Transcript
[Music] Welcome to Local Leverage, your competitive edge in business. Today we're joined by Jason Mock, a direct mail expert and founder of Whitespace Solutions, a firm dedicated to making direct mail smarter, faster, and far more effective for real estate professionals. In this episode, we tap into Jason's expertise to explore why direct mail has made a big comeback in 2025. We uncover the X factor behind high performing campaigns and lay out a proven direct mail campaign roadmap. If you use direct mail in your business, this is your new playbook.
Jason, welcome to the show. Thanks for having me. Excited to be here. Yeah, I uh I I know you are got a ton of experience in uh small business marketing specifically around direct mail and been an advocate for you know crafting winning campaigns uh everything from uh kind of the assembly of data through the execution of uh campaigns and measurement and so uh I think that's going to be fantastic to talk about. I I my request for you is um I want you to give some of the secret sauce to the audience today and kind of unpack how we really put together winning campaigns.
Does that sound fair? Sounds good. Yeah. Yeah. Awesome. Awesome. Well, so let's just start at the top. I mean, um specifically in real estate, it feels to me like direct mail is kind of having a renaissance. it kind of maybe felt old and stale for a little while and and now it's uh you know one of the things or the thing that I hear um real estate professionals talking about over and over is they're using direct mail successfully. Um why do you think it's having that renaissance? Yeah, you know, I think it's um it's a factor of a a number of things.
Um largely a lot of pressures I think in other channels, right? Um SMS has been having a lot of challenges with uh just the regulations and the rules that come out around it have come out around it. Um and just even just like connectivity being able to get you know SMS through through the carriers has been become more difficult. Used to be you know probably people's number one channels and that's the only thing they're doing. Um I think the same is probably true for cold calling outbound. I mean you have a lot of um uh a lot of regulations around that that you have to sort of watch out for and uh same issue on sort of connectivity.
Uh a lot more headwinds there and uh you know direct mail sort of always been you know tried and true. I'm actually always amazed at how how successful and productive it can be. Um I think the the challenge there is it's it's uh you know it can be hard to sort of like execute. You know it's a lot of moving parts. It's a lot of data. um that's sort of the challenge. But I think that the benefit that direct mail often has is it's going to people's homes in their mailboxes. It's very sort of personal whereas digital can be very sort of crowded, right? Um you know PBC is another big channel, social um is another avenue SEO, but a lot of those get super crowded.
Uh whereas direct mail it's you know people are always going to have homes whether you know uh the latest AI thing is out there in the market or whatever it may be. you know, people are still going to check their mailboxes. And I think that's why it's still productive. And that's kind of why it's going through this renaissance now. People, I think, are running into, you know, headwinds across these other channels. Um, having a harder time finding like rorowaz that makes sense and um, you know, getting leads at affordable rates.
And so I think people are starting to to revert back to, you know, direct mail a lot of ways. And it's becoming a lot of people's main channel. Yeah. Yeah. I one of the things I like to say is that, you know, uh, there's no filter on the mailbox, right? I mean, whether whether it's regulatory or or like a spam filter for uh email, I mean, there's all these things that are keeping you from connecting with your audience and and direct mail still feels like something that's going to uh it's going to get in their hands and very likely it's going to get multiple impressions before it makes its way to the trash can.
I think that's right. Yeah. Cool. What do you see as um kind of the the the big mistakes that folks make when they approach direct mail? Um one of the things that I I get a kick out of uh it's both funny and frustrating to me is um you get into a big group of uh real estate investors, real estate professionals, and everybody says, "What piece is working?" or it's it seems like such a very broad and open question. Um, but I'm curious, you know, what are you seeing work and what are you seeing as the big mistakes that folks make? Yeah, I think I think the biggest thing is um sort of having a framework in place when you when you step into direct mail and having sort of clear expectations.
Um, you know, mentioned you you mentioned uh people looking for the the killer piece, right? They look for these like silver bullets. Um, and and there definitely are pieces that perform better than than others, but that's sort of like only one one piece to the puzzle. Um, so I think, you know, number one, when you're stepping into direct mail, you have to kind of view it as like a long-term play. It's not like fast leads. It's definitely not going to be easy. It's going to be sort of a long long-term investment in terms of, you know, how you're running the the campaigns and kind of like how much how much you actually need to scale into it. um it's definitely not for the like the faint of heart in that way.
Um and especially if you're just starting out um you know there's probably other channels that might be like a little bit more you know quicker to execute on and fulfill whereas direct mail you kind of be have to be committed and then kind of have a good plan on like what you're going after and and really a good as I said before framework or like strategy in terms of how you think about all of the the components around it. So it's it's not just the piece, it's uh in my mind a lot more about the data, your ability to execute, um the cost inputs into it.
Um and and all of those need to add up in order to have like really productive successful campaigns. Um yeah, I think the the other thing I would add to that is probably just around knowing your numbers throughout the funnel because, you know, marketing and any of these channels aren't going to solve a a bad salesunnel, right? If if you're not actually able to convert these leads at a high rate and you're able to sort of prove out that rorowaz, then it doesn't really matter how much money you spend on on the mail or whatever the channel might be.
Um your problem's likely not a lead problem. It's probably like a sales conversion uh uh channel problem where um you really need to sort of close that gap. So, you know, I think number one is um you know, having the right strategy. You got to have the right in terms of like content and and context strategy and how to think about that. So when I think about content, it's like, okay, what is the the one or two pieces, you know, usually I like to keep it really simple. I do have guys that are are doing um you know, many different p pieces, AB testing, but that's really hard to do unless you're at scale and we can talk a little bit about statistical significance and AV testing and like what's actually really required for that.
