subject: Foreclosure Marketing - Getting the Phones to Ring With the 6Ms [print this page] Foreclosure Marketing - Getting the Phones to Ring With the 6Ms
Marketing campaigns normally consist of two types: Demographic or Geographic.
o Demographic consists of a particular market (i.e., homeowners on a foreclosure list).
o Geographic would consist of a list of homeowners in a particular zip code, etc.
Marketing campaigns can be further delineated by what is known as "one-step" or two-step."
o A one-step campaign is where homeowners on a list are contacted (via mailer, postcard, etc) and they can contact you in a single step--that is, "If you like this message, call my office at 555-555-5555."
o A two-step campaign is where the homeowners are contacted with verbiage like: "If you like this message call 555-555-5555 for a free special report. Please leave your name and address on the recording and we will mail the Free Special Report."
What I've learned in this business is that a one-size fits all approach is not successful. When I send out my direct marketing pieces, some will include a one-step approach. Another piece in the campaign will utilize two-step, which might be better for the shy foreclosure seller that is afraid of calling a live person.
By incorporating both systems you get to capture more foreclosure sellers. Even your phone options should give the choice of the recorded message or a live operator.
The 6 M's of marketing (using foreclosure prospects):
1) Market--the recipients: Owners of single-family homes who have a Notice of Election and Demand (NED) filed in public record. This list normally works well in emerging, flat, or declining markets. By far, the market is the most important of the six M's.
2) Message (what's in it for the recipient): Basically this needs to be a document that is personalized to the homeowner and conveys to them "What's in it for me." This message is targeted to highly motivated homeowners in distress, expressing an interest in buying their property quickly and easily, at a fair price, and on the date of their choice.
3) Media (what type of mailer, contact): These can range from postcards to letters, from a FedEx package to lumpy mail. Personalized postcards and personalized letters normally work best for this market. Also note that a postcard with a one percent response rate will cost about $0.37 each, versus a letter at about $1.25 each. This means that a letter requires about a three percent response rate to match the effectiveness of the postcard.
4) Multiple: Research indicates that several instances of contact, as opposed to a single contact, make a huge difference in the response rate. This market should be contacted approximately 5-8 times during the foreclosure period.
5) Months: In Colorado, the foreclosure period (from NED filing to auction) is approximately 110-120 days. Therefore the mail campaign would span about 4 months.
6) Money: This is the amount of money investors should expect to spend over the campaign. Investors should track the number of pieces at whatever cost it takes to generate a phone call. Next, they need to know how many phone calls it takes to get a profitable deal.
The key point is to understand that we have to be ever more diligent on calculating the offer. Note, formulas used to calculate offers on long-term hold real estate are not at all related to fix and flip formulas, and these deals are normally disastrous for the unsuspecting investor.
We talk much more about this in the What2offer mentoring program. After years of doing these calculations by hand, my partner and I have developed an online real estate software to make our lives much easier. We can now crank out offers and determine the exit strategy in seconds.
