People often ask, “what’s your response rate on your direct mail marketing to Sellers?” It seems like a simple question, but the answer is not as simple as one might think. The counterintuitive truth is this: good marketing is hard to measure. In this episode, Jeff explains what good marketing is—and what it is designed to accomplish—and explains that good marketing should be difficult to track because it is relational in nature, not transactional.
Here’s a question I get a lot. And maybe you’ve even wondered this yourself.
Hey, Jeff, I hear you are into sending direct mail to sellers for your marketing, what is your response rate like? And I can answer that question and just kind of throw out a number. But the truth is, it’s hard to know. And the truth is, that it’s good that it’s hard to know because there are aspects of the way that we market that shouldn’t be measurable. And so in today’s episode, we’re going to talk about why good marketing is hard to measure. So let’s cue up the theme song, we’ll jump right into it.
Welcome to Racking Up Rentals, a show about how regular people, those of us without huge war chest of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans, nor are we posting We Buy Houses signs are just looking for “motivated sellers” to make lowball offers to. You see, we are people-oriented deal makers, we sit down directly with sellers to work out win-win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from the Thoughtful Real Estate Entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media, this show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio.
Thank you for joining me for another episode of Racking Up A Rentals. Show Notes for this episode can be found at thoughtfulre.com/e111. Please do us a big favor by hitting the subscribe button in your podcast app. It really helps other fellow thoughtful real estate entrepreneurs to find the show and of course helps you make sure you don’t miss any upcoming episodes. Onward with today’s episode.
I can already hear the naysayers and the people who are not going to want to believe this perspective. This might be an unpopular opinion, this might be naysayers, saying Well, Jeff, you’re just rationalizing why you can’t measure the return on your marketing very well. But before you jump to that conclusion, I’d suggest I’d ask just hear me out. Let me see if I can explain this in a way that will make sense to you. So here’s two things I hear a lot. When I send out a marketing campaign, which we do fairly consistently. Two things I hear are, hey, Jeff, I got your letter, like six months ago, and it just wasn’t the right time. But I kept it. And so now I’m giving you a call back, because now’s a better time to chat. And the second thing I hear is they say, you know what, I get letters pretty often postcards about my property. I’ve never called anybody back before, but I’m calling you back. And those two things are kind of indicative of what we’re going to talk about, in this episode of assessing whether it’s good to be able to measure your marketing super closely or not.
So my thesis to you is a good marketing is hard to measure. And that should make you happy. So let’s start by defining what is good, right? We say good marketing is hard to measure, well, what is good, I would suggest that good marketing is the marketing that gives you the highest chance of getting the outcome that you want to have. So then that, of course begs the question, well, what’s the outcome that we want to have? And so here’s how I would state that: I would say the outcome we want is this. It’s a conversation that is open and transparent, with the owner of a piece of property that we would like to buy, without a bunch of other competition, having that conversation to Okay, so let me say that, again, we’re gonna break it down into its pieces. It’s an open, transparent conversation with the owner of a piece of property we’d like to own without facing competition.
So let’s break this down into just three components. So the first thing I said was, it’s an open and transparent conversation. So Well, what does that mean? It means that the seller feels safe, and feels comfortable enough. having that conversation with you, it leads to trust. Now, they don’t really know if they can trust you from just getting a letter, but they do have clues about whether they would feel safe, placing a phone call to you and returning your inquiry. So we want an open and transparent conversation. We want to sit down at the sellers living room or kitchen table or whatever, and have them feel comfortable enough with us that they’re not playing games, that they are telling us what’s really going on and they’re being transparent. They don’t have their guard up. They’ve got their guard down because they feel safe enough with us.
The second thing I said there is we would like to oh we want to talk to the owner of a piece of property that we would like to own So what’s funny about this is that I think most real estate investors go out and they just see what’s available and then say, Well, I guess I’ll own the things that I can try to buy, because those are available. But in our case, we’re saying, No, no, I want to identify the properties or the types of properties in the areas that I would like to own. And then I want to go talk to those people. It’s not about finding sellers who need to sell the property, it’s finding properties we want to buy, it’s really kind of the opposite perspective.
And then the third thing I said, there is no competition or without competition. And well, what does that mean? We’re not talking to owners of properties who have raised their hand publicly and said, hey, look at me over here, I want to sell my property. Instead, we are having conversations with people that nobody else knows, are actually sellers, right, I choose to use the word seller a lot, even when maybe the word property owner is more accurate, because I don’t know that they necessarily have a strong desire to sell. But I like to think that they do. And if they call me back from my marketing, they probably are potentially a seller and not just a property owner. So we wouldn’t have conversations without competition. And then if you go talk to sellers who have raised their hand publicly and made it clear that they want to sell their property, you’re going to be having competition for that conversation.
So what outcome do we want? We want an open and transparent conversation with the owner of a piece of property that we’d like to own without facing a bunch of competition in doing so. So take a notice here real quick of what’s not in this definition of the outcome that we want. I didn’t say anywhere that we want this to happen. Now, I didn’t say we want to have somebody call us so that we can buy a piece of property next week, I’m saying instead that we want a certain type of conversation with a certain type of person, we want a certain type of dynamic in the relationship that is created. It’s not about the timing, it’s not saying it needs to happen right now. And notice, the other thing that’s not in this definition is any mention at all, about the seller being quote motivated, or certainly being distressed. So we’re looking for an open transparent conversation whenever it needs to happen with the owner of a piece of property, whether they are motivated or not motivated, that we would like to own without having competition in that conversation.
