In real estate wholesaling, if you want to make money, you have to spend money.
I’m not talking about throwing cash around aimlessly.
I am talking about the cost to qualify leads so that you can turn them into deals.
Leads are the lifeblood of your business, and turning them into deals should be your primary focus in order to grow your business.
So how many leads can you effectively reach with your marketing?
The two important words in that sentence are effectively, and reach.
Effective marketing requires that you touch a prospect at least 5-8 times before they will talk to you.
This is because a prospect has to go through several psychological obstacles before they know and trust you to work with you.
Any fewer touches, and your marketing effectiveness goes out the window to 0.
Reach requires that your marketing gets to as many prospects as possible for the lowest cost.
You will rarely have every piece of a lead’s contact information, and so the selection of marketing channels will be the difference between a lead from which you can extract value, and a dead one.
Understanding how much marketing spend does it take to get one deal
Wholesaling real estate is a numbers game, and understanding those numbers is critical for success.
One of the most important figures to know is how much you need to spend on marketing to secure a single deal.
In order to find this number, first, you have to understand how many prospects you can effectively reach.
Then you have to apply conversion rates to understand how many leads you can convert into deals.
How many prospects can you reach?
Let’s say you can afford a marketing budget of $300 this month.
How many leads can you reach with that budget?
It’s not an unlimited amount. In fact it depends on which channel you use to reach them.
If you use postcards, which have both the highest deliverability (nearly 100%) and cost, then if you spend $0.73 on each postcard, it could cost you a minimum of 100% deliverability X $0.73/postcard X 5 touches or $3.65 to reach one prospect effectively with that channel. (If it takes 8 touches before you get a pulse, then that number goes to $5.84.)
So what’s the maximum number of prospects that you can effectively reach with a $300 budget just using postcards?
$300/$3.65 = 82 prospects
Fortunately, your REI/kit Success subscription includes 100 already skip traced leads for you to immediately market to.
How many prospects can you convert?
Conversion rates for real estate wholesaling campaigns can vary widely depending on various factors, such as the quality of the mailing list, the message on the postcard, the market conditions, and the overall strategy employed.
What we’re seeing with our customers is that typical conversion rates for postcard campaigns range from around 0.5% to 2%.
This means that in order for your $300 postcard marketing budget to net at least one customer, your conversion rate needs to be at least 1/82 = 1.22%
How can you improve your deal flow without increasing your budget?
In order to improve your deal flow without increasing your marketing costs, you can either optimize your marketing spend, or optimize your conversion rate.
How to optimize your marketing costs
You can optimize your spend by using different channels for different purposes in your funnel, and using the maximum number channels possible to extract the most value from your lead list.
Different communication channels have varying costs and effectiveness:
Email: Often the most affordable option, with the cost per email can be a fraction of a penny, but open and conversion rates can vary. It is great for cheap early opt-outs.
SMS: Text messaging can be an effective way to reach leads, if they’ve opted in. Costs are around 3 cents per message. If you’re sending 7 messages at $0.03 each, that’s $0.21 per lead. Great for moving a conversation forward.
Direct Mail Postcards: As mentioned, these can cost around $0.75 each, depending on volume and design. Although their cost is high their deliverability is outstanding.
Ringless Voicemail: This method drops a voicemail directly into a lead’s inbox without ringing their phone. Costs can be as low as $0.8 per drop. They work great for replies from curiosity.
Cold Calling: The cost here can vary widely, depending on whether you’re doing it in-house or outsourcing. Factor in hourly wages or per-call costs.
Extract more value from your lead lists
Another way to improve your marketing spend is to extract more value from each of your leads.
Some of your leads might not have an SMS number but have an email.
Some may have an email but only a landline.
Having multiple ways to reach out to your list means that you’re still connecting with potential leads, even if one channel is unavailable.
Diversity is Key.
How to increase your conversion rate
When you optimize your funnel so that the replies come from more qualified prospects, this will significantly improve your deal conversion rates.
Here’s how to optimize your conversion funnel.
Eliminating uninterested leads via early Opt-Outs
Early Opt-Outs help you save money.
Having someone opt out means saying goodbye to someone not interested, and giving you the ability to focus on making sure that those dollars are spent on more valuable leads.
The sooner they opt out, the more money you save.
Email messages are a great inexpensive option to qualify your early prospects.
If they opt-out, remove them from your lists and move on with more expensive methods for higher quality prospects.
Reach leads using methods they respond to.
