JF1202: How A Direct Mail Specialists Says RE Investors Should Utilize Direct Mail #SkillSetSunday with Craig Simpson
Craig started his direct marketing business when he needed a way to market his fake rocks. He did well there, and sold the business to go work for a large operation and learned more about direct marketing. Now he has his own company again, and he helps many different types of businesses and investors market through direct mail. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Craig Simpson Background:
- Owner of Simpson Direct, Inc.
- His direct marketing company manages almost 300 different promotions per year
- Author of The Direct Mail Solution and The Advertising Solution.
- Based in Grants Pass, Oregon
- Say hi to him at http://www.simpson-direct.com/
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
I hope you’re having a best ever weekend. Because it is Sunday, we’ve got a special segment called Skillset Sunday, where you’re gonna come away with a specific skill that will help you in your real estate ventures. Today we’re speaking to the owner of Simpson Direct. He has a direct marketing company that manages almost 300 different promotions per year, so obviously we’re gonna be talking about direct mail. How are you doing, Craig Simpson?
Craig Simpson: I’m doing excellent. I’m glad to be a part of your call today, I’m looking forward to talking to you guys.
Joe Fairless: Yeah, I’m looking forward to learning more about ways to have effective direct mail campaigns. A little bit more about Craig – he is the author of The Direct Mail Solution and The Advertising Solution. He is based in Grants Pass, Oregon, and you can say hi to him at his company website, which is in the show notes.
With that being said, Craig, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Craig Simpson: Sure. I actually kind of fell into the direct marketing world or direct mail world… When I first got started, I was 19 years old and I had made these fake rock climbing holds, the kind that you bolt on the walls and you climb up on, and I had a bunch of people saying “Hey, you should try selling these things”, so on a whim, I went into business manufacturing these fake rocks. Of course, as in any business, I had to market it, and I heard of this thing called direct mail, so I tried doing direct mail, and my first campaign was completely [unintelligible [00:03:52].02] I didn’t get any response, but I kept on trying and I got to the point where I sold over 4,000 fake rocks through the mail.
I found that I loved marketing, but I hated manufacturing. I didn’t like going out to the sweatshop and making these things by hand. So I closed that business and went to work for a big publisher, and started doing huge direct mail campaigns, to the point where we were mailing 30 million pieces a year… So for the last 25 years I’ve been doing a lot of direct mail, and I love it; I’m kind of a numbers guy. So that’s how I got my start and got into this weird world of direct mail marketing.
Joe Fairless: You’ve been doing it for a while, you said you’re a numbers guy… That type of response rates should we receive on our direct mail pieces?
Craig Simpson: Well, if it’s real estate investing and we’re trying to get people to respond for “Hey, we wanna buy your house” or “We’re looking for distressed properties” or whatnot, usually you can expect about three quarters of a percent to respond to your campaign. Now, that doesn’t mean you’re gonna be able to find that many sellers, but you’d at least be able to get three quarters of a percent for them to call and find out what it is you’re offering, or what it is you wanna know more about.
Joe Fairless: What’s the frequency that you recommend doing?
Craig Simpson: It all depends on response. I’m [unintelligible [00:05:11].23] because this is an area that I do quite a few mailings in. Let’s say you’re looking for absentee owners, and you’re wanting to buy their home at a discount. So you take and you mail all the absentee owners, and there’s 5,000 of them, and you get three quarters of a percent response… And you find out that a lot of them turn into people who wanna sell you their home. So you buy their home or their property, and you have a great return on investment. If it’s a really strong campaign, you don’t wanna just leave it and sit on it and say “Well, I’m not gonna go back to those names again.” Instead, if you have a great response, you wanna hop back in and mail to them again. So normally, the frequency, if it’s a really good list and you get really good success from it, you could mail to that exact same list every month.
Now, if it turns out that the list doesn’t perform as well the second time, then you need to give it a little bit more space. Maybe you can mail to those same names every 60 days or every 90 days. But response really dictates for me how frequent I mail to somebody.
Joe Fairless: That makes sense. When we are looking at direct mail companies, how do we evaluate one against the other in terms of the questions that we should be asking the companies?
Craig Simpson: Good question. I think the biggest thing is – and I guess this goes across the board with any marketing company – if somebody is promising you the moon, that “Hey, I guarantee I can get you X number of new clients in the door”, or “We’re gonna guarantee that you’re gonna get more response than you ever have”, I would shy away from anybody who uses the word “guarantee” or “ensure that you’re gonna get the best kind of response.”
Really the things you’re looking for is people who talk about testing, because all direct marketing boils down to is a lot of testing. You always wanna test to see what works and what doesn’t. For example, if you’re talking to a company and they’re suggesting that you send out a postcard mailing, hopefully they’re gonna suggest “Well, we don’t just have one piece that we think is gonna work for you. We have a few pieces that we would like to test out. One may be pink, one may be yellow, one may be white, but we need to test a few things to see whether or not it works in your marketplace.”