Um, but usually keeping it simple, having a strategy in mind. Um, the the key piece really around direct mail is the data. Um, and I think that's often maybe overlooked or not not well understood and like that's that's really the crux of a success in my mind is having good inputs to the data. Um, I think there's, you know, a lot of sources, um, that that you can that you can tap into for that, but you got to at least be able to understand the segments and, you know, it's all the main distresses that you would normally be thinking about, right? Pre-forclosure, uh, probates, absentees, right? Those are usually the the biggest.
Um, and so you have to have a sort of a strategy around each of those. And then you need to sort of like execute these campaigns over several months to actually really observe true performance. And again, you need to get to these levels of like statistical significance to be able to get, you know, real reads on like what's converting well, what's not converting well, you know, how is it going? Um, and so that's kind of coming back to the the long time horizon concept is you got to really be able to uh, you know, tolerate that.
You will see leads in the early days, but you got to be doing, you know, tens of thousands of pieces a month, I would argue, um, in order to really be productive. Great. So I want to tap into a bunch of the things you just talked about specifically data but u let me jump back to your kind of first comment around the commitment and kind of the duration right that you're you're going to uh commit to um there's there like you said I mean I've see plenty of uh situations where somebody you know does a kind of a oneanddone mailer and they'll maybe look at it and maybe you have success with it maybe they they get something out of it but most often I get the oh I tried direct mail but it didn't work.
When you think about commitment, um what are you talking about? How is set a frame for people? How long should they commit to and and what kind of cadence or frequency throughout that commitment is uh is kind of like the ante to the game? Yeah, I would say minimum probably three months um depending at the like the monthly volume. Um, you know, you when we're talking about direct mail, you're looking at like conversion rates of like maybe half a percent on on on like gross response. That's just like people picking up the phone, right? Usually I see, you know, anywhere between probably on average around 50% of that will convert like will actually be true net leads.
That's like, you know, netting out all the uh miscellaneous calls and taking me off the list type calls. Um so then at that point like your net response rate is 25 basis points you know a quarter of a percent right so you know on you know if you're sending you know 10,000 pieces like you're only having like a handful of actual like uh leads signal within that data to actually give you like a really good indication and in order to get a real read especially when you're doing like things like split testing um and there's some really good like sample size calculators that you can go out there to like get an appreci appreciation for this.
But um in the world of like like let's say you're in a split test um two pieces and your baseline conversion rates like you know half a percent you're going to need something on the order of um depending on how like the degree of confidence that you want to have that you're actually reading uh reliable signal in the data. it's going to be in excess of 50,000 pieces per per creative depending on like the confidence level and the magnitude of like the lift that you want to see. Um, so I think the biggest challenge or the biggest biggest mistake I often see is yeah, people will do like one campaign, it might be like 5,000 pieces and they're like, "Oh, that didn't work." And then they'll just like move on to some other piece because they want to see if that one's going to work better.
So, I think really just like defining the the definition of success. And I think you need to run that campaign uh probably multiple months. I mean, if you're only doing like 10,000 pieces, you know, at a minimum, you need to at least hit that threshold of um a significant sample size, which in that example is like 50,000 pieces. That's 5 months. Now, if you're doing, you know, 50,000 a month, you might be able to get a read much faster, obviously. Um and then and then start to look at at at making some adjustments.
I think the other piece there is um yeah, it's keeping things consistent and giving that time and duration in order to get a a proper read, I think, and and not changing things too quickly, right? I think the other piece is you have to really control for the variables, right? And so you really can't change too many things at once because behind the scenes of like your mail campaign, maybe you're changing out the data sources or maybe you're changing out the se the segments that you're actually targeting.
Um or maybe you're changing out uh or maybe you're not even tracking how many times you actually remailed that that individual. And so you sort of need to con be able to have this ability to track all of those parameters. And when you're trying to make a decision about like performance in the data, you have to have to essentially keep all those sort of controlled and and fixed and then you only change one variable at a time to actually get a real understanding of what's going on and not make decisions based on some other variable that you weren't considering that actually is factoring in.
Um, a good example of that would be, you know, if I'm going to do sort of like an absentee campaign and I'm going to compare that to like, I don't know, a owneroccupied high equity campaign. Well, those are two very different populations of people and you can't you can't run campaigns against those and compare the results and and be able to make sort of like a a decision about that. You you need to have the population of the people consistent. Um, and so in that example, if you're doing just absentee, it needs to be all absentee and they need to be randomized kind of across that in order to compare differences so that you have very similar um groups of people that you're comparing when you're making a decision about it.
So um that that's the biggest thing I think I I would say from that is like it needs to be at volume. You need to look at sort of minimum sample sizes to to get an appreciation. And then you need to control all other variables and isolate the one thing that you're looking for. And typically when it comes to creative, the one thing you're looking for is creative. So all the other variables about the population and it be sort of fixed. Yeah. I I I love that approach. I mean you're taking a very scientific um approach to this.
And I think um that's a trap that I see often is that people start playing with multiple three four variables at one time and and then how do you possibly compare against it? I I also think you run the risk then of confusing the audience, right? You you've not established some level of consistency through which you're you're building trust. So, how so to do that? Well, and I think you've got to have a lot of um forethought when you're doing your creative, you're doing your list build, you're trying to identify upfront, what are the variables I'm now going to change up uh over the course of this campaign.
