The Creative Investor - Guerilla Marketing, Lesson One

What separates the successful professional investors from those of us who look in the paper every week for a “deal?” The biggest difference is that they seem to attract deals and money while we are stuck in a trap of no or minimal action. So where do we begin? As has been said many times, education and action. With that in mind, lets begin a short lesson in attracting sellers through direct mail.

Step one: Determining your demographic.
If you are saying, I just want to find a motivated seller, then you are going to waste a lot of money in marketing. Instead, determine what specific

type of deal you want to do, and the specific condition that you want the seller to be in. Motivated is not enough. Motivated, needing to close by next Tuesday, willing to sell subject to, and having at least $10,000 in equity; now that is a specific demographic.

What is the reason for this exercise? Essentially it will provide you with a good idea of the type of message that you need to send and the medium through which to send it. Different demographics have different needs which need to be addressed to maximize your return.

Step two: Cater your marketing message to your target demographic.
If you know how your customer thinks, you can touch the emotional points that will make them contact you. Customers will only react to emotion, and only move if you convince them that you have something that they need. There is a Maslovian adage that people will endeavor to decrease pain and increase pleasure. With this in mind, fear and greed are the two most effective motivators out there. I use both alternately with the same prospect to incite action from them.

After determining your marketing message, you must determine your marketing medium. Will yo use post cards or envelopes. Both have varying levels of effectiveness depending on their form. A piece of direct mail will on average get about three seconds of attention from your prospect. In that time, you need to make sure that the piece gets enough of their attention that they pay the additional 15 seconds of attention to it that is most common. Envelopes that appear to be personally addressed or hand mailed may get opened where “junk mail” envelopes with bulk mail postage will get discarded without being opened. Post cards with large red print and a simple message are useful in getting attention as well. Personably, I use both with the same prospect at different times to get my response.

It is worth repeating that you prospect will give only a couple of seconds of attention to the piece unless it catches their attention. If you don’t believe me, just keep this in mind tonight when you check your own mailbox. A useful exercise may also be to keep track of which mail that you receive catches your attention.

An important caveat that is overlooked by many trying direct marketing for the first time. Make sure that your message speaks to your prospects in their language. If you are targeting owners of double wide trailers, don’t be afraid to use slang to get your message across. Speak to your audience.

Step Three: Find the list
I use a couple of sources for my direct mail leads. The notice of default and lis pending lists from the county recorder are excellent. I also supplement this list by renting a demographically targeted list from a direct mail company.

Step Four: Fulfillment
Believe me when I say that you will only sit and stuff envelopes once before you figure out that your time is more valuable than this activity. There are many companies that specialize in mail fulfillment that will print your material and mail it to your list. Find one of these companies and pay for their services. It is worth it.

Step Five: What now?
Actually, this is part of fulfillment. When you contract with a direct mail company, make sure that your create a plan and a mailing schedule with them. Ask for discounts for multiple mailings and multiple creatives. When using direct mail, or any marketing for that matter, you must keep in mind that it will take an average of six exposures to a message before a prospect will take action. Therefore, plan to repeated message to your target list. As I said before, I alternate between envelopes and post cards and vary my message to create fear or capitalize on greed.

Step Six: When will the phone ring?
The outcome of your direct mail marketing depends on how effectively you matched your message with the needs and wants of your customers. However, some statistics that you must be aware of are that a direct mail piece with a 1% success rate is considered good, and anything with a 5% response rate is phenomenal. If you get send out more than 100 pieces and get one phone call, you are on par with success so please budget accordingly. Also, your response rate will grow and usually stabilizes at about 3% over time so by the sixth mailing, you should be getting three phone calls per 100 pieces sent.

Essentially this means that if you are serious about attracting customers, you must create a marketing budget that will not cost you more than you expect to make. Choose your targets wisely and planning on making direct marketing a continual investment.

Final Hints:
The objective of any direct mail piece is to get your prospects attention. The use of odd shapes, or sending unique containers will dramatically increase your response rate. Although more expensive, these type of pieces make a great addition to your standard direct mail campaign and generally get a better response.

Barrett Niehus is a principal for IP Ware Commercial and Residential Real Estate Investment Analysis Software.
He responsible for the development of the IP Ware Co-brand relationship to help realtors and investors promote their web sites using IP Ware as a branded giveaway.