Posted on: December 04, 2020

Today’s guest is a successful entrepreneur and real estate investor. He is also the host of Flip Talk, a no BS podcast that aims to provide real and actionable information from those who flip houses.

Before Don Costa achieved the level of success he’s currently enjoying, he had to ask himself some tough questions, change his mindset, and acted “as if.” In this episode, Don brought with him years of experience and tons of valuable insights and he willingly shared many of the things and techniques he has learned along the way!

More importantly, Don also tackled one of the key elements of any business—the marketing budget. If you are unsure how to spend your marketing dollars in a way that will bring in the most profit, this episode is exactly what you need to hear!

Key Takeaways

  • Four areas he’s focusing on right now
  • What he thinks of direct mails and why he’s still doing it
  • Two things that can help maximize the benefits direct mail offers
  • Percentage of direct calls he captures
  • The importance of doing follow-ups
  • How they handle their follow-ups
  • What he likes about cold calling
  • What he considers one of the most profitable marketing channels
  • What “Googling for dollars” means
  • What networking looks like for them
  • How they maximize profitability in their organization
  • The different people you can network with
  • The importance of tracking
  • The different people you can network with
  • Where people can find him online

RESOURCES:

If you are Ready to Explode Your Wholesaling Business, Click here to Book a Free Strategy Session with me right now!

Subscribe to Wholesaling Inc

Episode Transcription

Chris Arnold:
Welcome to the Wholesaling podcast. I’m your host, Chris Arnold. Man, I got a show for you today. Don Costa, I know you’ve heard that name. Guy’s been around forever. Let me tell you why I wanted to bring this guy on. I’m very picky about who we bring on to the podcast to talk to you guys. In my opinion, and, again, running Multipliers Brotherhood, I know hundreds of people in the real estate world. I get to do a lot of networking going to events and so forth and Don, without question, honestly, is one of the sharper guys I know out there.
He’s not just a real estate investor. He thinks like an entrepreneur. He thinks like a business owner. This is someone that understands how to elevate out of the day to day, not to be the one touching everything in his business, but actually to empower a team, to track the right things. I mean, run it like a true business. Any time I can bring someone in for you guys that can elevate your thinking, get you to begin with the end in mind, I think that that’s always super valuable. Don’s just a rock solid guy.
So, Don Costa, what’s up, buddy? Welcome to the show, man.

Don Costa:
What’s going on, man? I’m glad to be here. That was a great intro, so let’s save that for later, man.

Chris Arnold:
Thank you, man. I like you. We hung out in Florida not too long ago, sat down, actually had a little bit of heart to heart about raising kids and family and so not just the business conversations, but those life conversations that matter most.
So if you’re listening, here’s what you’re going to get today. Two things. We’re going to pick Don’s brain on the four areas that he’s focusing his marketing dollars right now and as he’s prepping for 2021. Then the second thing are really four tactics on how to maximize marketing at a high level. So that’s what you’re going to walk away with today. Two for one special. I like it. It’s going to be solid conversation.
So, Don, let’s hop in. Everyone wants to know: what are the four areas for you that you’re focused on right now when it comes to marketing channels?

Don Costa:
So I am born and bred direct mail, guys. Direct mail is always an avenue that we hit. In 2018 and ’19 combined, I sent out over 2 million postcards.

Chris Arnold:
Two million?

Don Costa:
Two million. I know direct mail at a high level. I’ll be honest, during COVID I’m not sending out as many. I’m only doing about 40,000 a month right now, but direct mail is still an avenue that I love and understand really well. Cold calling is another avenue that we are hitting pretty hard. We have two full time cold callers and then of course Googling for dollars is kind of a twist on driving for dollars. If you don’t have time or the bandwidth to go out and drive neighborhoods, you can always Google those neighborhoods. And my tried and true marketing that’s always been the best deal source for me is networking.

Chris Arnold:
All right, so let’s break these down one by one. Let’s make this kind of practical. Here’s the first question. You’ll hear a lot of people saying direct mail’s saturated. You walk into someone’s house, there’s 50 postcards stacked up. Why a guy of your caliber with your budget, why are you still spending on direct mail? What are you seeing there that’s keeping you in the direct mail game right now?

