Sometimes the most effective strategies are the most simple. Today we’re breaking down why list management isn’t, mathematically, worth your time.
What Are These Lists?
Wholesalers look for discounted properties owned by people who want to sell quick, for cash. To find those people, there are many lists:
- Equity lists
- Absentee owner lists
- Tax delinquent lists
- Code violation lists
- And more
What’s Up With List Management?
Some Wholesalers are tempted to save some money by eliminating people from their mailing list over time – don’t do that!
Here’s an example illustrating why we think the math won’t work out in your favor:
- Let’s say you send 5,000 pieces of mail every week for $0.32 / piece of mail, and you have a response rate of 1% – that’s 50 calls per week.
- Of those 50 calls, one or two are “warm prospects” while about 10 people want to be taken off the list.
- If you eliminate those 10 calls from your list, you will save $3.20 / week. Someone also has to take the time to remove those names from the list.
We don’t think that $3.20 is worth the time it will take you to complete the task – and it’s definitely not worth the potential errors caused by removing someone from your list (and maybe they will want to sell in six months, anyway).
Your time is worth more than that!
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Tom Krol: Hey guys, let’s have a conversation about list management, about all of these lists that you have that you’re sending direct mail to. If you are a wholesaler wholesaling real estate, you’re wholesaling houses, let’s have a meat and potatoes, no fluff, no BS, straight to the point, actionable information that you can use right now to explode your wholesaling real estate business.
Hey guys, my name is Tom Krol. I am America’s number one wholesaling coach, and today I’m going to give you a quick video on list management. So here we go.
First of all, what are lists? When you’re a wholesaler, wholesaling is the art of finding a discounted property. When you are a wholesaler, what you’re looking for are discounted properties. These are the homeowners who want to sell quick for cash. You have all of these lists of homeowners, whether they’re equity lists or absentee owner lists or tax delinquent lists or code violation lists or whatever you have. The question that comes up very often is, how do you manage these lists? So people will say, well sometimes they’ll do a mailing, and they’ll get their return mail, and they’ll start to take a pencil, and they’ll cross out the names or they’ll delete it from Excel the people who are on the list who are not interested in selling their home or for some reason they want to take them off the list. The homeowner said, “Hey, I’m not interested in selling” and hung up.
So some wholesalers, especially new wholesalers, will start to manage the lists. This is not a good idea, and I’m going to show it to you via math right now. Here we go. So let’s just say that you do a big, big mailing. Let’s just say you get, for instance, 40,000 pieces. In our tribe of wholesalers, we put it on an eight-week cycle. So that would mean that you’re mailing 5,000 right? 5,000, 5,000, 10,000, 20,000, right? So 5,000 pieces a week for eight weeks, and then you repeat your cycle.
Now one of the huge benefits of our tribe is that for your list, you only pay three cents a name, and you are only paying 32 cents for your mailing, which is a huge bonus for our tribe members, and it’s awesome. But let’s just stick with those numbers, right? So we’re going to just say it is 32 cents for the mailing.
So let’s just say that you get 5,000 pieces of mail, and you’re sending them out every single week. So every Monday or whatever day of the week, I know some people like Thursday, that’s fine, too. So every single day of the week, you’re sending out your mail, you’re sending out your mail. Now, you’re not doing it. You have a VA doing it, because you stink at ordinary tasks like that, because you’re an entrepreneur, you’re a visionary. So somebody, one of your VAs, is sending out a mail list of 5,000 pieces every single Thursday, let’s just say.
Now, the calls start to come in. You’re locking up deals. Revenue in first position, you’re finding discounted properties, you’re putting properties under contract. You’re buying them or assigning them or whatever you’re doing as your strategy, and you’re in your element. You’re making money. Awesome.
Some people what they start to do is they want to save money, and they want to do list management. So what they start to do is they start to manage these lists by eliminating the names of the people who do not want to be mailed or they don’t want to sell or whatever the case may be. Here’s my argument. Don’t do that.
Let’s just run through the math. Let’s just say that you send out 5,000 pieces, and you get back a response rate of 1%. So let’s just say of 5,000, I have a calculator right here. So let’s just of 5,000 pieces, times 0.01, that is 50 calls, right? Which is pretty good. Some markets you’ll have 3%, even more. Other markets, you’ll have 0.03% of a response rate, whatever that would be. So let’s just say it’s a 1%, that’s 50 calls. Let’s also assume that of the 50 calls, you have maybe one or two what we would call warm or hot prospects. And then the majority are kind of somewhere in the middle. Then you have, let’s just say, 20% that are, “Hey, take me off your list. Stop mailing me. I don’t want to sell. Leave me alone.” Whatever it is. Let’s just say that that number is 20%. You could go higher or lower if you’re following along based on your own expectations or your own experience. So let’s just say 20. I can tell you that’s probably 10, but let’s just do that anyway. It’s 10 phone calls.
Now, here is where the problem comes in. Let’s just say that you don’t do list management. If you’re paying 32 cents, you’re spending an extra, times 0.32, $3.20 a week in mail that is probably going to go to the wrong person, because they are not interested in selling. So you’re going to save about $3. If you’re doing much, much bigger numbers and you have a lot of people who are saying that, then let’s just move it to $20 a week. Let’s just say it’s $20. Oh $20, wow. Okay.
Now let’s say that because somebody else is going to be doing this hopefully, so now let’s just say that when you eliminate somebody or somebody else eliminates a name from your list, you do it to your full list or your 5,000 pieces, and somebody eliminates a name, but they do it incorrectly. So now all of a sudden, all of the names, like Mary Homeowner or Sally Smith, is now, because they deleted it wrong, incorrect. So now all of the names jump down a column. Now what happens is all of those names you’ll be able to see are now going to be misaligned. So now you’re going to have a huge problem, because on your next mailing, all of those names and addresses are not going to line up, because the person who was fooling around with your Excel list messed it up.
So here is the bottom line. List management, in my opinion, I would avoid at all costs. It’s just not valuable time. The other thing, too, and I learned this from one of my mentors about list management, is your hourly income is not in alignment with that. So whether you’re doing it or somebody else is doing it so you can take either your personal hourly income or how much money your company produces every hour, the time it takes and the tedious nature of how specific that is to go into list and then start fooling around with them, it’s just not hourly worth it.
So I would definitely avoid list management. This is a question that comes up a lot in our tribe about, “What do we do with the return mail? What do we do with the people who say they’re not interested? Do we continue to mail them or take them off the list?” In my opinion, I would suggest leave the list alone. The the dollar amount that you’re saving by doing list management is really not worth it. Very often the people who are angry and ask to be removed, they could actually end up selling. Usually when they’re that angry over getting a postcard, there’s something else going on there. Sometimes not, but sometimes there is.
So something to think about and hopefully this will help you save some time by avoiding this activity, this mundane, low level, not very big saving, high expensive resource task that can really just be avoided. Hopefully that answers the question, and we will go from there. All right, talk to you soon, and have a great day. Bye-bye.