Why Direct Mail Response Rate DOES NOT MATTER

How do you decide if direct mail is working?

Are you trying multiple different methods to bring in leads so you can start closing more deals? Do you ever find yourself unsure of whether or not something is working? One of the methods we hear a lot of mixed opinions about is direct mail. We have podcasts, blogs, and all sorts of helpful information regarding how to do direct mail well, because in our experience, it still works. But how do you really know if it is working for you

When you release a direct mail campaign and are attempting to figure out how successful it is, you will be tempted to look at your response rate as a marker for success. We’re here to tell you, that is not the metric you should be tracking! And why not?

First let’s define response rate. You could define response rate as the number of people who call you, divided by the pieces of mail you sent out. You can also define response rate as the number of leads you get. We define a lead as someone who responds who has a house they are likely to sell. What throws off your response rate with the first method are the calls you get from people quite simply saying ‘Take me off your list.’ It is a response, but not one that forwards your business. Even with solid leads, you aren’t necessarily having a successful campaign. 

The key here is asking the right questions. When you send out a direct mail campaign, be it a 200 piece niche market or a 100,000 piece blanket sweep, ask ‘What is it I really care about?’ 

The answer is quite simply, Return On Investment, ROI.  

Right now the response rate on direct mail is nearly half of what it used to be. Is that a good reason to throw it out all together? Not if your marker for success is your ROI, and the numbers show profit! 

Here is an example: 

You send out 400 pieces of direct mail. It takes you 4 months to close a deal from a lead from that direct mail campaign. The profit from the deal makes you approximately $7 for every $1 you spent on the campaign. Yes, it took time for the deal to solidify, and it may have only been one, but the numbers speak for themselves.

You can apply this to any method of campaign you use: PaperClick, networking, Driving for Dollars, really anything! We also know that when you are starting a new business sometimes it isn’t money that gets you leads, it’s time. Time and money are your two greatest resources and if you have less of one you generally have to use more of the other. You can also look at Return on Time, to assess if a marketing method is working for you. 

There are a million different methods to acquire leads and ultimately our goal is to give you all the tools you need so you can define your own path to successful real estate investing. We don’t operate under a ‘one method fits all’ mission. We empower you to make well-informed choices that best fit your circumstances! 

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