So the keywords to listen for are testing, and you never wanna find someone who’s guaranteeing or promising results, because nobody knows. I’ve sent out thousands of mail campaigns and I can’t come into any client and know what the response is gonna be in advance. All I can do is take my knowledge and experience, run a test, and from there we can learn whether or not we have an opportunity to scale it out and make it bigger, or if we need to retool things and try and make it better.
Joe Fairless: And as far as making it better, what are some suggestions to make something better?
Craig Simpson: So, for those that are interested in doing direct marketing, the key is testing. Things that you can do to make it better – when you’re talking to the prospect, you always wanna talk about the pain points, the things that they may be struggling with. If they’re an absentee and they’ve got renters, you’re probably gonna wanna talk about the fact that there’s some theme of having renters, worrying about people destroying the house, worrying about them paying rents, worrying about them moving out when they’re supposed to move out, and then you can address the solution. “We can take care of this off of your hand; we can take away from you having to deal with this burden every month, and you can sell to us and we can make it so that you’ve got extra cash in your pocket.” So we talk to them about the pain, we offer them a solution – that’s one way.
Another thing would be offering testimonials, having past clients that you’ve worked with rave about you and sharing that with others. People are always convinced and encouraged when somebody else has had a good experience… Just like with Yelp. We’re going to eat at a restaurant, we’re gonna look at Yelp to see if there’s any good reviews or not, to see whether or not we should go there.
But there’s three main things to keep in mind when it comes to direct mail – there’s the list, there’s the copy (creative) and then there’s the offer you make them. The copy (creative) comes to what it is you say to them. The list is who it is you’re mailing to, and that probably is the most important piece of any mail campaign. You wanna make sure you have a targeted list of prospects that will look like the type of customers you wanna go after. Then the final thing is the offer, which is basically what is it you want them to do – do you want them to call? Do you want them to go online? Do you want them to request a free report or consultation? Those kinds of things.
I can dive into more of those deeper if you’d like, or we can move on and talk about something else… I don’t wanna overwhelm anyone here either.
Joe Fairless: Well, perhaps we’ll revisit those three, and I’m glad that you mentioned the list, the copy and the offer. I’m curious, who does direct mail work best on?
Craig Simpson: It works best on boomers and seniors; they love direct mail. But having said that, there’s still a whole group of those who are millennials and those who are older who it works on, but if we were to pick one group – if I could only have one group to mail to, I would mail to boomers and seniors. They’re the ones that love it. But I wouldn’t shy away from testing it on other groups.
One of my big clients is Beach Body, and they’re a fitness company and they have a lot of young individuals who buy into their programs. So I can’t say that it doesn’t work to those younger crowds – it does, but I like boomers and seniors the best.
Joe Fairless: Okay. What type of products does it work best with? And forget you’re talking to a real estate investor… Just in general, and then perhaps we can apply some of this to real estate… But just best in class, what type of products does it work best with, and what type does it perform the weakest with?
Craig Simpson: That’s a tougher question. What does it work best with? I think whenever you’re mailing to people who have a problem and you can solve it. And the problems can be hundreds or it can thousands of different things, because it works for so many different niches, whether it’s a bankruptcy attorney mailing to people who are going through foreclosures, and it’s a way to help them out of it. Or it’s a person who wants to buy their pet food online or through the mail, rather than having to go to the store. The problem is “I don’t wanna go to the store and buy a 50-pound bag of dog food.” The solution? “I can deliver to your front doorstep for the same price as you go into the pet food store.” Wow, isn’t that nice? Just with a push of a button. So really, if there’s a problem and you provide a great solution.
The third element I guess would be it’s gotta be sold at a reasonable price. It’s tough to sell books through direct mail, because the price is just too low. 19.95 is not gonna make anybody, especially when you have to pay printing and postage. I like to see products that are sold around $100 or $75 and have what we call lifetime value, meaning that’s just the entry point. So if they buy one dog of bag food, they’re gonna buy 20 more over the next nine months, or whatever. So there’s a long-term customer value that’s associated with that initial sale. It’s not just the “Buy one time and we’re done” kind of a thing. Those are the things that are the best. The worst are the low-priced offers.
Joe Fairless: There’s a parallel with what you’ve just said when I look at my sponsors for this podcast. If the sponsor is a company that has a price point that is low and there’s not a lot of a lifetime value of a customer, meaning, as you said, they’re not gonna make money after that initial purchase, then they wouldn’t be a good fit. But if the sponsor has a higher price point or has a higher lifetime value where there’ll be repeat purchases, then it’s a good fit and I’ve learned to disqualify potential sponsors because of that, and then qualify them.
Do you do any sort of qualification process with new people who sign up, or do you kind of just let them test it out and then see how it works?
Craig Simpson: No, I think there’s always a process where we’re kind of vetting out who they wanna go after, and is there a market for it. And also looking at their business to determine, “Will they be able to get a high enough customer lifetime value to make this a profitable venture?” Because it doesn’t matter if you get a 10% response rate; if the return on investment isn’t good, then there’s no longevity with that type of marketing campaign.
So yes, there’s totally a vetting process where we evaluate that, and look at who can we mail to and what kind of revenues can we make from it.