It seems like that needs to be considered before you send piece number one. Is that how you look at it? Yeah. So I think you have to start on a on a good uh a good foundation, right? And that's where again I I kind of default back to like the framework, right? Yeah. Do your homework. Try to understand, you know, what pieces are performing for other people out there in the market. Um even on that note, I would argue that just because it's working in one market and for one um you know, one operator doesn't mean it's going to work for you.
Markets are very different. People in those markets are very different. So you do really need to have this sort of like mentality of testing. Um, but you need to sort of put your best foot forward and sort of like map out the strategy that you think is going to have the the most success and then just ride that out until you you actually have sample to make adjustments. And then the the really hard thing I think is being sort of disciplined and not changing things too quickly. And I think as business owners and operators that's the hardest part, right? because you're moving fast and you're trying to, you know, drive revenue and drive leads and keep the sales team fed and and all those components, but you sort of need to be disciplined in ter in terms of how you execute that, not sort of shoot from the hip and make changes too quickly because you may find yourself in a hole that you can't get out of to like recover from and and you kind of just land on like, oh, that doesn't work for me.
Well, you I would argue that you you probably introduced too many variables where you weren't able to actually make an informed decision on on whether it was working or not. Um, so I I think yeah, I think that's the biggest piece in terms of mapping it out, setting again the framework and foundation. Okay, here are the the three or four lists we're going to go after. Here's how aggressive we're going to get. um as a as maybe like a framework that I would share of how I think about it. You know, usually like the higher motivation and usually motivation and and distress tends to correlate with response rates, right? And so pre-forclosure, probate, those are going to there's real distress there and real reasons why someone would have to sell in those examples.
Um and so you can get more aggressive. So in those you might do, you know, as as frequently as weekly or or monthly. And then the sort of less um you know pointy distresses like just being absentee or absentee out of state. There's correlation there, but there's not as uh any real pressure there typically. And so you're going to have to elongate your your cadence because you're trying to essentially control for cost relative to the profitability that they're going to actually respond. And so those are going to be, you know, maybe every 3 months, every four months.
Um so once you kind of like align that sort of strategy then it's like okay what are the pieces um generally how I think about content and and contact strategy is you know really you're trying to think about a like what is what is the offer you know like what what are what are you putting out there to them that's going to be any different than anybody else out there uh which is always hard to differentiate I think you'll you'll see in the space that people sort of convene towards like one or two things that sort of work and then everybody does it so then it's really hard differentiate.
So you have to like introduce your new ideas around that that you think um could could be better um in the context of you know fix and flip and and wholesale a lot of times it's around the offer price right and so that's like one data input that you then have to inspect very deeply in terms of like what's going to drive sort of the most response I think the other sort of narrative to that is around sort of just the the the communication strategy like the hook points that you include in in yours. And so if you think about mail as more of a journey and multiple pieces that you're going to put in front of somebody, you know, each piece in my mind should sort of build on the other, whereas a lot of times what I'll see people do is just the same piece over and over and over again.
And I think that's kind of what, you know, is the fastest path to throwing it away because like it becomes people start to tune it out. So if you can introduce new creatives, new formats that sort of build on top of each other, um the entire strategy is like a trying to be there at the right time and that's the part of staying consistent. A lot of it's a timing game. And then the other piece is, you know, ideally you're creating some sort of emotional hook point or trust uh through your communications where, you know, you're going to be the first person that that an individual calls because um you know, they saw your piece.
You're kind of in their minds and you know, they feel good about your brand and your company and and uh they trust that you'll you'll sort of do right by them. And so I think um those components combined uh are really important. Yes, you just dropped a whole bunch of uh terms there. That's great. I mean, so I I think you and I are very similarly uh minded on this. Um really approaching this thoughtfully with a lot of planning up front. Um, so we're about to approach a a campaign we were just working on a little bit yesterday and um uh I'm kind of taking a you know a page from kind of our digital book but but uh looking at this is like you know establishing um our campaign the number of touches the audience uh the messaging the variables that we intend to modify as we go and um and maybe I'm overthinking this but I think the way that we were looking at this is building almost a um a hypothesis up front to say, you know, this is the audience.
This is the sequencing of messaging over this number of touches and duration and these are the items that we intend to swap out as variables along the way or to your point, these are the things that we want to build upon in kind of a a story sequence versus just sending the same piece. Um is that how you approach it or is that overkill? I think there's a balance. I think in some ways, yes. Um, at the same time, you you need to keep it simple. Um, because there are a lot of moving parts and you don't want to over complicate the campaigns.
But that said, I do I do agree with this like idea of creating this like narrative or story um and and sort of like really focusing uh pieces of content around sort of like one idea where a lot of times what I see is people will try to do everything in in a given piece. Like there's like uh there's like an offer amount and it's like look at us on Google and it's like call or text us or scan this QR code and oh by the way we do all these other things and they'll have like 10 bullet points, right? I think that's where um it starts to become a uh you know you you tune that out and it's maybe too noisy, too busy.
And so like when I think about it, yes, I like this idea of a journey. Each piece should be like really focused. Here's the the value prop. Here's the one call to action. And you really got to keep it focused. And then the next piece, you try something different. Okay, now the next one's going to be more anchored around social proof. And here's all our great testimonials and our Google star rating. And you know, here's the one call to action. And I think you could have multiple calls to action. I I often get asked about like, oh, should I use this QR code in this piece? That kind of thing.
Um, yeah. Yes, maybe. Or you just try that in a different piece. Or you split test that, but you really need to sort of isolate it. And and the question is like where do you ultimately like want to drive people? Are you driving them to your phones to to call in? Are you driving to to text you in your team? Are you driving them to a website in a web form? I think all of those can be successful. um but definitely not done all at the same time. And I think you afford yourself that opportunity when you have this expectation that you're going to do this and and remerate on those.
