Thursday, May 22, 2008

Split test your direct mail campaigns and jack up your response rates...

Direct mail split testing is the process of testing two or more versions of your letter to determine which one produces the greatest response. It’s a simple concept, but has HUGE benefits when done properly. Direct response marketers do this all the time by testing different elements of the campaigns to ultimately product the highest possible responses.

A response is measured in a few ways, but ultimately it’s a measurement of the effectiveness of the letters ability to get your recipient to complete the call to action. That call to action could be to have them call you, visit a website, send back another letter, or perhaps send you a check (nice!). The response rate is just a percentage of actions that were completed for your mailing. If you sent 100 letters and received 3 phone calls, then you would have gotten a 3% response rate. Pretty simple stuff, right?

Ok, so the direct mail industry average response rate is something ridiculously low like 0.5%... but that takes into consideration all the bulk junk mail that gets sent to us. I would venture to say that we investors “that target our lists properly” are more likely to get a 2% or better response rate. If not, then something is wrong. Either the list is not targeted enough, or the letter isn’t hitting the right cord to get the reader to take your requested action.

But what happens if you have a highly targeted list, and a not so hot letter? You might get a low response rate… right?

Rather than throw darts and hope for a bull’s-eye, why not send two or more versions of a letter to one list and increase your chances of success? Just take that list and divide it in half and send one version of your letter to one half of the list, and the other version of your letter to the other half of the list. It’s the same amount of work to stuff the envelopes, and it cost the same amount of money in postage… but the difference could mean BIG profits if you hit a winning combination.

You should always split test your letters. The one that gets the highest response will be what is called your “control”. And with every mailing you should try to beat that control, and if you do… the new letter becomes your new control that you are going to try and beat.

So what should you change between each version? There are many views on this, but I personally feel that it really depends on the size of this list you are mailing to and where you are in the testing process. If you are just starting out with your test, then I would try using two letters with a different call to action, or tone. For example I often test the difference between having the letter come from my wife, or from me. I’ve tested sending from me as an investor, as well as looking like it came from a non-investor.

Once you get something that seems to be working the best you can begin to fine tune it by changing more subtle things like the headline (if you are using one), or the opening paragraph. Perhaps the paper it’s printed on, the text font, or the envelope you send it in.

It’s so easy to do, so why not do it? But don’t forget to print a code or something on the bottom of the letters so you can ask the seller to read it back to you when they respond… how else would you know which version it was?

I know it seems like more work, but it REALLY makes a big difference when you narrow down on a letter campaign that responds well with a targeted list. It means the difference between doing one deal a year, and one a week… and often on the same exact marketing budget.

Perhaps you don’t want to deal with all this and would like to have someone do all this testing for you. If that’s the case, then check out the letter templates that Steve Berchtold has created…

Steve has created a series of letter templates that have all gone through rigorous split testing and will guarantee a high response rate out of the box. Then you can make your own tweaks to see if you can improve your responses from there, or just enjoy the results from his hard work. I have used a few of his templates myself and have had some impressive results.

In any case, direct mail marketing is a very powerful marketing tool for us as investors, both for buying houses as well as selling houses. Split testing your letters can greatly improve your responses, as well as increase your profitability… even if you are working on a tight marketing budget.

Checkout Steve’s REIM letter templates here:


At 12:03 PM, Anonymous Sell My House said...

Thanks for the info John. I have multiple pay per click marketing campaigns that I constantly split test and it has increased my ROI. I have never put in the effort to split test my direct mail, but you propose a very easy way to do it. I will give it a try.

At 11:29 AM, Anonymous Richard Dale-Mesaros said...

Thanks John!

Golly heck, I keep meaning to do some split testing of my direct mail campaigns and this has given me the motivation to get it done. We've had huge success sending letters to out-of-state owners, so hopefully this will enhance our results even further....

Yours with boundless enthusiasm,

Richard Dale-Mesaros :)
Chief Deal Weaver


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