Don Costa:
You know, direct mail, it always gets response, right? Really, we’re going to dive into this a little bit further, but once you understand your tracking, say you’re micro-tracking, you’re breaking your direct mail up between your list and when you mail them and the color of the card and the type of the card. You’re tracking those things. We call them split test in our organization. We use a different phone number for everything we do different.
So, for instance, I use a green card with an equity list, it’s going to have one phone number. If I use a Google street card with an equity list, it’s going to have a different phone number. We’re watching that data. We start to see, I’ve learned that during the summer with direct mail, kind of a bad time of year to mail. People are on vacation or they’re getting ready to bring their kids back to school and so direct mail, it doesn’t perform as well. During election years, obviously we have saturation. Direct mail doesn’t necessarily perform as well going into November.
When you start to see the flow, for instance from January to about June direct mail is on fire in some markets that I’m in. Every market’s a little different. We learn when to pour the gas on and when to take our foot off the pedal. That allows us to maximize the profitability of that marketing channel. If you’re just doing it willy nilly and you’re shotgunning it out there into big, black hole and you’re not watching the return and tracking the data and looking at what lists perform and what lists don’t and what time of year is better and how often the mail, it’s not going to be successful for you. You’re going to find it to be a very expensive marketing channel. But like any other marketing channel, if you’re paying attention to the results and the data, you can fine tune it and make it work for you.

Chris Arnold:
Yeah. I just hope you actually heard Don, how he was breaking down direct mail. The level at which you were niching it down. I think you’re right, most people just kind of spray and pray. They put a lot of focus on building the list, but they’re not really thinking about the exact times to send them and to come in and get really strategic about when you drop, how you drop, changing. I think for a lot of people, the thing I want you to hear Don saying is you’re at level two. Don’s taking this thing down to level 10 on how he’s doing it.
So, Don, I have a question. Someone’s listening. They’re doing direct mail right now. Give a couple things that they could do practically to maximize their direct mail. You mentioned certain holidays or times a year. What’s two things that someone could run with and go, “You know what? I can apply those right now to get more out of my direct mail.” What would those two things be?

Don Costa:
For instance, one of the things that we do is we dial it down to the day. We’re tracking it down. We know that, for instance, we don’t want our direct mail to land on a Wednesday when we mail it, because that’s when all the junk mail hits. If you want to just simplify something, when does junk mail hit in your market? Okay, we’re sending out these floppy little paper postcards and they’re bound to get lost in the shuffle of all this junk mail you get. So if yours hits on a Wednesday, like mine does, I try to direct my direct mail providers to send out my mail so that it hits on a Monday or a Friday so we’re avoiding that Wednesday, right? And that way-

Chris Arnold:
That’s a great tip. So don’t allow your direct mail to hit on Wednesday when everyone else does. Focus Monday, Friday. That’s a great little nugget. What might be one more practical one like that?

Don Costa:
The best way for any marketing channel to work, and we’ll probably get into the discussion a little bit more, but you got to answer the phone. If you are sending out direct mail and you’re sending it to a voice mail, you’re throwing money away.

Chris Arnold:
Uh oh. Lot of people just got challenged there, because they’re sending everything to voicemail. So if it’s not going to voicemail, how in the world are you managing the call flow of 2 million postcards under normal season when you’re sending out that many?

Don Costa:
We had five lead managers at one point. We started with one lead manager and we were sending out about 30,000 month. Went up to two lead managers. We took it up to about 50,000 a month. I think at our largest point we had five, but we averaged about three lead managers during the 2018/19 kind of a season, I would say. Now we have two, so we’re not sending out as much direct mail. We’re doing a lot more cold calling than we have in the past, but we still have two full time lead managers to handle calls.

Chris Arnold:
Are those lead managers answering those calls live and maybe dispersing them out to the-

Don Costa:
They’re answering them live and then they’re-

Chris Arnold:
What percentage of your direct mail calls do you try to capture live?

Don Costa:
Hundred percent, the goal is 100%.

Chris Arnold:
Wow.

Don Costa:
That’s the goal. I get an end of day report every day that says what we missed. We’re usually 97%, 99% of the calls answered. There are some days we hit the goal of 100, but you want to answer every single call live. That’s the whole point. There are people that’ll call you and they’ll act like they have no interest in selling their home and you get them on the phone and you have a good conversation, you break it down, and pretty soon it ends up being a deal. I mean, some of those don’t work out, right? But at least you get a relationship going. Some of those we buy on follow up.
You asked for two, but the third, and, again, I think we’re getting a little ahead of ourselves-

Chris Arnold:
He’s giving an additional one. All right, cool.

Don Costa:
If you’re not following up, you’re losing money. No marketing channel is going to be profitable long term without follow up. If you don’t have a follow up ground game going, I’m telling you, you’re throwing money out the window. I know people have heard it, and they’ve heard it over and over again, and guarantee you most of them aren’t doing it.

Chris Arnold:
Oh, I can tell you that. I know that for sure. Follow up is terrible in our industry for the most part. Now, are you utilizing automation to do that?

