 2016. Hopefully all of that is already laid out. If you’re following through and finally taking action, congratulations!

I recently wrote an article titled “Wholesalers: Having Trouble Getting Starting? Take This One Step Today!: After reading this, maybe you got your letters and envelopes ready and your postcards prepared to be shipped. Some of you may even be receiving calls. Now that you’ve started, have you asked yourself how you know whether your campaign is successful or not? Here are some specific metrics you need to track in order to determine if your campaign is a success or failure.

I’m sure most of you are saying, “I know my campaign is a success if I get a deal” — and yes, that is part of it and very easy to track, but if you’re not tracking these 5 metrics, you may be throwing money down the drain.

5 Direct Mail Metrics Every Real Estate Investor Should Track Religiously

Tracking is very important. I will briefly introduce you to the metrics you need to track to ensure success with your campaign. There are many more, but these will get you started.

1. Response Rate

The response rate is the number of people who called from your direct mail piece divided by the number of pieces sent. It is usually expressed in the form of a percentage. For example, if you sent 1,000 pieces and you received 10 calls, you produced a 1% response rate, which is the norm for most direct mail campaigns.

Related: Real Estate Direct Mail 101: What You Should Know Before You Spend the Money

This number is dependent upon many variables, such as the market, niche, time of year, and the mail piece itself, to name a few. So don’t get discourage if an investor in Cleveland gets a 8% response rate and you in California only get a 1% rate.

real_estate_direct_mail_101

2. Cost Per Lead

The cost per lead is essential, especially if you are using multiple lead generating techniques. The cost per lead is as stated — how much did it cost for you to generate each lead? This formula is simple to calculate. Simply divide the cost of the campaign by the number of leads. This will provide you with insight on what form of marketing is most cost effective.

Using the figures from above, if you mailed 1,000 pieces and it cost you $500 for the campaign, your cost per lead is $50. As you can see, if you are using another technique that is more affordable, you may want to devote more of your energy in the other marketing technique; however, you will still need to see what technique generates the most leads with the least cost.

3. Conversion Rate

This is an area I am really trying to develop and cultivate. The conversion rate is the number of incoming leads you can convert to a deal and close. Boom! This is a key metric because the more leads you can convert, the better return on your investment you’ll see.

The increased conversion rate can be developed by working on your negotiation tactics and having numerous closing strategies, i.e. wholesaling, lease options, seller financing and referrals. It is always good to have more than one way to close a transaction.

4. Cost Per Closed Lead

This is the cost of the campaign divided by the number of closed leads. This will simply tell you how much each closed lead has cost you. This number need to be as low as possible.

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5. ROI

Enough said with this one, right? You want this metric to be as high as you can get it.

Related: How to Get a 40%+ Response Rate on Your Next Direct Mail Campaign

By tracking these numbers, you will be able to somewhat predict the effectiveness of your campaigns. This is done over time. For example, your response rate will increase during the duration of the campaign. So the more times you contact the seller, the higher your response rate will likely be. The others will respond the same way, except for cost per closed lead, which will decrease.

The most important factor in direct mail is consistency; by being consistent, you will be able to improve upon these numbers. It’s great to challenge yourself to see how efficient you can be with your direct mail by monitoring your numbers. Remember: Measure, measure, measure and test, test, test!

I would like input on other data that should be tracked.

The more we can get in the comments, the more helpful it will be for other readers!

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. He has also converted some of his deals into cash-flowing rentals. Marcus holds seven rentals, two of which are commercial units. He’s even purchased a school, which was converted into a daycare center. His overall goal is to turn what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (buy, rehab, rent, refinance, repeat) strategy to increase his portfolio without any money out-of-pocket. Marcus has been featured in numerous podcast such as the Louisville Gal Podcast, The Best Deal Ever Podcast, The Flipping Junkie, and many others. He contributes content regularly to his YouTube channel and blog.