Leads have a preferred way to communicate.
Treating every lead as if they are on a one-channel spectrum just does not work. A lead might toss an SMS but check their emails every five minutes. Or maybe they want old-school mail to hold on to and put on their fridge.
By using all five channels for each lead and respecting and adapting to their preferences, you increase the likelihood of them working with you.
Always plan for multiple touches to fewer leads vs. one touch to many leads
Some software providers tout that they give you access to unlimited leads.
This is a marketing trap, because they know you can’t afford to market to an unlimited number of leads.
Casting a wide net with a single touch to the highest number of leads that you can afford, is the number one way to reduce your conversion rate to 0%.
In reality, establishing trust and increasing brand visibility often requires multiple interactions.
Through opt-outs you can focus on fewer leads, and then, by engaging them multiple times, you’re building a relationship and increasing the chances of a deal.
Multiple touches to the same lead is far more cost-effective than trying to reach a vast number of leads once.
For instance, sending follow-up emails and texts to the most qualified people is more cost-efficient than sending one email or one text message to a new batch of leads.
Optimizing your marketing budget is not just about cutting costs; it’s about maximizing the value of every dollar spent.
By focusing on genuinely interested leads, respecting their communication preferences, and prioritizing more interested leads over a mass bunch of leads in your outreach, you can achieve better results with the same (or even less) investment.
Remember, in marketing, it’s often the quality of the interactions, coupled with continual contact, that increase your chances of getting a deal.
How can you accomplish qualifying and reaching out to leads in the most efficient way?
Most lead qualification/outbound marketing software have just one, or maybe two methods of communication built in, making it extremely difficult to diversify your marketing spend.
You can certainly try to combine multiple software subscriptions each for a different channel, however managing all of those communications with your prospects across different platforms can quickly become a nightmare.
This is where an omni-channel lead qualification software like REI/kit comes in.
Specifically, REI/kit real estate wholesaling lead generation and qualification software is designed from the ground up to use 5 channels to help you optimize your marketing budget in a single software.
This is vital for investors looking to maximize their reach and engagement in the most efficient way possible.
Here’s how REI/kit can get you in front of leads with omni-channel marketing.
Diverse Marketing Methods:
With five different marketing methods in the platform, REI/kit offers you an incredibly sophisticated ability to stack five methods in one marketing campaign.
This diversity means that you can tap all of those channels with multiple touch points, increasing the likelihood of engaging your leads.
Beginning with low-cost opt-outs like email means that you will be able to start your omni-channel campaigns in REI/kit with a minimum investment.
By creating your campaigns with those two approaches, you not only conserve the marketing budget, but you can also test the waters and gauge how well each of these channels works before diving deeper.
Omni-channel Campaigns: Being able to include all four communication channels in a single drip campaign means being able to saturate communications with leads multiple times. This effective approach ensures that your message is consistent across all channels, reinforcing your message and increasing the chances that leads will respond.
Fail-Safe Mechanism: If one communication method fails due to a lack of lead data or other reasons, REI/kit’s omni-channel campaigns will increase the number of leads who would normally not be reached.
Flexibility in Communication: People have different preferences when it comes to communication. While some may prefer postcards, others might be more responsive to talking on the phone after receiving an RVM.
REI/kit campaigns mean that there are other channels available to attract your lead’s attention.
This flexibility increases the chances of a reply and conversion.
REI/kit’s omni-channel marketing approach is designed to optimize the marketing budget by ensuring maximum reach and engagement.
By offering a diverse set of communication methods, starting with cost-effective options, and providing a fail-safe mechanism, REI/kit ensures that you’ll get the best bang for your buck.
To close it out, remember that success in real estate doesn’t just come from spending money, but from doing so in a strategic and consistent effort.
No matter if you’re just starting out, aiming for success, or scaling up, it’s essential to understand your budget’s potential and how to leverage effective strategies to optimize your spend and conversions.
By understanding the cost of each touch across these channels, you can mix and match channels to maximize your budget and reach.
Determining the cost to secure a deal is not just about raw numbers; it’s about understanding the nuances of your marketing strategy and the effectiveness of each channel.
If you stick with a single channel, then you limit your ability to optimize your marketing budget.
Remember, it’s not about how much you spend, but how wisely you spend it.
Fortunately REI/kit is an omni-channel platform specifically designed to help you optimize your marketing spend and conversion by giving you access to the most marketing channels available and campaigns designed to convert.