Don Costa:
I consider follow up a marketing channel. That, to me, it’s considered a marketing channel. That’s how seriously we take it. We do the automation, the text message and email automation. We have our team do what we call warm follow up. That’s the lead manager who answered it is calling them back and continuing that relationship. And then we also do cold follow up, where we actually throw it over to our cold callers and have cold callers call it, almost like we’re a whole different company.
So we’re hitting them from every single angle we can on a regular basis. If they tell us to call back in 30 days, we’re calling back in one to two weeks. I mean, it’s like, we’re buying deals 12 months, 24 months after the fact, and sometimes we’re buying those deals, not because the seller changed what they’re asking for, but because the market has changed and the ARV has changed and what wasn’t a deal maybe 18 months ago is a deal today. A lot of people will say, “That seller, they’re hard and fast at $100,000, and I just can’t buy it at $100,000.” When’s the last time you ran the comp? I mean, the market’s on fire right now, right? It’s another avenue.
Everything about success is your mindset and your perception of what is or isn’t an option. You just go to make sure that you’re looking at everything a little differently, a little bigger, and looking to see if there’s options you’re missing.

Chris Arnold:
Yeah, I love that, and I love what you said. I want to make sure everyone heard that. Your follow up program is just an entirely different marketing channel. I think that literally put the nail in the coffin in the sense of how you handle your follow up. I thought that that was really well said. So, again, focus your drops on Mondays and Fridays, right? I think that that’s key. Obviously, come in and make sure that you’re answering these calls live, utilizing some type of lead manager, which I think is an important piece as well. I think that that’s crucial.
So let’s go over to cold calling, right? Again, why cold calling. There are a lot of different things you could be doing right now. Cold calling is kind of fundamental. I know Brent Daniels is hearing this. He’s like, “Come on, Don Costa, let’s talk about TTP.” What do we got going on there? Why cold calling?

Don Costa:
I’m an old school guy and, like I said, direct mail was my jam for a long time and I was reluctant to do cold calling. I don’t know why I was. I think a lot of people, we are. Coming into COVID and the changes we were making in the organization, if I’m being real, right? We weren’t virtual. Everybody, 100% of my team was in my office. Now we have, a couple of our internal team members have moved to Tennessee, which we’re in the Tennessee market now, and then we have outsourced two VAs for our lead management and my KPI reporting and a lot of the different systems and processes. We have somebody that builds a lot of that out for us and our VAs. So my team is half virtual and half in person now.
I kind of let go of that fear of implementing cold calling in my organization. We did. We went pretty heavy in it. For me, the secret to cold calling, first and foremost, is making sure you’re on good data. I’ve learned that. A lot of people say it doesn’t work. Again, it goes back to, “Okay, then where’s the break in the process?” Are you on good data? We were on bad data when we first went for it and we dialed in our data and we started getting results.
Then it’s like, “Well, how do you maximize the results?” We get a lead in from our cold calling team that goes into Podio and our acquisitions team member calls it and that home owner doesn’t answer, well, do you stop there? No. She assigns it to a lead manager and then they tag team that person until they answer. We’re aggressive. We start looking at, “Okay, well, where’s the break in the system and how do we make it work better?”
Just the other day I personally closed a deal that we’re making 50 grand on. I think we’re getting the check today. It was one of those that it looked like a great lead, but the homeowner wasn’t answering and the lead manager and the acquisitions manager tag teamed that person until the lead manager got him on the phone, back on the phone, and then my acquisitions manager asked me if I wanted to close it and I went over there and closed the guy. It’s how hard are you willing to work for it to make it work in any marketing channel? We’re finding that cold calling is, now that we’re on good data and we’ve got a good process in place, is going to be one of our most profitable marketing channels out there.

Chris Arnold:
That’s interesting. I love that. What about this Googling for dollars? Again, everyone’s so used to hearing driving for dollars. Someone’s not familiar with that language, what would it look like to Google for dollars? Give us a quick breakdown of that.

Don Costa:
I mean, technology is so phenomenal nowadays, right? Back when I first started in 2003, I was printing off routes, door knocking with Microsoft streets and maps on paper and I was flipping through paper and driving these routes. Then you had GPS, which you could only put one address in at a time, and now we’ve got these route planning software and all kinds of things.
The technology that’s at your friendships as a real estate investor is ever evolving and Google is one of those. The Google Street View is an amazing tool if you don’t have the time or the bandwidth to go out there and drive neighborhoods for dollars. You can actually go through, put an address in, pull that address up, and you can go up and down the streets and around the neighborhoods and you can look.

Chris Arnold:
You’re cruising via Google Earth, looking at properties, right? And actually getting in the car.

Don Costa:
Mm-hmm (affirmative). I actually registered the domain name GooglingForDollars.com, and that actually goes to a driving for dollars platform that has Google for dollars, because I think it is going to be a great asset for marketing for us as real estate investors.

Chris Arnold:
Any data on how Googling for dollars sizes up to just your traditional getting out and driving for dollars? Have you been able to see the difference? Is it as valuable? Maybe it’s a little too fresh to have data, but that’s what I’d be asking myself. I’m like, “Dang, I don’t really like driving for dollars. I want to go to this Googling site, but can we back it up with anything to support how effective it is?”

Don Costa:
If driving for dollars is working for you in your organization, it’s going to work for you here. The data in our organization, I would have to take a look at and tell you compared to driving for dollars. I would say it’s equal.