    Timothy Friars
    Replied over 3 years ago
    If 1% is the norm for a response rate, is there a norm for a cost per lead?
    Marcus Maloney Rental Property Investor from Queen Creek, AZ
    Replied over 3 years ago
    @Timothy Thanks for reading, the cost per lead is dependent upon your area, if you are in a highly competitive market like I am your number will be higher. So to give you an exactly range is difficult due to many factors. However you can possibly contact one of the larger wholesaling outfits in you market and ask some leading questions to try and find that answer or attend some meet ups and you may be able to find the answer there as well. “Enjoying the Journey”
    Account Closed Investor from Walnut Creek, California
    Replied over 3 years ago
    Great post, Marcus. I also like to track Average Deal Size and Sales Cycle (how long it took to close from the point of initial contact). Tyler
    Brandon Gentile Real Estate Agent/Investor from Clarkston, Michigan
    Replied over 3 years ago
    Interesting metrics. I like that idea, Tyler!
    Marcus Maloney Rental Property Investor from Queen Creek, AZ
    Replied over 3 years ago
    Tyler, Thanks for the feedback; those are also great metrics to monitor. Its great to see that this business you can do solid projections off of your previous outcomes. Thanks again for your response. “Enjoying the Journey”
    Andy Webb Real Estate Agent from Carrollton, Texas
    Replied over 3 years ago
    What’s the best way to set up your tracking system? I have started everything in Excel.
    Marcus Maloney Rental Property Investor from Queen Creek, AZ
    Replied over 3 years ago
    Andy, We are currently using Podio by Citrix but there are other programs that are available. We use Podio because it can be customized for your business exclusively. You can find a programmer to develop the crm for you on upwork.com. Research Podio on youtube or google it and you will witness the functionality of the platform. Hope this helps “Enjoying the Journey”
    Account Closed Investor from Walnut Creek, California
    Replied over 3 years ago
    Andy, in my opinion, it’s best to start small and keep things simple. For that reason, Excel is a good choice to start dumping everything into so at the very least it’s captured and stored. From there, you can start playing around with the data and figuring out what metrics you want to track (hopefully using Marcus’ suggestions 🙂 ) and formalizing a reporting process. Since manual data entry does not scale, you may see opportunities to automate the process over time as your system matures. Or, you might find the spreadsheet provides everything you need. If you already have other systems in place, you may be limited in how you can pull (or push) the data out (or in) the system. I do suggest you take a look at moving over to Google Sheets vs Excel as that will give you the flexibility of pulling the data into other systems (and vice-versa) via api or simple scripts. Hope that helps.
    Gerardo Dominguez Real Estate Agent from Chicago, IL
    Replied over 3 years ago
    Great article @MARCUS MALONEY. Thanks for posting!
    Adam Carlson from Bloomington, Illinois
    Replied over 3 years ago
    Thanks Marcus, Just to avoid confusion for folks new to direct mailing, I think the Cost Per Lead was mistakenly calculated at $50 per lead. I believe you meant 50 cents per lead. Thanks again
    Marcus Maloney Rental Property Investor from Queen Creek, AZ
    Replied over 3 years ago
    Adam, Thanks for catching that I appreciate it.
    Brandon England Real Estate Agent from Marietta, Georgia
    Replied about 3 years ago
    Technically, I’d call the actual lead cost in his scenario, $50. He got 10 responses (leads) at a cost of $500 which is $50 each. I’d consider the other 990 addresses as potential leads.
    Kerry Baird Rental Property Investor from Melbourne, FL
    Replied almost 3 years ago
    Several months later, and your article continues to pull. Glad to see what you and others are measuring.
    Marcus Maloney Rental Property Investor from Queen Creek, AZ
    Replied almost 3 years ago
    Kerry, Thanks for reading I love to provide valuable content for everyone. I discuss this and other topics a lot more on my personal blog at equityrealestateblog.com Again thanks for reading “Enjoying the Journey”