And I think the the the benefit to that is people will have different ways that they want to interact and some people might prefer the text, some people might prefer um going to the website. And so by sort of introducing those strategies in isolation over time, you are able to sort of cover a broader spectrum of the population that will increase your pro probability that one of those people will convert through one of those channels, through one of those, you know, uh calls to action or or the messaging and the hooks that you're trying to to test.
So uh I think the answer is somewhere in between. I yes, I like that idea. keep it simple, keep it focused and and and map it out, you know, with that in mind. Yeah, that's great. We we're in a really interesting situation in that because we not only are a data source and but also a targeted outbound uh lead generation platform, we get to see, you know, thousands of people's uh campaigns, right? So, you get to see what people are doing. And I I I feel like, and this is very anecdotal, but as I scan through these, every night I get a all of the orders coming through our system, and I just, you know, kind of geek out on them.
But, um, I'll see one of two things. I see people that have kind of this, uh, muddled call to actions where they've got maybe three calls to action on a single campaign piece, or honestly, I see some that have no call to action. Do you have a do you have a framework of of kind of what's the right way to go about that? I mean, I I obviously there's a cleanliness of having a single call to action, but I agree that, you know, people are going to respond to different things and they have their own way of reaching out when they're interested.
But, um, how do you find that balance? What's your recommendation for number of call to actions or the type of call to action? Yeah, I actually think about it a lot like a uh like a website page, like a funnel page where, you know, you have like your headline and then you have like um a hook or something like a sub headline, something that's going to like draw them in and like get them engaged and then you know, you have like sort of the body of it, whatever like the offer is or um the value prop, right? And then you have ideally one call to action at most two.
Um, and I would consider like, you know, call us, text us. That's two. Uh, ideally, you're saying, you know, just call us. And that's what I see, you know, across most people. Um, I actually came from a a uh a fintech space where we did direct mail to basically sling credit cards across the US. And, uh, we were entirely digital, right? So, our only call to action was like, hey, go to this website or in that case, we actually did use a QR code, um, to to enter your information. And so like that's its own sort of you know journey and call to action.
And then so generally you have the primary call to action and then you reinforce the call to action. So you might have it in the main body and then it should be down again at the very end because as they you know if someone's just scanning through something you want the the main thing to stand out at the end of it and they're like okay I'll call them. And they might even not even read the whole thing but like phone number's right there. Okay we'll we'll call. And so any way you can sort of emphasize those things, you know, we we use some tricks where um you know, maybe use like a you know, handwritten kind of like image looks like a circle where you're like just drawing attention or um just reinforcing it.
You can reinforce it through like bolding it or making it a larger font, things like that, right? Um, but I think one call to action ideally, um, reiterated multiple times, two, maybe three times, and then, you know, definitely have it in the middle and then at the bottom where someone will see it, you know, last thing they kind of look at when they're scanning through. Yeah. Right where their eyes leave the page. Right. Last thing. Yeah. Cool. All right. Let's make the jump over to data because I know you mentioned this earlier and I know this is uh kind of where it all starts and I I believe this is where it all starts as well. um how do you recommend uh the folks that you work with assemble their audience? So the biggest challenge I often see is people pull lists from multiple different sources and um this is maybe like a hot take.
Um there there's this like this idea of uh of like list stacking, right? where people sort of like uh amalgamate like multiple lists and then they like go through this like a whole dduplication exercise and a lot of times they're just running this out of like spreadsheets uh which very quickly just gets like very difficult to manage. Um and so like the real solution in my mind to this is like having a like a proper database. The list stack in my mind is like lit literally just fields and flags and then you know proper database with a an identifier allows you to essentially that is your dduplication right you just merge records into the the same identifier and you can enrich the data by having the sort of like the right the right data structure when you talk about list stacking and just for the so the audience understands like you're you're have discrete lists maybe one is a non-owner occupied property and the other list is um a pre-forclos exposure and you're trying to mesh those two together, right? To identify maybe multiple levels of distress um for the sake of building an audience.
Is that how you see list stacking? That's right. Yeah. You're usually what ends up happening is people are are trying to like um aggregate multiple disperate sources, right? So maybe you're getting like probate records from you know the county and then you're you know you're just doing um you know property search records to find like absentee and then you know maybe you're looking for like your county like tax lean records and so you have these disperate sources that you're trying to to get them from people like pull them from from all these places and then they go through this whole like you know e exercise in Excel where they're trying to like you know figure out and make sense of the data which I think becomes overwhelming and is like very over um errorprone and so I think you know when I think about data.