Chris Arnold:
So you would say Googling for dollars is equal to driving for dollars?

Don Costa:
I believe it’s equal, yeah, because it’s the effort. Really, it just depends on how seriously you’re taking it. I have a gentleman that I’ve been working with for a few years. He’s worked for me as an acquisitions rep, he’s followed me on some of the platforms I’m on and learned from me. His first deal, he got it in the Bay Area for Googling for dollars. He was cold calling a house. He looked up and down the neighborhood and noticed the neighbor’s house had some issues. Skip traced them, called them, made $300,000 on his first deal. It’s the Bay Area. That’s a caveat, right? It’s not like typical USA, but he made $300,000 on his first deal Googling for dollars.

Chris Arnold:
Yeah, that might change your thinking a little bit, a deal that size. That’s fantastic. Let’s go down to networking. I believe this is way overlooked. You and I were chatting about this before. I got a couple good buddies of mine at a high level that have really maximized just your traditional networking. Break it down. What does networking look like in your organization to find deals? How does it actually work?

Don Costa:
Networking, when I started most people here may not know my story and it’s all over the place if you want to find it, but I had a million dollar judgement against me. I had no money. I had no business out there doing marketing. My marketing channel was networking, calling agents, calling other investors. I would call people’s bandit signs. A lot of people will say, “I put up an bandit sign. I only got other investors that called me.” It’s, again, outside the box. Why does that suck? Those relationships could be profitable.
That means your bandit signs worked, right? Because it attracted some people that you could be doing business with. I called bandit signs. I would troll Craigslist and call other people’s ads on Craigslist. I would go to REAs and talk to people. I called agents and met with agents. Networking, again, it’s the effort. How seriously are you going to take it? You’re looking for those people that you can connect with that understand what you’re doing. A lot of them aren’t going to. A lot of people go out there and they talk to an agent. The agent will be like, “Let me put you on a portal or blow you off and you’ll think it doesn’t work,” but if you can find just, say, two agents that understand what you’re doing and they send you one deal a year, that’s two deals a year you get for free. You can find 10 agents that understand what you’re doing, they send you one deal a year, that’s 10 deals a year you get for free, right? The way to maximize profitability in your organization is to cut the costs. So anything that’s free, it maximizes the profitability in your organization.
When you start to develop those relationships… Most agents I work with are good for a couple of deals a year. They’re not good for 10, usually, but two or three or four. The other thing about networking that I want to share is, when you’re going to people and you’re going and asking, “What’s in it for me?” That’s the wrong way to do it. If you’re going to people and you’re saying, “How can I serve you?” If you’re coming from a position of service, those relationships will be exponential for you. You go to an agent and not say, “Can you send me good deals?” Go to the agent and say, “Look, if you have an issue with a seller that has a house and they’re a hoarder and they don’t want anybody walking through it and you can’t put it on the MLS, I’m your guy or gal. If you have a property that is falling out of escrow and you need somebody that can close quickly, I’m your guy or gal.” If you come from that, from a position of service, you’re going to have a lot of success with networking.

Chris Arnold:
Being a solution provider and saving them the commission they might lose. So I want to end on this piece with this aspect of this marketing channel. Let’s categorize or put in buckets the different people you can network with that are worth their time. So agents obviously have deals. You might call them bird dogs, people that are out like the mailmen, et cetera. New investors.

Don Costa:
New investors.

Chris Arnold:
Another great place. Who else would you add to that list to spend time networking with?

Don Costa:
Well, new investors, established investors, potential private money lenders. You always want to be raising money even when you have more money than you need.

Chris Arnold:
All right, so private money lenders.

Don Costa:
A good relationship to have is the customer service rep at the title company. A lot of people don’t realize title companies have customer service reps that are responsible for bringing business. They have a lot of free tools for you, especially when you’re newer, to help you get some traction. They can provide lists to you for free. They’re not as dynamic as some of the lists you pay for, but they’re free. They provide free tools for you to go in and pull property searches as far as the history reports or neighborhood reports or even comp your properties, quick and dirty comp, and they also have relationships with our investors in your market that they can potentially introduce you to as well. So they’re a great source.
Then, of course, you want to be networking with anybody. You want to be telling everybody what you do, to be honest with you. When you ask a few good people, it’s like, everybody, even your neighbor, needs to know what you’re doing. Something I want to share, this is the giveaway because this is something that I had heard from somebody. It actually came up in conversation and we hashed it out, but when somebody asks you what you do, it’s not, “I’m a house flipper,” or, “I’m a wholesaler,” it’s, “I help people place money in high performing projects.”

Chris Arnold:
Nice. That’ll get your attention, right?

Don Costa:
That’ll get your attention.

Chris Arnold:
That’ll kind of make that person go, “Huh, okay.”

