Hopefully those of you who made a real estate resolution to start your direct mail campaign have.
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.
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.
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.
Enough said with this one, right? You want this metric to be as high as you can get it.
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!