The the the key things is in my mind, direct mail is really a data play um in terms of like what you have to get really right. And so having the right data sources um and not to to plug property radar, but like that's why I was sort of drawn there because there's like two problems that I think it it you know in that example solves for me really well. uh it does it essentially is that database in a way you guys have sort of like unique identifiers and it becomes easy to work with the data because it's sort of APIdriven um and so I think like once you have those two pieces right you can still enrich that data with other sources but um by making it easy to sort of move around through an API it gets you out of the the Excel spreadsheet and then you sort of already have the the majority of like the list stacks like the the the multiple flags or indicators that you might leverage to at the end of the day segment the data right you're trying to find you know people with like multiple flags that are list stacked uh quote unquote um you would correlate to I have a higher probability to getting a response from those guys and so that start starts to drive sort of your strategy um but if you're able to abstract this sort of like operational overhead of you know aggregating all this data ddupling dduping it all uh cleansing the data layering and hygiene and then trying to figure out then how am I going to go fulfill uh that that file of mail and then I think more importantly the other part of this like data problem that has to be solved is like the the tracking and reporting of it right so that might work the very you know first time you go through that exercise but like the hundth time you go through that exercise like how do you then wrap your arms around everything you did in the past and I think that's where people get lost um over time and as they start to scale is they now have like a Google Drive of all these files of all the things they've done in in the past, but they don't they don't have an appreciation of like, oh, wait, how many times did I actually mail that person in that file? What did that look like over time? How did that um, you know, how did people respond like by the third time I, you know, touched them with a piece of mail? And then how do I actually control my future mailings relative to like the number of times I touch that person, right? um as one example of like the the degree of complexity this can kind of get to and so um the I think the best approach to that is having a database right like a like a like a real database like Postgress or BigQuery some of the tools out there um that maybe people aren't familiar with they're actually not that difficult to to work with um but you need to have that level of tracking and add these other fields around times mailed and piece put in front of them and all these things so you can actually do the analysis that you need at the end to sort of close the feedback loop of okay you spent a bunch of money on mail it went out you got x number of leads how do I then track that over time to then iterate on the strategy and refine and then isolate the pockets that are are low performing and that could be a multitude of dimensions it could be particular zip codes it could be particular distress point segments it could be um a cut point after the the number of times you mailed them and you see like in the data that by the sixth touch nobody's responding um as an example.
So all of those pieces are sort of all the things that you need to put together, I think, to have a really successful direct mail program over time and uh afford you the opportunity to really scale into it um and and and lean into it and have success there over time and um you know move past you know maybe a couple of lucky campaigns where you had like a 10x rorowaz at scale when you're doing like 100,000 pieces a month and you're trying to maintain you know a 4x rorowaz those are the the pieces and the inputs that you need I think in order to to you know make that possible.
Yeah, absolutely. Um just since you're on rorowaz there, do you have a a specific rorowaz target and return on ad ad spend is rorowaz for those that don't know? Yes. Um yeah, I actually I have a couple couple thoughts on this topic as well. Um you know with rorowaz like obviously that's a metric that you're you care about at the end of the day as the as the business owner. um you know in terms of targets it it's really hard to to to say in terms of um what any one individual or any individual team will get and the reason I say that is because rorowaz is actually not just a function of the marketing right the the the mail piece isn't going to bring dollars in the door like the sales team is going to do that right um so I think it's like um it's like a uh tra sort of a trailing indicator and it's it's sort of an incomplete indicator of of the marketing channel itself.
So, I think it's it's definitely something you need to track and look at. Um, in terms of like rorowaz that I see, I mean, I have guys that I work with that are doing like 10x rorowaz and we're doing like 30 or 40,000 pieces a month. But I know I can't take credit for that because if you look at their their entire funnel and and um KPIs like their average deal spreads, you know, north of 50k a deal and their sales team crushes it and their like net contract to to like um their contract to like net lead rate is in the double digits, right? And so those are metrics in in other parts of the funnel that actually lead to the revenue from the male side. what you really need to or any of the marketing channel um um core KPIs that you need to control for is really cost per net lead, right? How many how much am I spending to get that lead in and and that is really the the parameter of success.
If if I'm spending $1,000 a lead to get them in the door, uh that's not great. Uh if I can control that down to, you know, a couple hundred dollars, then it's like, okay, I'm doing my job. the rest of the job in getting the revenue and driving that rorowaz number is going to be really around um the the the productivity of the the sales team. Um the at the end of the day the average contract value right if if you know if your average contract value or um you know even if we abstract this from real estate like if the average you know think about like a home services business maybe if you're talking about like the average value of a job that you're going to do you know if it's a couple thousand bucks it's going to be really hard to be successful if you don't have really high response rates to offset that.
Um, same goes, you know, true in the real estate space. You know, if the average contract value is $10,000, well, the guy that they're competing against that has maybe more exit strategies or is doing fix and flip and their their revenue per um per contract is much higher, they're going to be able to outspend you. And so then it's really hard to sort of compete for that uh you know, with that. So, um, to like distill that down, yeah, rorowaz, I think at a base minimum, like you need to be at 3x or better.
And that's sort of just like an industry thing I've seen. Why is it 3x and is it 3x for everybody? I would say no. Um, 3x is sort of just like a rule of thumb. It's kind of like the 1% rule in real estate when you're looking at like a rental property and if it'll cash flow. But if you actually like double click on that and if you actually have done deals like you you'll notice that like okay that rule of thumb doesn't necessarily apply across the board. It's really dependent on where interest rates are.
It really depends on like quality of the asset and it whether or not it'll cash flow. And actually like in my market it's actually more like two or 3%. Right? So I would say the 3x is kind of a rule of thumb. Um the the idea there is with 3x it's going to cover your marketing right which is going to be roughly a third of that and then you have like another um twothirds of that that are going to cover like um opex and and headcounts and then ideally you have some profit margin baked in in there. Um but for some businesses maybe that that floor is going to be 4x for you to have like a profitable business.
So I think generally that's where I see like the floor to be. If you're less than that, then you need to change some things. And it's either you need to change your cost structure in the marketing or you need to change your throughput on the sales team or you need to change your business model in terms of like the revenue you're actually able to drive per each of those leads. Um, and then the guys that are doing, you know, 10x and and and better, um, you know, it just affords them more opportunity to like double down on the channel.