Don Costa:
“Okay, tell me more.” Then you get into maybe they’re a private money lender. Maybe they’re somebody you could potentially work with that could send you a deal. Make them ask the question and want to know more. Doesn’t necessarily have to be that, but again it goes outside the box. It’s like, “How can I resolve an issue? I have an issue with I’m trying to make relationships. These people aren’t opening up to me, so what can I provide in that situation that’s a solution that allows me to continue the conversation?”

Chris Arnold:
Okay. If I’m listening to this podcast, Don, and I’m like, “Okay, I’m newer to the game. I love this idea of going out and networking, because I have time, not money. If I was coaching with Don Costa, which of these would he tell me maybe to begin with?” Because I hear you clearly, should be talking to everyone, but maybe one of these two where you go, “I think you’re going to get the biggest bang for your buck with this.” Is it agents? Is it title companies? Is it new investors? Where would you tell someone to begin?

Don Costa:
The three places I would start is other investors in your market, new and established, agents, and the customer service reps from title companies.

Chris Arnold:
Okay, so title companies, agents, and investors, both new and seasoned.

Don Costa:
Right.

Chris Arnold:
Okay, excellent. Let’s make this transition. Now we have a good understanding of what you got going on on your marketing channels. Let’s talk about mastering marketing. We’re going to talk about some tactics, call them principles if you will, just to get you thinking if you’re listening, “What do I need to understand to get more out of my marketing?”
I love this first one. Are you blaming the system or the system’s operator? What’s this mean? What do you feel like the first one is here for everyone to understand?

Don Costa:
A lot of people will look at a marketing channel and they will, say you send out direct mail and you get phone calls but you haven’t converted any deals, or you’re doing cold calling and you’re not getting leads or getting leads and you’re not converting deals, right? Like I said, for instance, we started cold calling and we weren’t getting good leads. We weren’t really getting any leads. I was like, “Okay, well, do I decide that cold calling doesn’t work or do I look deeper into the process?”
As an operator, my job is to make sure that I’ve uncovered every stone before I decide if something works or not. We realized we were on bad data. We had to adjust the data set. We actually got bad data from our data provider and it wasn’t functional we had to figure out what data performed the best. Are we answering the calls live? Is our sales process proper? Is our follow up process proper? Is my team properly trained to go in and actually ask for the close? We’ll look at a marketing channel and just decide that the marketing channel doesn’t work and we won’t look in the mirror and realize that our process after we pick up the phone is what’s broken.

Chris Arnold:
You know what came to me? I feel like what I hear you saying is rather than ditch it, why don’t you dissect it?

Don Costa:
Right.

Chris Arnold:
Because that’s what I feel. I see this a lot. I think it’s an important point. I call them bouncers. I see a lot of people, and tell me, Don, if you see this, are so impatient about the results of marketing which, because of that impatience, not really having an understanding of how hard and how much of an expert it takes really to become an expert at a marketing channel, people just wave the white flag. They point at the system and say, “This marketing channel doesn’t work.” And like you said, they’re not taking the time to realize and take a look in the mirror that the problem is themselves.
Do you see this happening quite a bit in the industry on blaming the wrong thing?

Don Costa:
I think it’s just human nature to automatically deflect and place blame somewhere else. As an entrepreneur, you got to look. If there’s a failure in your team, at the end of the day it’s your fault. You’re the leader. There’s a failure in your process, at the end of the day it’s your fault. When you start to realize that and you start to look at, “Well, if something isn’t working, how do I make it work?” That’s what we’re supposed to be good at as entrepreneurs anyway, right? Somebody tells you that it’s impossible, you prove that it is.
Somewhere along the way, sometimes we lose sight of that. I learned this. In 2018, I sent out about 60,000 postcards January 2018. I sent out to one particular list and I got really good results out of the gate. We were buying contracts. I sent out to a second list. It was blah. We were getting phone calls, we weren’t really get a lot of deals from it. I figured the second list was worthless. Good thing I was tracking, because I had started tracking. I call it micro-tracking. Everything I do has a different phone number to it. We split test everything, we’re looking at the data coming back. Well, May and June, end of April, May, and June, we locked up a ton of contracts. In fact, June that year we did 30 contracts.
I could have thought I was mailing to this particular list that I mailed to that had results. I was mailing to that one over and over again. List two, I mailed one time, like I said. I thought in my head that the lists that I was mailing to every month were getting me the results in May and June, but when I sat back and looked at the split test and looked at the data, the properties I bought in May and June of that year, again 30 contracts in June, came from the list I dropped in January. I realized, for instance, you have low hanging fruit lists, you have high hanging fruit lists. There are lists that’ll perform out of the gate and there are lists that’ll perform over time through follow up and proper process. What I learned from 2019, is that list that I thought didn’t work ended up being my most profitable list for the year.