Joe Fairless: And what type of cost or investment dollars into this program, into a direct mail should we expect to do?
Craig Simpson: It all depends on the marketplace you’re going to and how big your marketplace is. When I’m doing a national mailing, I need the client to mail 10k-15k pieces of mail in order to see and gauge response. If we’re doing a local/regional mailing, it could be 2k-3k pieces of mail.
So what is the cost to mail that? Well, there’s a lot of variables there. Are we mailing a letter, are we mailing a postcard? Obviously, a postcard is significantly less in cost than an actual letter would be. When it comes to how much is this going cost, there’s a lot of things that play into that, but I would think you would wanna start out with a budget of, say, $5,000 to test. It may end up being significantly less than that, or it could be a little bit more than that, depending on what it is you’re mailing and how many pieces you’re going to.
Joe Fairless: And generally speaking, $5,000, how many pieces does that get you and what are some of the standard things that that would entail?
Craig Simpson: If you’re thinking of mailing a postcard, you’d probably be able to mail 3,000-4,000 postcards, plus that would include — the $5,000 would give you the money for the copywriting fees if you’re not writing the sales copy yourself. It would give you the money for the list, it will give you the money for the design… It would basically be one of those things that “Hey, all-in this is what it’s gonna cost me to test it.” And that’s doing it on your own, kind of figuring out the list and the copy and the design and those kinds of things.
Joe Fairless: Did you say the list rental?
Craig Simpson: That’s correct.
Joe Fairless: Will you elaborate?
Craig Simpson: In most cases, depending on what are you’re in, in many cases you can rent the list, but the lister may not let you buy the list and use it as much as you want. It all depends on what you’re going after. If you’re going after people that are going into foreclosure, most of the times the lists are only available for rent. You can use them one time for a fee. If you’re going after absentee owners and you’re working with your local courthouse or whatever to get information on that kind of stuff, then you probably can buy the names and use them as much as you like.
Joe Fairless: How do they protect against the rental not being used more than once if you’re mailing —
Craig Simpson: Yeah, they put in what’s called seed names; those are names that they sprinkle throughout the name file, you don’t know what they are but they do, and there’s companies that set up these remote addresses at different locations throughout the country, and when they receive your mail piece, they will mail it back to you. So they may have 50 locations throughout the United States.
Now, they track who is mailing their lists, and if they see somebody who’s mailing it – because they’re gonna have a specific name on there – they’ll know, and then they’ll come after you.
Joe Fairless: Okay. Now, just to circle back to the list, the copy and the offer… What is most relevant to elaborate on for us as real estate investors?
Craig Simpson: I think for real estate investors I would say that one is the list, know who you’re going to. If you’re going after distressed properties, make sure that you have a targeted list for that and that your copy connects with them, that you’re writing specifically to them about owning a distressed property and how stressful it is, and how you can take it off their hands.
If you’re going to the absentee owners’ list, obviously make sure these lists are quality, that you’re getting them from a good source and that you know them to be true. Going to the absentee owners, make sure the copy connects with them – owning a piece of property that they’re not living in and that there’s pain and heartache there and that you can solve that. Or if it’s going after people with probates – you’re specific in your marketing method, the copy and how you talk to this list of people who have probates available.
Joe Fairless: What else haven’t we discussed that you think we should, based on your expertise in direct mail and our focus in real estate investing?
Craig Simpson: I think the thing is there’s so many different marketing channels out there right now, and it’s important to test and to always find out what works and what doesn’t, and I think that anybody who’s in this niche and they haven’t done direct mail, I encourage him to give it a try, because that’s important, and people could think “Well, how can I use direct mail for real estate investing?” Well, surprisingly, there’s dozens and dozens (maybe hundreds) of people using it all over the country to attract the right kind of seller of property that they’re looking for, and it’s worth an effort on your part to give it a try.
So I don’t know if there’s anything missing here… We obviously can’t go through every detail on how to do direct mail, but I think if I could go away from this call today with one thing in mind is it’s worth giving it a test. It’s worth finding out if it can work for you or not.
Joe Fairless: That’s a perfect segue, Craig – what is the best place the Best Ever listeners can get in touch with you?
Craig Simpson: It would be my website, which is Simpson-Direct.com. There’s also some information about me there, and that would be a great way to reach out to me.
Joe Fairless: We went through a whole lot — well, YOU went through a whole lot, I was just enjoying the ride. I really appreciate you talking through the three things to keep in mind when we’re doing direct mail, ways to make direct mail better, the pain points and testimonials, things to watch out for when we’re interviewing direct mail companies, like the guarantee… You really wanna focus in on testing the frequency; if the list is good, then maybe every month. If not, then less than that – maybe 45 or 90 days. And identifying the ideal audience, although of course anyone receives mail, but the idea audience, as you said, boomers and seniors, but again, everyone receives mail, so test out based on what your offer is… The budget that you recommend at least minimally starting with, and going from there, which is 5k.
Craig, thank you for being on the show, sharing your best ever advice in terms of direct mail, and we’ll talk to you soon. Have a wonderful weekend.
Craig Simpson: Sounds good, thank you very much.