And I think the real question becomes like okay what is the what is the real margin the business is after and and um like gross margin on on uh on revenue and either they can double down and then that essentially affords them the opportunity to go into maybe lower probability lists lower responding list. They'll compress their rorowaz but as a result they'll be able to drive revenue that way. And so that's usually like the the formula to to how you scale um in in any of these marketing channels is is sort of like playing with the levers in that.
If the if the funnel is healthy and the cash flow and the the contract values are healthy, you can then reach into other channels, compress the rorowaz, but still drive like a healthy profit margin. And you know, normally I see that sort of normalized down to like that four or 5x at at scale. That's all super helpful. And I think that, you know, folks didn't tease out the the subtle piece in there, which is, you know, outside of everything you just explained around rorowaz, the there's a critical uh component of making sure that you understand all of the different steps and stages within that funnel, right? measuring each of those points, not just the the end point of rorowaz, but uh everything from the early response rates and and then of course it trickles down through your sales engagement or other kind of life cycle touch points, but having measurements at each stage um you kind of lightly touched on but I think is really critical.
Yeah. And one thing I would highlight that like a way that I like to look at it that I I don't actually see a lot of people look at it this way. Um, so I mean if you if you if you take that funnel and you just sort of like baseline it um across the board, the easiest way for me to look at it is like you just sort of look at everything in the context of like a like a net lead, right? And so once you answer the question of like, okay, how is marketing doing in terms of the cost to bring that net lead in? And if you back out your average revenue through the back through the funnel to that sort of um net lead, what is the net lead value from a revenue perspective on average? And then that's your ratio of uh essentially row ads that you're trying to optimize for.
And if if you're spending 250 on um on that lead, you need to be average net lead value of at least $1,000 to hit a 4x row as an example. And so that's like a really easy way in my mind to sort of just like simplify all these moving KPIs throughout the funnel and just sort of normalize it because that sets the foundation of, you know, how much can you afford to pay and then how much um how much revenue are you bringing in? And then that starts to answer the questions of like where do I need to optimize? And then I like that too because it seems like that's, you know, it's it's faster to get get that information, right? I'm not having to wait for the entire cycle before I can then determine.
Um, and it feels very actionable. So, I I like that recommendation. That's really smart. Yeah. Yeah. Um, tell me a bit about your philosophy on building your audience or building your list. Are you one that believes in kind of casting a broad net or are you a uh hyper hyper niche kind of a audience builder? In terms of targeting and lists, um I think starting out, you're best served to start really targeted and and and sort of focused in terms of like who you're going after. Um so if you know, if I was to look at a couple like use cases of that, you know, I've mentioned like the niche list uh multiple times, right? Probate, pre-forclosure.
Those are going to be like really small lists in most markets. Um, you know, same would be true for like I don't know if I'm thinking about like a like a realtor or like a a home services business. Um, you you're going to target like zip codes, right? Like how do I get really hyperfocused on um the areas that I think are going to be the most productive because that's uh going to set you up for like a higher likelihood of success. And then I think through that you start to like you know figure out the process and what's working, what's not working.
And then as you start to scale then you you you sort of in order to scale you have to cast a wider net. So then the the question is really how do I do it efficiently and and then you have to solve a bunch of different problems in order to to scale and cost that uh cast that wider net. Otherwise, if you do that out of the gates, uh you can get hurt. Meaning, like you can have, uh, you know, campaigns that kind of just blank or didn't get you the results that you were expecting and you just burned, you know, 20K on a on a campaign that didn't didn't uh yield anything.
And I think that's likely mostly the the fear of most people. And so yeah, what I would say is um you know, if you're in the early stages of solving for it, then it's like yeah, start super targeted, build from there, and sort of like force rank um like the order of operation of where you're going to start and then work your way down the list and then do it in a very sort of controlled manner when you step into like a e it could be a new market, it could be a new list like a a new segment of like distresses or whatever that might be.
Um, and you have to kind of go through it in a very sort of controlled manner of what you're looking for, what your expectations are, and then testing into that. And, um, I think that example of like testing a new market is a a perfect example of that is because there's just a lot of, um, uh, unknown unknowns. You just don't really know what you're and so you have to kind of like put the best possible strategy out, start relatively small, and then like scale from there. I think you and I share that same philosophy.
And I I think it's to me it's not just about um getting a very targeted list for the sake of identifying the people with the highest propensity, but it also then allows you to approach that audience with a far more specific message and with more empathy because you're understanding exactly what they're facing um and potentially even the timing of that. So I think the my belief is that by kind of going hyperargeted or or tight niche uh it then improves your opportunity for being really on point with your messaging and and really understanding your your market.
Yeah. And I actually I think there's like second order effects of that as well, right? So there's like the targeting and just like getting the lead in the door uh component of it, but then there's also like the sales process and team behind that, right? And so if the the team behind it is not set up or prepared to have those conversations that that's also going to lead to challenges, right? And so I think by starting focused and and having sort of a clear idea throughout the funnel of what that's going to look like and making sure you're targeting people and you have the messaging um to those people that your your sales team is prepared to actually like talk to whether like you know pre-forclosure is a good example.
Like if you don't know anything about pre-forclosure and how to navigate that process and actually help somebody through that, right? then that's going to be a real challenge. Or, you know, if you're doing a lot of like offer letters or check letters, that kind of thing, and a lot of the marketing is anchored around price, but you don't have a sales team that can speak to price and talk people, you know, in and around price and and like navigate the negotiation, you're going to have some some challenges.