Chris Arnold:
Yeah, absolutely. I love that. What a great example of how something like that can play out, why you stick with it and really dissect it, because you might be reading the entire story wrong. Which, in that example, you realized it just took time for the true story to come to the surface.
Let’s go to number two. Again, we hear this all the time. The value of tracking and cadence. Why does this need to be put in place? More particularly, we hammer people on track, track, track, metrics, metrics, metrics. How does someone even begin to do this? Here’s what I’ve found. Even with REI Radio students, you’re in the beginning of a launch. Life’s crazy, family’s crazy, you’re juggling. It’s like, “I just can’t get around to doing it. I know I ought to do it, but I’m not.” It’s like going to the gym. I know I ought to go to the gym. You don’t need to convince me that it’s important to work out. The problem is, I just can’t get myself to do it.
So talk about tracking and, more importantly, maybe how to practically begin to walk it out when it seems like an overwhelming mountain to start climbing.

Don Costa:
Let me just say a couple things. One is, we can’t try to eat the whole elephant at once. You got to take the bites. Then I think, again, as entrepreneurs, we always try to conquer everything and I’m guilty of that constantly. We had a conversation the other day where I had to take a deep breath and go, “Okay, I just need to take the bites.”
There’s a few things to say about tracking and the importance of tracking. One is, if I hadn’t tracked in 2018, I would not have known that my most profitable list was what I call a high hanging fruit list. It’s one that we put time and energy into and follow up into, but produces more money than anything else. That’s also where I learned to watch for the cadence of the marketing. We’ll get into that in just a second, but I learned that I made the most money on was the list I mailed to less often that year. The reason why was because I wasn’t eating at my profit by mailing to the list more times that I needed to, if that makes sense, by watching the data. That’s one of the reasons why it’s important. I saw I was throwing money away mailing more often than I should have.
The other thing is, there’s a sweet spot in marketing. You have this threshhold that, if you don’t cross it with either time invested or money invested, you’re throwing money away. If you spend $500 on radio ads, you’re probably not going to get success. It’s the momentum in that marketing spend, right? You got to get to a point where you’re getting momentum in that marketing channel.
Then you have the top part where it doesn’t matter how much you spend, once you hit a certain point you’re throwing money away. It’s called the law of diminishing returns. You got to know you’re in that sweet spot in that marketing channel and you stay there for maximum profitability. Those are a couple reasons why tracking is important. I don’t know if anybody’s ever articulated it like that before. It took me beating my head against a brick wall to figure out why it was important.
The simple steps you can take–I know you have a question there–but the simple steps you can take-

Chris Arnold:
No, no, no, you rock and roll. You’re being down and simple. That’s what we like to hear. The simple steps.

Don Costa:
The simple steps. Look, you don’t have time. Everything’s crazy. Just assign a different phone number each thing that you do marketing wise. If you change the list, change the phone number. If it’s first quarter versus second quarter, make it a different phone number. If you change the card. For instance, if I have an equity list on a green card, it’s one phone number, and an equity list on a Google street card, that’s a different phone number. REI Radio should have its own phone number. Your data, your list, should be tracked if you’re cold calling.
Then when you have time down the road to digest, you can go back through and break it up. Or even hire a VA to break it up and do it for you. Team member in your organization to go in a build out. All I did is have my team members built out the Excel sheets so I could see the data. I am not a data junky. I am like every entrepreneur. I am ADD, I like to stay high level. I don’t want to get into the weeds. I don’t want to do all this stuff myself. I can’t spell without spell check. I can’t do basic math without a calculator. I’m not a data geek, but, man, when you see the clarity in your organization and how you’re either throwing money away or maximizing profitability? That is a game changer as an entrepreneur and I get excited. I can feel it right now just talking about it. I get excited about it.
It starts with the simple step of just assigning a different phone number to everything you do. You can go back and look at it later if you have to.

Chris Arnold:
Yeah. I think you nailed it. I’ll give you an example of this on REI Radio. “I got this beautiful phone number. I just want to put it on every radio station so everyone memorizes this sweet vanity number. Can I do that?” And every time, we tell them, “No.” And they push back. “Why not?” “Because you’re going to put a different phone number on every radio station so that you can automate the tracking, because there’s no way you’re going to lose control of asking people, ‘Well, where did you hear me?'” A lot of times, people don’t remember. Then you’re building an extra step in the process by having to ask them versus automating them.
So if you’re listening, that’s two people that are coming on strong telling you the importance of utilizing, it might be different URLs if you’re doing something that’s website based or it’s going to be phone numbers if you’re doing something call based. I love that.
I love and I want to sum up a couple things you said, because I think they’re important. I agree with you on the sweet spot. I say bigger is not always better. Better is better. There’s sweet spots in marketing. I’ve even found now, being in business 15 years, that there’s sweet spots with businesses. You don’t just keep scaling a business, because at some point you’re going to cross that threshhold where you’re saturated. It’s good to put that thing in a sweet spot and then begin to move on to the next thing and begin to build that.
I love that you brought the sweet spot up, because we’ve never talked about that. People don’t a lot, but I recognize it and I call it the exact same thing. I call it the sweet spot. We’re there. We don’t need to just get bigger to get bigger, because that’s what everyone is saying and doing. And then-

Don Costa:
I love that you said… I don’t want to cut you off, I want to just hammer that in, because I have watched too many businesses scale themselves out of profitability.

