Is Direct Mail The Right Strategy For You?


There are many attractive ways to generate leads and grow your business. Perhaps the most popular way for new investors is direct mail. In a perfect world, with a direct mail campaign you send letters or postcards to a targeted list and wait for your phone to ring off the hook. As productive as this may be for some, others find it expensive, time consuming and much more disappointing than they anticipated. Like most other things in the world of real estate there are pros and cons with everything you do. In the right market, with the right list and the right work ethic a direct mail campaign can completely transform your business. However, with the wrong list, poor presentation and bad execution you will be left wondering why you weren’t more productive. If you are considering a direct mail campaign here are five potential downsides you need to think about.

  • Expense. Direct mail campaigns are much more expensive than you may think, especially compared to email. For starters you need to find a quality list of targeted homeowners. If you simply blast out letters to a specific zip code, you won’t have nearly the results you anticipate. A good, targeted list of people in foreclosure, probate, divorce or currently late on their mortgage may not come cheap. You can expect to pay hundreds, if not thousands, depending on the target, zip code and volume. From there you will also spend money preparing the postcard or letter. If your letter is not catchy nobody will even read the content. You also need to spend money on stamps, envelopes and possibly a dedicated phone number. After everything is added up you will be out a good chunk of money before your phone ever rings. If you can close a deal or two you will be ahead of the game but if not, you may end up wasting thousands.
  • Timeframe. It is important to recognize that a direct mail campaign started today will not produce revenue for at least a few months. In a perfect scenario where a homeowner gets your letter and wants to move asap you are still looking at 90 days plus until you can earn on it. Even if you opt to wholesale the deal and pass it off to a fellow investor you still need 45 days. The point is that while a direct mail campaign should produce a good number of calls, those leads take a while to bear fruit. If you are not the patient type or need revenue in the short term a direct mail campaign may not be for you. A homeowner just starting foreclosure may want to explore all their options before moving to act. Your lack of patience may serve to push them in another direction and you can eventually lose the deal because of it. If you aren’t willing to wait these deals out a direct mail campaign may not be for you.
  • Conversion rate. Like any other type of lead generation, direct mail is a numbers game. Your goal should be to get eight phone calls per every hundred people you mail. Out of those eight five will be curiosity calls leaving you with three solid leads. Of those three you should hope to close at least one of them. The numbers should indicate that there will be many phone calls, emails and appointments along the way. Squeezing one deal out of at least 100 letters may not seem like a lot but you need to consider your competition. The same homeowner late on their mortgage is receiving letters from their mortgage company, local real estate agents and at least two other investors on a daily basis. There is a good chance they may not even read your letter or postcard. Closing 2% of your mailings may not seem like it at first glance but is quite an accomplishment.
  • Repetition. What makes direct mail so frustrating is that you typically need repetition to succeed. Sending out one batch is a good start but doesn’t guarantee your phone will ring. You need to send your letter at least four times, and closer to seven, if you want the results you desire. This means four sets of envelops, stamps, postcards, etc. This obviously adds to your bottom line, but it is a necessary evil. The more letters you send the more your recipients will register the name and the more likely they will be prompted to call. It is often a blind leap of faith to continue sending out letters but must be done if you want success.
  • Unreliable data. It takes a number of factors to have direct mail success. The most important is your data. Without a good list nothing else you do matters. As we mentioned, buying a list of homeowners who are 60 days late on their mortgage doesn’t come cheap. You had better make sure the company you use has reliable data you can trust. If the data is off, even by a little, your phone won’t ring and you will essentially waste money. It is critical to spend time vetting your list company to ensure you know exactly what you are paying for.

Direct mail is truly a high risk, high reward proposition. The returns are great, but only if you know what you are doing. Prior to your next direct mail campaign take a little time to make sure your I’s are dotting and T’s are crossed.

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