Investors and wholesalers -- For those of you who are using direct mail, or even using some other method of sourcing deals, what percentage of leads do you close? 1 out of 10? 1 out of 20?
What percentage are even worth making an offer on?
I've heard a lot of variation from other investors, so I wanted to get a general discussion going.
@Rob Drum Jr. This is a great question, Rob. I think the closing percentage depends on what an investor considers a lead. I have a lot of filters that I use before I consider a prospect a lead. Once it enters my CRM, then I would consider it a deal. It takes me about 160 leads to get one deal. This is not to be confused with the amount of prospects I'm actively marketing to, which is around 10,000 per month. We followup with our leads aggressively in my wholesale company so our closing percentage increases over time. Because of this, it's hard to say "Month 1 resulted in X number of deals". In month 4, we could close 10 deals, but it's difficult to determine if these deals came from followup or the 1st, 2nd, third, etc contact. Because of this, I go by how many leads it takes for us to get a contract. After we receive a contract back from a seller, the "clock" starts again. We count up to how many qualified leads it takes to get a contract, then we start again, and so forth. Probably not the best way to track this, but it works and makes sense to the team.
Currently, I cold call and and it takes me about 2400 prospects to get a deal. So if you were to relate this to direct mail, then it will take 2400 postcards or letters to get a deal.
We make offers on just about everything that touches our CRM. After our account representative takes the initial call and forwards it to our acquisitions manager, it's their responsible to present the offer regardless of how far apart it is from the seller's initial asking price. Sometimes, we have sellers asking for 100k+ more than our offer and my acquisitions manager is like "there is no way that he/she will even entertain that offer", but you'd be surprised. A few of them will entertain the offer and knock a lot off of their asking price. You never know unless you ask. I just typed up a response on another forum post regarding the metrics from my cold calling campaigns. It can provide a bit more insight as to what I referenced above.
@Cornelius Garland Thanks!! That's exactly the kind of thing I was wondering about. If I could vote this up twice I would! I'll check out your other post too.
I'm a numbers guy, so knowing the stats around marketing is super interesting to me.
@Rob Drum Jr. I'm glad I could help out. I love the fact that you can tweak your business based on the numbers. It's one thing to speculate if something is working properly, but to have the stats to back it up is so reassuring. If we're having a down month, we know what we need to do more of based on our previous results. Please let me know if you have any other questions. Hopefully some more experienced investors can chime in!
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