Chris Arnold:
Yep.

Don Costa:
I’ve coached people that already had million dollar businesses and that’s the biggest thing I’ve seen them do over and over again is scale themselves out of profitability. You got to know what you want before you start the path so you know what success looks like and find that sweet spot.

Chris Arnold:
Yeah, and don’t get caught up in all the rah rah and all the numbers that are thrown around. Just because the guy with the highest revenue walks into the room and everyone’s like, “Look at that guy.” Again, this is what I like to say. Revenue is for show, but your net profit’s the real dough. Rev is just show. I’m just telling you. What you really care about is what people are putting in their pockets. I know some people putting way more in their pockets at revenue levels at the top level doing around a million to $1.5 versus let’s say $3 to $5 million, because they just keep it so lean.
The last piece I want to make sure they heard is, okay, you might not have time, Don’s saying, to come in and really pull out all of that data and interpret it, but at least set up the system to be tracking it so when you’re ready to send somebody in they can do that. This is one of the biggest things I learned, Don, when it comes to tracking, which I think’s important. I enjoy interpreting and reading the data. I don’t want to assimilate and put all the data together.

Don Costa:
Same, yeah, same.

Chris Arnold:
Because you don’t want to get so drained assimilating data that by the time you get over to the important part, and that’s interpreting it, you’re like, “I’m exhausted. I’ve looked at these spreadsheets forever.” I made that mistake in the beginning. I don’t put anything… We use a system called Klipfolio. It’s a KPI dashboard. It just takes everything in Excel sheet format and puts it into nice colorful graphics that are easy on my eyes. Then I come in with my COO and CFO and we talk about what that data means. I enjoy that conversation. I don’t enjoy assimilating it, so you can outsource it.
Don, I want to hit on these last couple points here. The next one, obviously, is about consistency building momentum. What is this real third principle here? The idea of, if you have a strong front end and not a strong back end, you’re in trouble. So many people enjoy the sexiness of the front end, but they stay away from the hard work of creating the back end. So explain this a little bit.

Don Costa:
In the consistency building momentum aspect, let me just touch on that. A lot of times you’ll spend some money on marketing, you’ll get a result, you’ll get a couple deals. Then you put the rest in follow up. Then you layer another marketing effort on top of that and you get a few deals. You put the rest in follow up. As you start to do that, you’ll start to build momentum. You’ll start to see, we see there are months where a large portion of our deals come from follow up and not as much from the new marketing we’re doing, and then the next month might be new marketing, less follow up. Those things, they’ll augment each other and they’ll layer upon each other. That’s one of the reasons we have success in our business.
You don’t want to lose that momentum. Everybody hears consistency, right? I know you guys have heard it in every podcast and every real estate event, that consistency matters, but it’s that momentum that really matters that consistency breeds. In order to maintain that momentum, you got to start building systems and processes in your organization. You got to start putting pieces in place. Maybe that’s team members that are better at things, like the data or the information or answering phones or closing deals or whatever it is in your organization, so that you don’t get so bogged down.
We always talk about this roller coaster, this bipolar roller coaster ride. You got a bunch of deals coming in, you take your foot off of marketing, you start working on the deals, deals start to stop coming in, but you’re working on them, then you sell everything and you got to get the momentum again. You want that consistency and not the bipolar roller coaster. The only way to do that is to sit down and start mapping out systems and processes. For me, it’s like whenever I hit something that sucks I sit down and be like, “How can I unsuck this? How can I make this something in my organization that just functions like it’s supposed to?” Because you don’t always know ahead of time what you’re going to need.
Tackle it when it happens, do the work on the front end, build it out right the right way, that way you can automate it and forget about it.

Chris Arnold:
Yeah, absolutely. The analogy I like to give for front end versus back end is, I tell people the front end is the traffic, Don. That is all the leads, everything you’re doing. The back end is your bridge, your systems and your operations. What I see happen is people spend so much time on the front end, they create so much traffic on that bridge, that the bridge collapses. So what you got to do is before you drive more traffic over the bridge, go in, stabilize the bridge, deal with the structure, do what needs to strengthen that bridge, and then go back to the front end and create more traffic. But I see people do this backwards all the time. If your bridge collapses, you just burned a lot of money on the front end, because you can’t keep up with the leads and the lead volume and the calls and so forth that you’re creating for yourself. So I think that’s an important one.
Let’s nail this last one. Bottleneck. Don, who do you find or what do you find ends up being the primary bottleneck when it comes to marketing and making sure, obviously, that we’re mastering marketing?

