Inner Circle E-Lesson: What You Know About Marketing is WRONG
Why What You Know About Marking Doesn’t Apply to You.
In studying marketing extensively (and sometimes expensively) over the past 2 decades, one of the things I’ve discovered is that the marketing that you need to do as a real estate investor is different than the marketing that you see as a consumer.
In fact, a lot of “common knowledge” about marketing—that image is everything, that customers need to be “touched” 5-7 times to respond, that response rates should be in the 1-2% range—just flat out doesn’t apply to our businesses.
You’ll avoid a lot of expense, wasted time, and heartache if you’ll just take to heart these realities:
For You, “Image Advertising” and “Branding” are a Waste of Money
In the broader business world some of the marketing that you’ll see is what’s called “image advertising”.
Image advertising isn’t intended to directly sell a product; it’s meant to give current and potential customers a feeling for what the company is about.
Remember the old AT&T ads where the young soldier on leave shows up to surprise his mother at Sunday dinner? Not once during that ad did the handsome G.I. turn to the camera and say, “Switch to AT&T long distance now by calling 1-800-ATT-DoIt”. Instead, the only “ad line” was, “Reach out and touch someone”. That’s image advertising.
When Nike runs a 30 second ad showing a ripped woman sweating it up while she runs, kickboxes, swims, grunts her way through a dozen chin ups, never once says “Hey, come buy some Nikes”, that’s image advertising.
Although this sort of marketing, when successful, can make a long-term impression on the public, it does NOT generate what you’re looking for, which is an immediate response leading to an immediate deal or sale.
Plus, it’s expensive, requiring constant repetition (often over the course of YEARS) to “stick”, AND it’s unsuited for marketing to a customer who has a very short and probably one-time motivation arc. Think about it: I make the decision to buy new athletic shoes annually; I’m motivated to sell my property ONCE, and to buy another house every 7 years.
So, as attractive as the idea of being a “known” name is, you shouldn’t spend any significant amount of time or money or even space within an individual marketing piece on trying to build an image in the public eye of what you’re company’s all about. Focus instead on getting an immediate response from the buyers, sellers, and renters who need you NOW.
Your Marketing is Always the Trigger for a 2-Step Process
When your local department store advertises their Black Friday sale, their goal is not to generate a phone call, but to entice you to show up in the store and buy stuff. When People Magazine mails you a subscription card, it’s not to prequalify you to become a customer—they’re hoping you’ll immediately mail it back with payment.
In contrast, it’s NEVER the goal of your seller marketing that someone will send you back a deed in the mail, or of your rental ad in Craigslist that someone will stop by your office to drop off a check for the deposit and first month’s rent, and pick up the keys.
In other words, our marketing is NOT for the purpose of convincing our customers to do business with us.
It’s for the purpose of convincing them to CONTACT us so that WE can take the important next step of pre-qualifying THEM to see if we want to do business with them.
Keeping this in mind results in a completely different, easier, and more effective message (“Call today and I’ll show you how I can buy your home in 10 days or less for full price!” vs. “Let me take a couple of pages here to explain to you what a ‘subject to’ is”) with much higher response rates.
In General, We Don’t “Create a Need and Fill It”
There are many, many thriving industries in the United States that sell products that their customers don’t actually need. A big part of the marketing message of these companies is aimed at convincing us that what they offer is important to have; our customers are different.
Marketing to buy, sell, finance, and rent properties is NOT the same as marketing a line of cars, or a new soda, or the latest and greatest product that makes you look younger, smell better, and feel hipper. Marketing for the latter is meant to achieve multiple goals: it tries to create a need or desire in the reader/listener/watcher, then motivate that person to take action to purchase the marketer’s product.
Creating the desire is the hard and expensive part—once I’m convinced that I REALLY, REALLY have to have the mascara that assures that my lashes will precede the rest of me through every doorway, it’s a short step to going out and getting it.
Luckily, most of the marketing that you do as a real estate entrepreneur is to people who are already motivated. They already NEED to find a place to live, or WANT to sell their house, or DESIRE higher rates of return.
This is all good news: your buyers already want to buy. Your sellers already want to sell. Your potential tenants already want a new place to live. You don’t have to convince them that action needs to be taken—all you have to do is convince them that the RIGHT action is to contact you immediately.
Frankly, this makes the most sophisticated marketing that we do as real estate investors exponentially simpler, cheaper, and less difficult to produce than the least sophisticated marketing most advertisers deal with.
It also means that we should NOT be satisfied with industry response rates of 1-3% for our direct marketing—that’s ridiculously low for most of what we do. If we have a list of truly motivated sellers, why would only 1 out of 100 respond to a clear message that you want to buy their house?
We Have More Prospect Types to Whom We Need to Market than Most Businesses
Think about the little independently-owned coffee shop in your town.
If the owner of that coffee shop hopes to compete in our already overly-caffeinated culture, he’s going to need to do a very good, very effective job of marketing his product to local coffee drinkers.
But he does NOT also have to market to get his product. Not being in the coffee business myself, I’m not exactly sure how the production/distribution chain for coffee, coffee flavoring, coffee cups etc works, but I’m pretty sure that his suppliers come to HIM with these things and, in fact, probably compete with each other by marketing to him in with catalogs, websites, emails sales calls, and so on.
In fact, we are one of the few businesses I can think of where we have to market to get BOTH our supplies (houses) AND our customers (buyers and renters). What’s more, we often have to market to get our FINANCING, which gives us three times as many prospect types to think about as the average business.
As you can see, there’s a lot to know about marketing—and it’s information that’s well worth knowing, since every incremental increase in the effectiveness of your marketing adds dollars directly to your bottom line. Do your business a needle-moving favor by joining me at the Marketing Academy on June 24-26 in New Orleans. More information at www.REGOddess.com