And so, yeah, you got to really look at it, you know, sort of full funnel and have a a game plan and the team in place that that can speak to those things and handle it and has experience. And then you sort of build on that over time um to in order to to grow and scale. Yeah. You know, I this may this may be a kind of a hot take on my side, but I think this concept of I mean of list stacking um yeah, has inherent problems in this regard, right? I mean, if I'm list stacking to identify people that have three or four sources of distress and now I'm just casting uh a message out that is trying to tackle too much uh versus like let me instead let me mailbox stack instead of list stack.
And in the mailbox, let me get really hyper specific. Let me talk to the challenges that a divorce couple are going through in terms of how they're going to dispose of this asset and how they're going to split this thing, right? let me talk specifically about the person that um is facing an HOA lean or whatever those those things are. Um and then and then let my let my pieces let my touches uh surface because they're super on point and I've I've hit the the the specific message topic versus trying to amalgamate it all together on the list and then cast more of a a generic message to them.
This is my I'm curious what you think about that. No, I tend to agree with this and I think uh people are sort of seduced by this idea of list stack as if it's going to be this like silver bullet to I'm going to get much more cheaper leads. Um actually what I see in the data is that generally response correlates with the primary distress like what is the main problem that the person's facing and and and like what is what what is the problem they're trying to solve? And in in most cases, they're not trying to solve like they might have three different problems.
So they might be on that as in your example, the HOA lean and like I have delinquent taxes, but I'm also going through divorce. Like right, divorce is going to be the problem, right? Like the other two doesn't really doesn't really matter. And so I think yeah, if you if you just focus on um the main problem and solving that problem, I think that's like that's what a lot of the that's what business is about, right? And it's not even I love what you're saying. And it's not even the surface problem, right? It's not the fact that um I'm in foreclosure.
It's the fact that I've got to go tell my wife and kids that, hey, we're going to have to move. I've got to deal with the fact I might have to put my kid into a different school system. I might have to face my neighbors and and have that embarrassment of kind of leaving the house and and leaving the neighborhood, right? So, to me, it's like go that next level, right? Let's get down to what what really is the issue. And so as as a service provider, it's not just that I can pay cash and do a quick transaction.
It's that maybe I can help you navigate this. I can find you another home through my network for you to rent even though your credit's, you know, all screwy. Like those those other things to me are the real problem. And um but oftentimes I see people approach it just at the surface level. like I'm going to, you know, go head on with you're facing an HOA lean or you're in foreclosure or whatever the issue might be instead of really getting down to the emotional uh component of what the person's grappling with.
Yeah, definitely agree with that. Yeah. Um, okay, one last thing that I really want to tap into. We've talked a lot about direct mail and talked about lists. um love to hear your perspectives on kind of multi-channel uh approach versus a single channel, how you do that, how you make the decision of which channels to utilize and uh and also just kind of what you see in terms of increased response rates as a result of doing multi-channel versus a single channel. Yeah. So, I think this is um I don't know if I'd call it my favorite topic, but I like I like this um solving this problem is I think something that like a lot of people have a really hard time with and it's is ultimately like what I try to like help people solve for.
Um but in order to solve this sort of like omni channel like multi- channelannel problem, you you need sort of like the tech in place to to do that. Um the the two big things like the two big pieces of um as I would describe the tech stack there's this idea of like a a customer data platform um and and what that helps do is sort of centralize your lists your that you're the prospects that you're you're targeting as well as like CRM data and sort of like bring that into one place and the second component of that is sort of like a marketing automation platform and so um with those tools what you can do is then leverage the the CDP uh customer data platform to do different variations of segmentation, right? And so that helps you with things like, you know, layering in all the segments that you would care about, right? Pre-foreclosure, probate, absentee, all these different things that you might have like aggregated over time.
You can then layer on other sort of like segmentation strategies on top of that using these platforms like, you know, hot zip codes, right? you you can or or even just suppressing zip codes that you don't like. You can then layer on other tactics using these sort of like segmentation and filtering tools to cut out things like times mailed or um just suppressing respondents or you know all these different components of like where you need to sort of like optimize sort of the the list um the list strategy.
And then with the marketing automation component, that's where you can then sort of then t start to target through multiple channels. And so I use these tools to sort of like automate the direct mail side and enter people into se segments and sequences that will touch them on sort of autopilot over time. But they also have other capabilities and like the the really impactful ones in my experience are uh to to the extent you have um you know if you're enriching things like phone and email you can leverage email as a channel to new prospects. uh I think even more importantly on the on the uh you know lead side the nurturing side once that mail piece has maybe converted they're in the CRM you bring your CRM data into this like central hub this customer data platform and then you can use these tools to put them in sort of multi-touch sequences uh where in that case you actually probably know if it was PBC or came through an online form you probably know what the email is most cases you have the phone number you already have the address.
And so, uh, I'm I'm having some clients have a lot of success with building out really robust retargeting campaigns, especially through sort of, um, these omni channel, uh, constructs where they'll hit them with, um, uh, they'll hit them with a piece of mail, they'll email them if they have email on file. They'll send a text that's already been validated and they have all the compliance checks on. And you can orchestrate that in uh sort of like a workflow builder like campaign where it's like okay on this day I'm going to hit them with this piece, hit them with this other uh channel with this other piece and then you know text them and then also push a a task to my CRM to do an outbound dial.
So what the sort of end result of that uh can be and and is is you have this like really nicely orchestrated um layer of outreach when again the the uh a big component of this entire game uh in business is just timing and also reaching out to somebody through the the channel that they're going to respond to um best. And uh to the extent you can introduce lower cost channels that aren't always just your team calling people um and doing like a heavy lift on the outbound side, you can do things like email or retargeting through direct mail or uh the the one that I actually left out was retargeting in digital channels.
