Earlier this week on the BiggerPockets blog, J. Lamar Ferren posed the question: “What are the most EFFECTIVE strategies for real estate marketing?” In the post, he responded that its not about effectiveness but rather about profitability and that the best way to determine what is profitable from what isn’t is to do tracking and testing for your marketing efforts.
Most of my real estate investing marketing experience comes from direct mail so I thought I’d share some tips from my year of direct mail marketing plus some wisdom from various direct mail experts that I’m learning and putting into practice for my own business. Many of these tips can be applied to other marketing methods outside of direct mail.
Tip #1: Be mindful of your budget! Make some response rate and budget assumptions to determine an approximate ROI up front so that you can first evaluate whether your marketing campaign expense is justified. You have to know what profit you’re looking for (e.g. 1 wholesale deal profiting $5K from a 2000 postcard campaign with two different messages tested; or 3 lease options deals yielding $15K in option deposits and $300/month cashflow with 5000 letters), and then you can best evaluate and move on.
Tip #2: Know what your variables are…what are you testing? Are you testing a specific marketing message? Testing the responsiveness to specific type of marketing piece (i.e. yellow letter vs. typed letters vs. postcards vs. brochures)? Testing the timing of the message? Testing the responsiveness of leads from one source vs. the other? Be sure to consider what you’re testing and don’t mix things up too much (changing 2 or more variables) or it will be very challenging to obtain the data you’ll need to make those small tweaks to your marketing.
Tip #3: Don’t try something once and then assume its not working if it doesn’t get the exact response you’re looking for….particularly if you only sent out a small volume of mail pieces. If you’re mailing out 100 letters, I wouldn’t assume your marketing isn’t working if you only received 1 call. If your budget permits, mail at least a few hundred letters or at least 1000 postcards. Change a variable and send out the same number of letters and postcards and track the difference.
Tip #4: It’s a great idea to speak with real estate investors about what’s working for them, but realize that what’s working for them may not necessarily be most profitable for you. There are many factors at play. You have to test and track your own efforts for your own business.
Tip #5: For testing and tracking keep detailed reports that include data on:
- Number of marketing pieces mailed
- Number of responses
- Number of resulting offers
- Number of closed deals
- Income generated from deals
- Your cost per response
- Net profits
Tip #6: Remember that many times it takes several contacts before a seller will pick up the phone and call you about their property. Keep following up and track the number of times you’ve contacted a specific leads before you received a response. When you track this, you’ll really have an appreciation for follow up and consistency. I personally knew this in theory, but it was eye-opening when I snagged a great deal from someone I had marketed to for months!
Tip #7: Don’t just test. Retest to see if your initial results were a fluke before you decide something is or isn’t working.
As J. Lamar Ferren pointed out, a key to the success of your real estate marketing is measuring the tangible financial results — increases in profits from the resulting deals. As with most things in life and in business, patience and persistence will pay off. Happy marketing and deal hunting!