Direct mail is tangible, targeted, scalable and trustworthy. As a result, direct mail is delivering better-qualified leads and, in turn, more deals! One thing’s for sure - everybody checks their mailbox!
Sometimes we build storage facilities like the Conversion I’m currently working in Dillon, SC. More Often though, we buy existing properties. And while there are deals to be had listed for sale, the best deals are off-market deals. But how do you find them? RIght now, Direct mail is our favorite lead generating strategy. To get started with a direct mail campaign, you’ll need a list. You can either buy a list or you can build it yourself. When I started out, I built my first list using Google by searching all the towns in the six counties that were nearest to me. I created a list in excel and then used that to send my letters to. Nowadays, we pay other people to build our list and it's really not that expensive. The pricing of the list is based on how fine-tuned the list is. If you start with 65,000 storage facilities in the country and then you just add your selection criteria, that list is going to dwindle down to say a 1000 or 2000 pretty quickly..
You’ll be spending $500 – $1000 for such a list, making it 50 cents a lead and sometimes as little as 25 cents. The final cost, of course, depends on where you're getting it from. But remember, cheaper is not always better. You might be able to find it for 10 cents per facility but it's quite likely that only one out of five of those properties is actually going to be solid data. Hence, you’re still paying 50 cents per good lead. I use Info USA. The other alternative is Listcourse or Reference USA. I haven’t used Reference USA myself but I've heard that you can get free access to this at your local library. Its basically a public record database that you can use to build your own list of storage facilities.
As I mentioned above, I used Google for my first list of a 100 facilities and I ended up buying one of them. This sort of bootstrapping to find mom and pop strategies can and does work. If you're more sophisticated, buying a list is clearly the more efficient way to go. The next thing you have to figure is if you’re actually going to mail them yourself? Are you stuffing envelopes? Or are you going to outsource the mailing process? In this case, I'm telling you, just outsource it.
If you do it yourself, you’re paying for ink, paper and envelopes and then stuffing the envelopes. Even if you only pay yourself $3 an hour, the big companies like yellow letter or any of the other hundreds of companies that can do it for you, will cost you the same because they get discounted postage rates and they pass those on to you. Also, they have more buying power because of the fact that they are doing millions of pieces at a time. So, this is one area where I'd say you're probably better off outsourcing. The only exception is if you're only doing a hundred or so letters which are very localized to your area, then it might be in your benefit to do some handwriting on the envelopes to improve open rates. After all, if you're only sending 100 or 200 letters, you need a good response rate, to have any chance of finding a deal at those numbers.
With direct mail, there are a few keys to success. Consistency is number one. Don't expect to mail once and score a deal. You're going to need somewhere between 7 and 12 touches to get to the “yes” you're after. It is a long-term play. The first facility I bought through direct mail was a 12 to 18-month process, from start to finish.
What I do is take my list, say it's a thousand people and divide it into thirds and mail to a third of the list, every month. That way every three months I've hit the full list. And then throughout the course of the year, each property will get a contact from me four times. This also gives you the opportunity to do some testing. In the marketing world testing is KING. Maybe your first letter is a very simple, stamped envelope with a printed address and return address label on it. And you send that out if your response rate isn't where you want it to be.
Just for your reference, a good response rate is considered 1 to 2%. So, if you send a hundred letters and get 2 phone calls, that's actually considered good from an industry standpoint. That will give you an idea of the where you need to be at if you want to actually start generating some calls. But if you send out a mail to the entire list in the first month and you get no response, you just wasted that entire budget for nothing. Whereas, if you had sent out 333 letters to that list and got no response, well you'd at least have the opportunity to change something before you send out the next 333 letters. This helps you build a split test. And if that works better for you, repeat it the next month, and if that works a little more, you might want to tweak something else to make it work even better.
That change can be the copy of the letter. Things like, are you printing the address and return address right on the envelope? Are you handwriting one of those two things? Are you printing them on labels and securing them? Things like the color of the envelope, the color of the paper, all of it matters. I don't get super fancy. To me, authenticity, good copy and consistency are most important.
Another key to success is to always answer the phone and don't be surprised if you get calls three or six months after you stop a campaign. Any one with experience in direct mail will tell you that your results will be much better if you answer the phone rather than letting it go to voicemail. So make sure you answer the phone or have someone do it for you if you want to get the most bang for your buck.
The last thing I'll say, and this might be surprising, is that the Gold when it comes to direct mail is actually in the letters that get returned to you - the bad addresses. Reason being, if you can't get in touch with them by mail, neither can any other investor. One of the properties I bought (and made just about $1 Million on), was a property that I had sent letters to four times. All four letters got returned to me over the course of a year. Eventually, I smartened up and decided to put in the extra effort. I actually went directly to the property to make contact with the owner. I ultimately ended up buying it, but not from the original owner that I had been mailing to. Another guy beat me to it and bought it and I had to buy it from him because I didn't chase the lead when the mail first got returned to me! I'm fairly certain that my failure to chase the returned letter right away cost me somewhere around! I had to pay the new owner an extra $70K above and beyond what he paid the previous owner, even though I bought it from him, right after he bought it from the original owner. Long story short, if a letter gets returned to you, chase that lead until you figure out if there’s a deal.