And so once you have all the data in one place, you can create audiences that you can then push to uh digital channels and you can actually retarget people on Facebook, you can retarget people on AdWords. Uh and that becomes really powerful because they, you know, they they got the piece of mail or whatever it might be, they happen to go online and they get hit with that the same, you know, your branding and call to action and offer. And I've I've seen a lot of cases where where people get hit multiple times end up calling in that becomes the deal.
And so that that is I think um uh you know expert level uh of operators that are thinking at that kind of level in terms of like the the nuance and detail of how they think about targeting and doing sort of this omni channel approach. Um and I think to be successful successful there you need a good data whether it's CRM data or and andor prospect data and then you need sort of the this like technical layer this the customer data platform in marketing automation to be able to execute that uh on that at scale.
Yeah. Yeah. at the risk I don't want to make this promotional about us but I you know one of the things that that we recently did was um uh rolled out a a offering called online ads and essentially um as you're building your prospect list or your audience um we were able to identify all of the device IDs and and um associations to those individuals and do the same thing you would do with retargeting but we can do it proactively and put your ad wherever they are online or in mobile apps and push that that's great just to that unique audience only.
Right. So so we're doing that actually in advance of direct mail in many cases as a way to start greasing the skids and building trust so when your direct mail piece lands they've already had multiple impressions that tie to that piece. So there's some really cool things that can be done there. I love that you're thinking about it that way. Um, I'm curious when when you think about these multiple channels, uh, and you're thinking about your audience, how are you making the decisions about which channels to use as you're architecting this kind of multi multi- channelannel omni channel approach? Um, how are you making decisions about which of those to use for a given audience in a given campaign? Yeah, I mean, I think it it always kind of comes down to sort of like cost and um where you have like the highest like likelihood of success and uh so if I think now deeper funnel and if we're just talking about uh for example lead nurturing once the person's maybe shown interest and you at least have a a lead sort of like in the in the CRM you then have your own sort of funnel within that right it's typically you know no contact or you know haven't been able to get a hold of and then it's you know uh long-term follow-up lead nurture that's like all your cold leads and then it's like warm and then it's like okay I had an appointment but then they ghosted and then it's maybe okay we we actually put an offer in front of them but they never signed or maybe it's um uh you know got under contract but then they ghosted right so you have these like deeper stage sort of funnels and I think for each of those you know if you think about your normal like pipeline view if you think about each of those sort of uh swim lanes uh those those vertical um you know statuses within your CRM that becomes sort of the the strategy you have a strategy for each one of those.
And for the guys that you probably went on an appointment with or u maybe got an offer from uh in front of but they never signed, you go a little bit more aggressive with them and you can, you know, do uh mail like is going to be your your probably most costly um channel typically. Um where you can actually put a a mail campaign in front of them and to the extent you have email um you can that's cheap and you should just do that anyways because you have it available. Um and then outside of that you can you can text those people because you often have you know the all the compliance checks.
And so I think you think about the the complexity and the frequency and the investment in the medium uh in that context of you know probability relative to um to that pipeline. And then on the other end of the spectrum you might have like all the no context. You know maybe you mail them once a quarter um as a long-term followup. Obviously there was interest but maybe the timing wasn't right. And so then it just becomes like kind of a timing play. Um, and then you're probably going to put them in a, you know, call queue, but like maybe that's, you know, once every six months or once a quarter, once a month.
Maybe you're not calling them every day because you need to adjust like the time investment and the actual like hard cost, the the cost of the mail or any of the other mediums um sort of in in that context. Um, and then I think the last piece would be, you know, the the retargeting side through through digital. um those should just become audiences and that's relatively lower cost typically um from from a retargeting perspective. So I think about it kind of in that context. I think the the aggressiveness of the contact strategy kind of aligns with where they're how deep into the funnel they are.
And then you know at the end of the day and I think this is probably an underappreciated part. You know, people love fresh new leads, but there's a whole other process around extracting value of your CRM in the leads that you already spent money to get into the CRM. Um, there needs to be a ton of thought there and you really do need sort of deeper funnel funnel strategies and I think mail should be a part of that strategy also, uh, which I often don't see. And so I I start to help people, um, you know, solve solve that problem, close that gap.
But um I think the context there uh that I would highlight is if they responded to you through mail but then you sort of lost them on the phones a lot of times like people are sort of like you know have their own sort of channel that they like to communicate with. And if you're going to sort of like retarget them through email or retarget them through digital or just keep trying to call them well your other channel that they did respond to was mail and so you should be following up through that channel as well and try to get them back in.
Um, and so I think that's just like a important part of the equation. Yeah, I love that. Jason, thank you for bringing the sauce. This was great. Um, I think people probably took a ton of value from this conversation and it also makes me feel like we should do another because I think we could keep going uh for quite a while. Um, in the meantime, uh, how can people follow you and get connected with you? Yeah, you can uh you can email me. My name's uh it's just my name, Jason Whitespaceolutions.ai.
Um I I've fallen off the the posting uh train, but uh I you know I tend to post a lot about um uh AI and some of the the things that I'm I'm leveraging in in that space and how I think it could be applied to businesses. Um and you can find me just you know JM Shu or just search my name on uh you know Facebook, LinkedIn, YouTube. Uh I have some some content up there as well. Fantastic. Well, if you found value in this conversation, make sure you hit subscribe or uh pass this along to a friend or colleague that can also get some value.
And uh again, Jason, thank you for uh joining us on Local Leverage. Thanks for having me. It's been great. [Music]