0.40% Response Rate on Yellow Letter - Looking for Suggestions

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0.40% Response Rate on Yellow Letter - Looking for Suggestions

Paul Felix
Austin, TX · Member since 2015 · 31 posts · 13 votes

I mailed 500 yellow letters to out of state property owners.  The mailer should have arrived in mailboxes around 3-4 days ago.  So far I have received 2 call from the mailer.  I used a standard yellow letter.  No modifications were made.  You can view the letter here.  https://www.yellowletters.com/product/investor-yellow-letter-1.

My list came from the central appraisal district.  I randomly selected 1000 out of state owners to mail to.  500 mailers went out a week ago and 500 will go out again today.  I sent one to myself and it arrived on Friday.

Based on other threads here on BP and elsewhere I expected to get at least 2 or 3% response rate and was hoping for something closer to 5%.  I may yet get a call or two, but it doesn't look like my response rate will come close to what others get on yellow letters.

Any ideas as to what caused the low response rate?  Here's my novice analysis of the situation.

- The letter itself has numerous people saying that it works well to generate incoming calls.  I have to believe that the letter is not the problem.  However, I do see that some suggest writing the address on the envelope by hand.  Others say this makes a marginal difference.

- Maybe more calls will come in over the next few days?  I don't know how long it should take to start receiving calls, but I was expecting that the majority of calls would come in shortly after the mail landed in mailboxes.

- My list is straight from the local county CAD.  I scrubbed the data thoroughly & ran it through google geocode api to get clean addresses.  I have not started to receive returned mail (likely will today), but if I assume that 20% of the mail is going to be returned that increases the response rate slightly but nowhere close to what others have reported.

- Maybe my target has seen too many yellow letters?  I plan to continue to mail to the same list indefinitely every month.  Perhaps the response rate will increase as the number of touches increases.  Others have reported that the response rate goes down and quality (conversion) goes up.  Not sure what to expect really.

My goal is to find opportunities to fix & flip.  The good news is that the couple calls I did get may generates some marketing fee revenue. 

What do you think I should do next?  Stay the course or make adjustments?  Thank you in advance for your feedback.

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Dannielle Spencer
Beacon, NY · Member since 2015 · 16 posts · 7 votes
10y
I'm not an expert either but I've been doing quite a bit of research on this myself because I'm doing my first marketing campaign this month. I recommend listening to Michael Quarles podcast on marketing (#81) if you haven't already. I think the biggest thing that I've learned so far is that you may need to touch people up to 5-7 times before you start to see a lot of calls come in. Being that you are in a very active area that may actually be to your benefit if you can find a way to stand out with your mailings because the people you are marketing to will already have received other marketing material and your marketing can build on that. When I went to do my mailers I made my own postcards via VistaPrint and pulled a list for my area for 1,300 homes via Listsource. In Listsource I chose absentee owners with 90-100% equity. I'm planning on running a campaign with 1/2 the list for at least 4 months and then adding on to the list as I go. I haven't sent it all out yet but I'm happy to let you know what happens when I do!
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  • Troy Sheets
    Developer · Philadelphia, PA · Member since 2013 · 1k+ posts · 902 votes
    10y

    @Mark Redmann

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  • Paul Felix
    OP
    Austin, TX · Member since 2015 · 31 posts · 13 votes
    10y

    Thank you all for the suggestions.  I have a batch of mailers that will be landing in owner mailboxes over the next few days.  For those interested in the numbers, I will post the results here.

    What did I learn?  Based on all of the feedback, I think the most important lesson is that the Austin area market is very competitive.  Mailers like the Yellow Letter may work well in some markets, but it is going to take a little more creativity to break into a market where sellers are receiving many offers from investors already.  Exactly what that creativity is going to be, is yet to be determined.  Second lesson is that talking about math is the fastest way to end a conversation!

    Thank you again for all of the feedback.

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  • Paul Felix
    OP
    Austin, TX · Member since 2015 · 31 posts · 13 votes
    10y

    A second round of 500 yellow letters went out early last week, and I've compile the results below.

    1000 total yellow letters sent

    6 unique responses (I missed 1 call that did not leave a voicemail)

    0.60% response rate

    4 returned letters (may increase slightly)

    0.40% returned to sender

    After speaking to a few recipients of the yellow letters, I can confirm what others have already stated.  In my market property owners are receiving many of these letters.  Some say they receive the letters daily.

    Some have suggested that my list is the main problem.  I agree somewhat.  My list did match the criteria that was suggested with minor discrepancies which do not account for the response rate.  However, in my target market my list was obviously not focused enough. 

    A 0.60% response rate could work if the mailer cost is kept under control, a reasonable conversion rate is met, and the deal size was high enough.

    0.60% response rate

    1:20 conversion rate (requires 3333 mailers per deal)

    0.75 cents per mailer average cost ($2500 for 3333 mailers)

    10,000 average deal size

    8,500 gross profit (10k - 2.5k for mailers)

    This type of strategy really needs to be executed in fairly large volumes to make sense which also means that the target market can't be limited to my backyard.  To achieve 1 deal per month 3333 mailers would need to be sent.  However, I'm basing the conversion rate (1:20) on research, not my own findings.

    Hopefully this helps another newbie like me get a clearer picture of the effort/investment required to generated leads and ultimately deals.  Of course, your market conditions may change the results significantly.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Paul Felix  not sure what your RE goals are but if its just to make monthly money by wholesaling I submit to you if you spend the same amount as a RE broker and went for listings and got proficient at it you would make more money... you would stand to create a career you could do for years etc etc.. more than one way to make money at RE. Just a thought.. 

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  • Paul Felix
    OP
    Austin, TX · Member since 2015 · 31 posts · 13 votes
    10y

    Hi @Jay Hinrichs,   I'm looking for flip deals.  My preference would be to buy from wholesalers, but after analyzing a significant number of deal I've resorted to trying to marketing directly.  I don't intend to wholesale.  Becoming a broker isn't really something I've considered, but who knows.  Things are always changing.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Paul Felix well at least your only spending small dollars now and having fun analyzing it your just one good call away from a Yatchzee 

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  • Marna N.
    Investor · Greenville, SC · Member since 2011 · 22 posts · 5 votes
    9y

    @Paul Felix how are things going?  I just stumbled upon this AWESOME thread, and am very curious!!  I love that you're a numbers guy.... I'm a numbers girl but you take it to a whole other level :)

    You are welcome to PM me if you don't want to pick back up on this thread, but I'm definitely curious how it's going.  We are just getting started, hired a coach and we're doing yellow letters to our D4D leads.  Very small operation right now, but will ramp up soon.

    Thank you for your time and, again, I loved this discussion.

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