Don Costa:
Well, the bottleneck in any aspect of any organization is generally the leader, which has been me on many occasions as I’ve been learning how to be a business owner. If you’re one of those people that you have to touch everything, that you have to put your yes or no blessing on everything, and if you have to overlook everybody’s shoulder and micromanage everybody, you’re a bottleneck that’s choking your organization and your profitability, your consistency, off. If you’re going to build a team around you, if you’re going to build a process around you, you really got to trust that team and that process to be successful in their lane and let them do that and not be a bottleneck.
For entrepreneurs, I will tell you, one of the things that we try to control, and we’re one of the last ones to control, is our marketing, our own marketing. Marketing money. But if we’re distracted in 15 different directions and we’re ADD and we have all these things going on, I guarantee you it’s not working as efficiently as it could. You got to have something, a process in your organization or a person in your organization to automate a majority of that so it happens when it’s supposed to happen and the decisions are made when they’re supposed to happen with or without you so that it can be consistent. I guarantee you, any lack of consistency…
In my organization, as good as I am, as many years, I’m 17 years in this game, in my organization if there’s ever a bottleneck, if there’s anything that holds anything up, it’s always me. It’s never the team or the process. It’s me getting in the way. That realization has allowed me to let go in a lot of ways.

Chris Arnold:
Yeah. It’s so funny, I think that, again, I know this, particularly dealing with multipliers and stuff like that. You’re right. Most of the time the person in the way that doesn’t realize they’re in the way is the visionary that just will not take their hands off of things. I always tell people, empower your team and give them permission to come in and tell you when you’re getting in the way. My team has gotten so comfortable with that, that they’re constantly kicking me out of things, but that’s what they should be doing.
I love the old saying, “You have to allow the inmates to run the asylum at some point.” You got to get out of the way and you got to realize what your lane is, but it gets confusing. If you start a business, you’re wearing every hat that there is. You’re the admin, you’re the sales person, you’re the marketing, you’re the janitor, but at some point you get confused on what your role really is and you, I think, deceive yourself that you’re really great at all those things. You might get good at them, but I guarantee you’re going to find someone that’s better at every one of those things than you, because you never really became a true expert, because usually a visionary doesn’t. That’s what makes a visionary a visionary. They need to focus on what’s next and acquisition of new companies and direction and so forth, not the tactical pieces of what it takes to run a business.
I think that’s a great, great, great point. Don, I mean, this was just full of meat if you were listening today, right? We gave you four strategies that are currently working in Don’s organization. On top of that, he came and delivered really four tactics and through that, again, I’d go back and listen, just dropped little pieces of nuggets here and here tactfully that I thought were good. Don, wrapping up again, I got a lot of admiration for you. I know you’re one of those guys that’s just highly respected.
If someone’s listening going, “I like this Don guy. I’d like to follow him. He sounds like he knows what he’s talking about,” how do people get in touch with you? How might someone plug in with you if they’re like, “Man, I really resonate with this guy.”

Don Costa:
Yeah, I mean, I do respond to emails. If you email me at Don@FlipTalk.com I will respond. Follow me on Instagram @TheRealDonCosta, and, of course, we have a Mastermind community that I love people to, if they feel like they’re a fit for it, to be a part of. You can go to BeInThisRoom.com and check it out. We have some mid-level coaching programs as well. You’re welcome to email me at Don@FlipTalk.com Costa. If you’re interested in something, if you have questions, and I have a ton. The Flip Talk podcast has been around for four years. We have the Flip Talk podcast, Flip Talk Rookie Playbook. I’m all over Facebook. I have a ton of content out there that’s free and I just love giving back.
And I appreciate you, too, man. I appreciate you saying… You’re highly respected in the industry as well and I think it’s just a testament that good people find good people and help build, right? And that’s what we try to do.

Chris Arnold:
The one thing I know about Don, man, just where he’s at in his life, he’s built the businesses. He’s scaled. He’s made great, great money and at this point he’s in that transition going, “Dude, I’m finding more joy in giving back.” If you’re ever looking for coaches and mentors, catching men and women in that transition phase where fulfillment begins to mean more to them than financial gain, those are great coaches to have because they start really developing the heart of a teacher.
As always, if you’re tuning in, we are selling out markets on radio. It’s been amazing how many people we’ve brought on this year. I know you guys are listening here, student after student coming on. But as always, check us out. See if your market’s open for radio, because we will get to a point where this bad boy will be sold out, which I’m excited about and trying to move on to the next thing. So, as always, go to WholesalingInc.com/REIRadio. Again, that’s WholesalingInc.com/REIRadio.
Until next time. We will catch you soon when we add more value. Talk to you later.

Leave a Reply

Your email address will not be published. Required fields are marked *

Wholesaling