Thought Leadership | Real Estate Investing | How To & Education | hyperlocal marketing
Everyone says that direct mail costs too much to be worthwhile. But if you spend your money only on the right contacts, there's a good chance you'll see direct mail ROI. In this post, we'll explore how to reduce direct mail costs by strategically connecting with the right homes or commercial properties, instead of wasting money by using the outdated ‘spray and pray’ marketing approach. For real estate investors and real estate agents, just going with the lists provided by your direct mail service won't allow you to get targeted enough. To cut costs smartly, you need to narrow your marketing list using public records data that help you pinpoint the right properties and property owners. Let's dive into the standard direct mail costs and how to lower them.
How much does direct mail cost?
Direct mail pricing isn't one-size-fits-all. Design, copywriting, postcard size, letter type, mailing list, and contact location all come into play. Postcards can cost between 30 cents to $2, while letters can range from $1.50 to $5.00 or more per piece. Bulky mail (sending gifts and swag) can cost upwards of $100 per lead depending on what you're sending. Here are some common calculations to benchmark:
- Direct mail cost per 1,000 postcards: Not including design and copywriting services, and only including printing, stamps, and distribution, 1,000 postcard mailers at a 5-inch by 7-inch size will cost approximately $650.
- Direct mail cost per 1,000 letters: Again, not including design and copywriting services, and only including mail merge personalization, letter printing, stamps, and distribution, 1,000 letters will cost approximately $1,800.
What factors affect direct mail costs?
Every company will have different needs and different in-house resources to help reduce what outside services they purchase. Here's a closer look at the factors that affect direct mail campaign costs:
- Design and creative assets
- Size of postcard
- Level of letter personalization
- Amount and type of letter inserts
- Weight of letter
- Contact location
- Mailing lists
That last one is key! Because a broadly targeted list of 5,000 people will not generate the same ROI for you as 10 lists consisting of 500 people, with each list segmented by unique characteristics, traits, demographics, and more.
Why you should avoid untargeted direct mail
USPS offers its direct mail marketing service called Every Door Direct Mail service. It’s often the first thing many small business owners consider when they plan a direct mail campaign. However, the targeting criteria they offer is extremely limited, which means you end up spending too much money on, you guessed it, a spraying-and-praying marketing approach. It’s a service we, unfortunately, can’t recommend because it’s simply not targeted enough. You don't need to hit all the doors. You just need to hit the right doors! You need to find the people who are most likely dealing with the problem that you have the solution for. So the first step to reducing your direct mail costs is targeting a quality audience.
Choosing quality over quantity to reduce direct mail costs
A direct mail campaign is going to cost more or less depending on how many people you send it to. If you can only afford to send 2,000 postcards in a month, wouldn’t you rather hit your best 1,000 prospects twice than send one postcard to 2,000 homes, half of which aren’t a good fit? Of course, you would.
Let's dive into some of the ways that pros reduce direct mail costs and maximize ROI.
Send mail to smaller segments for better messaging and testing
Smaller segments win the race. You'll have better results sending direct mail to five lists of 1,000 people than to one list of 5,000. And why is that? There are several reasons:
- Test what lists get the highest response (when someone calls, check what list they were in)
- Tailor the messaging of your direct mail to the needs of those individual lists to improve the response rate
- More easily prioritize your budget going forward and re-invest in the lists and list criteria that are working
Here’s an example. Let’s say you’re a real estate agent who would like to target both empty-nesters and vacation homeowners to get more listings.
If you don't segment your audience and send the same campaign to both empty nesters and vacation homeowners, then you won't know which audience is more likely to respond to you. You also won't be able to tailor your direct mail to their needs.
But if you do segment your outreach, then you can write something like "It's time to downsize" or "Sell your second home."Tip: to send direct mail to empty nesters, use homeowner age, no children at home, and home size as criteria. To target second homeowners, send mail to absentee owners in likely vacation spots.
Increase the frequency of contact to the right properties
When your direct mail campaign is highly targeted, it can make sense to increase contact frequency. Someone might not be ready to sell their home today, but they will be ready five months from now.
The properties that represent a good opportunity for you today are likely still a good opportunity in a year from now, so why not continue to reach out to them?
When you get better at targeting, you can increase your frequency. You can spend less on the wrong people, and more on the right people.
A newbie will spend thousands to reach everyone in their town. They'll burn out and blow their budget. A pro will be able to sustain regular contact with the right leads over a long period of time.
Other ways to reduce direct mail costs
Here are even more ways to lower the cost of direct mail, and increase your ROI.
Manage list creation yourself
Nearly all direct mail providers will tell you they can give you a targeted list. Why? Because they don't want to lose your business if you don't already have a list. They want to remove that objection to their service. That, however, doesn't mean that they have quality lists for you to use, or that they're even able to target the properties that are a match for your business.
Instead, handle building lists yourself with PropertyRadar, which comes with 200+ unique targeting criteria powered by public records data to help real estate agents, investors, and business owners discover the right clients and deals.<IMAGE IMAGE IMAGE....need to include Alt Text and Image Caption>
Handle creative in-house or with other resources
Doing graphic design and copywriting in-house could be a time-wasting disaster, or it could be a major time saver. That depends on your team.
Is there someone on your team with hidden copywriting and graphic design chops? Might as well assess all of your options before defaulting on having this service done by your direct mail provider.
Strategically choose which properties will receive premium mailers
When you're using smart targeting methods and public records data to find the perfect clients and deals, you can be more strategic with who receives which mailer. Maybe 75% of your prospects get a 4x6 postcard, and 25% receive a handwritten letter.
Heck, maybe the top 5% get a personalized gift from you. The point is, when you know exactly who you’re talking to, you can find creative ways to tailor your marketing message and approach so that you stand out from your competitors.
How to get an accurate quote for a direct mail campaign
Now that we know some of the strategic ways to reduce direct mail advertising costs, let's dive back into the numbers. Because there are so many factors in determining direct mail cost, there's no one-size-fits-all answer. Here are the things you need to know before requesting a quote from a direct mail provider:
- The number and location of the properties you'll be sending to
- The frequency of contact for different segments of properties
- Type of mailer for different segments of properties
- Whether or not you need graphic design and copywriting services
Note that postcard printing and mailing costs generally aren't worth attempting to save on by DIYing. You should rely on service for that.
How to calculate direct mail ROI
This isn't digital marketing. There are no pixels or conversion tracking code to install in your postcards. But there are still plenty of ways to calculate ROI from direct mail.
Use a conversion tracking phone number. Create a separate phone number that you put on your direct mail, so you can track who is contacting you from your mailers. If you have multiple variations of your mailer (for different segments or to test your messaging), then create different phone numbers. You can set up vanity phone numbers and call forwarding with a service like NumberBarn, and then track the number of monthly calls to that number.
Ask leads how they found out about you. If setting up new phone numbers feels unnecessarily complicated for where you're at with direct mail, no worries. You can simply ask leads how they found out about you. This won't make it easy to test the messaging on your mailers, but you can test segments. When someone tells you that they found you from your postcard, then check to see what PropertyRadar list they're on. Soon, you'll know which list segments perform the best for you.
Reducing direct mail marketing costs begins with highly targeted marketing lists.
When you create a segmented marketing list consisting of a few hundred, or even a few dozen people, you can better tailor your marketing messaging to more effectively connect with that segmented audience. The better you connect, the better response you’ll get, and isn’t that what direct mail marketing is all about? Getting the best response possible! So if you want a better response rate and better ROI from your direct mail marketing campaigns, remember these three magic words - segment, segment, segment.