Continued from Supercharging Your Market for 2008 (Part 1)
Success Is A Numbers Game
In 2001 we had exactly 0 clients. My wife's first question was, "How do we get people to call us?" Ah, good question mi querida. There was no craigslist, at least not in Atlanta, so I was going to have to actually work for a living! I did have a plan and that plan worked something like this ...
Warm Market First
At that time I had several contacts through the various non-profit and charitable organizations with which I had associated as well as a few dozens of friends and family members. It turns out our first loan closed was one of my best friend's son-in-law. That was a big boon to us because it was hard fought and a relatively small loan. It took 35 days to close the next loan and that was for a man I had met in my work with people transitioning from homeless to homed!
The following month our advertisements and referrals began to pay off and we closed 3 loans for a total of $350,000 funded. That was October of 2001. Then in November we did the unimaginable: from no contacts, borrowed money and no employees we closed 6 loans and broke $600,000 for the first time. In our first year we funded a whopping $2,000,000 and we were so happy! Of course there were two of us and we had very few expenses. What was most important was that we were able to pay back Myra's father.
The lesson? It was small. It was humble. We relied on our friends and contacts: 85% of the loans we closed were referrals from friends and family. That trend continued well into 2002 after we hired my sister who must have refinanced everyone from her church! Not really, but many of them. In 2002 we had 3 employees counting ourselves and funded only $10,000,000 in 81 loans. Over 50% were from referrals and $250,000 was because I stopped a man in the hallway and asked him if he knew of anyone looking to purchase or refinance a home. Turned out he was looking to purchase and was not happy with the bank.
"Despise not small beginnings" my mother always encouraged. She was right! Before you can take big steps you must take and master baby steps. I'm sure we made a few mistakes in those first years in how we attracted business and how we followed up. But after that I was able to have a better marketing plan and a better reception program as we grew to 14 employees and tens of millions of dollars funded per year.
Who Is Your Warm Market?
Many years ago I had a friend who was offered a job at Prudential selling insurance. He only had to have one qualification other than the basics. He did not need any specific education except he needed to be able to read and write. All they wanted from him to offer him the job was a list. That list had to consist of 100 items and each of those items should have only a single qualification. He showed me the list ... it was short. In fact when he showed me the list he had only 28 items on the list. What was the list? The names of people who should buy insurance.
What a concept! Have you listed your prospects for 2008? It doesn't matter if you are just now getting started with your business or whether you have been in business for years - make the list. If you have a contact management software USE IT! Lists that just sit there do nothing.
Try the Prudential method. Create your own list of 100 people whom you know and then ask them to use your services or refer you to someone who needs them. Here is a sample letter (I recommend letters and phone calls since these are friends and not subject to the Do Not Call list).
Dear Bubba,
As you know I am in the real estate investment funding industry and have been for many years. Surely you have followed the news about the changes in the real estate industry and most certainly the mortgage industry. Much of the media reporting has been negative and while I don't agree with everything they have said I am pleased to spread the word of a great benefit from all of this: This is a fantastic buyer's market.
Bubba, because this is a great time to buy and because I value our friendship I want to make sure that you are aware of the great opportunities all around you. There are hundreds of thousands of fantastic opportunities in our area today to either invest in real estate for long term security or to move up to a nicer home.
I will be phoning you in the next couple of days to talk with you bout this a little more and ask you to think about how you will take advantage of this window of opportunity. In the mean time please mention this to friends of yours we do not have in common and refer them to me. I want the opportunity to work with as many people as possible over the next few months and you know I will never do anything to violate your trust as I am dealing with your friends you have referred to me.
Looking forward to speaking with you,
Ken
I Will Be Doing This
To every prospect on my list I will be sending, as I a always do, a hand addressed Christmas card with a one sentence handwritten note on the inside. I also send birthday cards, thank you notes, anniversary (of closing date) cards, send keeping in touch emails and always ALWAYS ask for referrals.
But That Is A Small Audience
How do you reach a bigger audience ... an audience that leads to a tenfold increase in your business? I use radio, print media (focused on my target market) and the internet. Radio can be pricey but hits a huge number of un-targeted listeners. Radio can be used for a targeted audience. For example I advertise on one of the most successful real estate investment talk shows in Atlanta and I get phone calls - and close deals.
For print I stay only with publications that deal directly with my targeted market. Publications that go to a subscription only audience of real estate investors is perfect for me and I stay in those publications. Your target audience may be different. For example if you are a real estate investor you probably do not want to advertise in a manner that would reach only real estate investors unless you have some very promising "wholesale" deals.
Let's Look At Numbers Again
I have done many mass mailings over the years. My average response rate is about 4 in 1000. It can be higher when I call for urgency or give something away but overall that is the number I use to estimated my return. Of those 4 who call in from the mailing the average closing ratio is 1 in ten. So my card sent to closed ratio is 1:2500 - this is for general mail farming such as postcards to an apartment complex. All in all 1:2500 isn't terrible so long as that one is borrowing $200k or more.
For radio you are partly at the mercy of the ratings and numbers supplied by the station and the companies that tracks such things. One station on which I advertised heavily during 2004 to 2006 said they had an average of 850,000 listeners at any given time. They certainly charged for it. I was paying about .008 cents per "listener" called "per impression". Compared to cards that's not bad where the cards are about 54 cents per impression. The return rate, however, from radio was 1:85,000 - in other words I received an average of 10 phone calls per 850,000 impressions. Of those ten, however, we generally closed 2 which is an improvement over the cards. But let's look at costs and effort.
The total cost of the post card campaign was $1350 and about 20 hours of work.
The total cost of the single radio ad was $750 and no labor except to answer the phone.
If I closed one loan from the post cards that one lead cost $1350.
If I closed two loans from the radio those two leads cost me $375.
Ah, the difference. I can do one mailing and stop - doesn't make much sense but I can. Doing one radio ad is probably a complete waste of time and money ... plus I don't know any stations that will let you run just one ad. There is generally an agreement for a period of X weeks with X spots per day.
Next - Networking Groups and Online Campaigns (after that we will get to the SUPERCHARGERS!)
Copyright©2007 Ken Cook, All Rights Reserved
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