So here’s how we think about it. This is how I explain this to coaching clients and people in the deals workshop and stuff all the time, is I say that the marketing that we are doing a good marketing is like planting a seed. It’s like not just planting a seed, but planting lots of seed, okay, so imagine that you are walking through a field and you have a handful of seeds. And you are sprinkling those seeds in to the dirt, right, this is like you sending your mail. And you know that some of those seeds are going to sprout pretty quickly, some of those seeds might take longer to sprout, and some of those seeds are gonna take much longer to sprout, and some are never gonna sprout at all. So think of your marketing kind of like that. If you send out 1000 letters, for instance, quality, thoughtful letters, like the way that we do it, you are definitely going to get a couple people who are going to call you back right away, because you happen to hit them at exactly the right time.
You’re also going to have a couple people who are going to call you back like two months from now. And they’re gonna say, Yeah, I got your letter, but we were traveling time wasn’t right. You were also going to get people who call you back five years later, and say, You know what, I got your letter back then it was not the right time. But I guess what, I have a filing cabinet. And so I stuck it in a folder. And I decided to give you a call now because the time is right? Are you still interested in buying? And then what’s the fourth category? Some of the seeds are never going to sprout at all. And that’s okay. But here, here’s the challenge. We know the seeds are all going to sprout on their own schedule that is dependent on the seller, their life and what’s going on in it.
So let me ask you this, you want to calculate a response rate to your marketing. So when do you calculate the response rate? Do you send the letters on June 1? And then on June 20, tried to calculate a response rate? Well, sure, you could do that. But you’re going to miss calculating all the responses that will come a month later, you’re going to miss all the responses that are going to come two years later. So what happens if you send your mail on June first, and then you calculate a return on October 1? Sure, you could do that you give it a whole lot of time. That might be more accurate way to look at it. But there’s still seeds that are under the surface of the soil that are slowly germinating or they’re hibernating and waiting for the right time to germinate or however you want to take this analogy. But there are other things that are going to sprout in the future.
So that’s my question to you. If you want your marketing to be super measurable, you need to be able to pick a timeframe at point you could calculate that response rate. And good marketing has what I would call residual value. Now if you send somebody just a garbage postcard that that’s bright pink and says we buy houses, no one goes, Oh, what a nice postcard. I think I’ll put that in the file. No, there’s like, okay, I don’t that’s either relevant to me right now. Or it’s not, no one says, I think I’ll hold on to this for the future. These people seem really nice. No, no, there’s no residual value. However, there is residual value in a thoughtful letter that you send, like, the ones that we send people that expresses your sincere interest introduces you, as a real person does not talk at all about wanting to buy their property as is with cash on a timeframe or anything like that. You’re just a regular person who comes across very nice and very safe. And they say, hey, maybe the time isn’t right for me now. But I will hold on to this, that’s a residual value that good marketing has. And the residual value is what makes it hard to measure.
So let’s just talk about the inverse for a quick second, like what is what type of marketing is easy to measure. And I would say, like marketing that is very finite, it’s very timely, it’s very transactional, like, who is really good at measuring their marketing and their marketing is really easy to measure. And I often think of something like pizza hut, you know, Pizza Hut sends out coupons. And the coupon says, Get $5 off your next large pizza, expiration date, September 30. Limit one per customer, you know, here’s the online coupon, coupon code, bring it into the store to redeem. So they know when they send out those coupons on June 1, that on October 1, right, the day after the coupon has expired, they can go into their little computer and say, Oh, we sent out 10,000 coupons and you know, 1300, people responded. So we can calculate an exact response rate of that. And here’s exactly the ROI. And that’s great. But that’s very, very transactional. You’re not selling pizzas, you’re developing relationships. And so the more trackable and measurable your marketing is, the more it also correlates with a transactional type of nature. And that is not what we are trying to accomplish.
So here, let me tell you this. I don’t want easily measurable marketing in my business. And I hope that you don’t, I don’t want easily measurable marketing, because that would mean that I am taking a very transactional approach to developing relationships, right? If you had very measurable marketing, you’re probably also doing business in a way such that a seller calls you you’ve got your three standard questions, you ask them to determine their motivation and their distress. If you can’t figure out if they’re distressed within two minutes, you cut bait and run because, you know, you’ve got 500 people you need to talk to, and you’re just looking for a quick, easy, dirt cheap lowball type of deal. That’s not what we’re doing in our business at all.
So I don’t want easily measurable marketing, because that would mean I’m taking a very transactional approach to relationships. And I’m not, instead, I want marketing that creates the right feeling in the right people, and makes them feel safe about contacting me when the time is right for them. And that type of marketing is a little looser and more slippery to try to track exact response rate. So in conclusion, I would say don’t worry about your response rates, worry about sending the right message in the right way to the right people so that they feel safe contacting you when the time is right for them.
So that my friends is it for this episode of Racking Up Rentals. Again show notes here are at thoughtfulre.com/e111. Please do us a massive favor by hitting that subscribe button in your podcast app and take a second to rate and review the show; I keep my eyes on those, I read all of them myself and I’m super grateful whenever I see one come in.
Did you know that also that we have a Facebook group for thoughtful real estate entrepreneurs we do It’s called Rental Portfolio Wealth Builders and we would love to have you join us over there. Just go to group.thoughtfulre.com and the magic of the internet will redirect you right to that page within Facebook. If you liked this episode, please take a screenshot of it, post that screenshot to Instagram and tag us; we are @thoughtfulrealestate. I’ll catch you in the next episode. Until then, this is Jeff from the Thoughtful Real Estate Entrepreneur signing off.
Thanks for listening to Racking Up Rentals where we build long term wealth by being win-win dealmakers. Remember: solve the person to unlock the deal and solve the financing to unlock the profits.