You're listening to the “REI Marketing Nerds” podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords Nerds, a high-tech digital agency, focusing exclusively on helping real estate investors you get more leads and deals online, outsmart your competition, and live a freer, more awesome life. And, now, your host, Dan Barrett.
Dan: What's up, everybody? This is Daniel Barrett here from the REI Marketing Nerds podcast. As always, you can find more information about us at REIMarketingNerds.com or you can look at my company directly at AdWordsNerds.com if you want to do that. This week we are getting into something that's very near and dear to my heart, which is partnership. [01:00.7]
Now, what do I mean by this? Look, I have had the absolute pleasure of working with a very large number of real estate investors. You are likely a real estate investor if you are listening to this show, and I will say this about real estate investors: they are incredibly motivated, incredibly ambitious, incredibly intelligent, self-taught, self-motivated learners, whatever term you want to put on this group of people. This is a powerful, intelligent and dynamic group.
But—but, but, but—it is not the case that everyone can do everything equally well, by which I mean, look, I like to think, for example, that I'm great at learning and great at synthesizing the things that I learn. I'm good at breaking down complex concepts into mental models that people can understand and apply. That's what I like to think that I'm good at, but there are a huge number of things that I'm terrible at. [02:02.0]
There are a huge number of things that I just don't want to do or don't enjoy, and if I try to force myself to do everything, just so I can control it, just so I can say that my hands are on everything, I'm involved in everything, I'm going to permanently bottleneck my own business and my own success.
So, to a large extent, the investors that I talked to that have the most success, they do that by acknowledging where they are uniquely skilled and then forming partnerships to take care of everything else. I always say this story, but I owned a riding lawnmower for the longest amount of time. I had a riding lawnmower and I still paid someone to come and mow my lawn, because at the end of the day, I didn't doing it and they were going to do a much better job, and so, forming that partnership allowed me to not only do more of what I was passionate about and what I enjoyed, but to enjoy a higher quality of life, and quite frankly, a better mowed lawn. So, this week all about partnerships. [03:06.4]
Without any further ado, let's talk about partnerships for real estate investors.
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When I first started my own business, and first started getting into business and marketing and all this stuff, I did not have a business background. I didn't have any kind of business education. I was really teaching myself everything that I need to know. I was reading every book that I could get my hands on.
I started with The 4-Hour Workweek like, I think, a lot of people did, by Tim Ferriss, and really started tearing through the business section of my local Barnes & Noble, which, I don't know, I don't know how many kids today are like, I need to go down to the Barnes & Noble and learn about business. I think they mostly are going on the YouTubes or whatever they're doing, but at the time I was going down to Barnes & Noble and just literally sitting in the business section and reading the business books. [03:59.7]
I picked up this book by this guy, Jay Abraham, and this book was called Getting Everything You Can Out of All You've Got. It is still, I think, to this day, my favorite business book of all time. If you have not read it, you have to read this book. It is amazing. But the one idea that I got out of this book that really stuck with me more than anything else, I think, and really made a huge difference on how I ran my business, how we do our marketing for clients and everything, it's this idea of the “Parthenon,” which is what Jay calls this, the Parthenon, and it's this idea that every business needs to have multiple marketing channels going all the time.
To break down why this is, Jay is going to ask you to imagine a day diving board. Okay, so picture you've got this long kind of thin thing, which is the board where you stand and you dive off, and then you got the base. The base is all the way at one end, and so it's got this one piece of support. [05:00.0]
Imagine that the divers board, the board itself, that's your revenue, and that base, the place where the diving board is anchored to the edge of the pool there, that's your marketing channel. You've got one big marketing channel that’s supporting the entire revenue board there. Okay?
Now, you think about what happens on a diving board. When you go on a diving board, you go up and down, right? Because there's only one point of support. So, if you go to the far end of the diving board, you go up and down really, really rapidly. The same thing happens in business. If you've got a single point of view support for your revenue, which is your marketing channel—you've got one marketing channel you rely on to bring in your leads, you're supporting this long board of revenue—that revenue is going to go up and down based on what that marketing channel is doing. As the marketing channel shifts, so goes your profits.
Now, instead, the diving board, which is kind of how most businesses are set up, we want to picture the Parthenon. If you're not familiar with the Parthenon, you have seen it I pretty much promise you. It's an old Greek building. Imagine your stereotypical ancient Greek building, white, and you’ve got all the columns. [06:16.4]
Now, in the Parthenon, the roof is your revenue, so the roof is your revenue, and it's supported by multiple columns. You maybe got six columns, three on one side, three on the other. Now, does that roof move up and down the diving board? Absolutely not. Right? And in fact, the real Parthenon is still standing however many years later. It's a very stable structure, having these multiple support columns.
Likewise, in business, you want to have multiple marketing channels supporting your revenue. Those multiple points of support, those multiple ways of generating leads, multiple ways of driving new business for investors, multiple ways of finding motivated sellers, that's going to create a stronger support system for your revenue overall, and it's going to reduce the ups and downs of your business a whole lot. [07:10.3]
Really, what the Parthenon is all about is, yes, it helps you grow because you've got multiple marketing channels bringing you more leads. You're definitely going to get higher volume this way, but, really, what it provides is stability. It provides support. It reduces the ups and downs. This is absolutely massive. You want to generate a predictable source of revenue rather than going up and down with the day of the week, the time of the month, whatever it is, the seasons, anything you can think of.
So, that's the Parthenon idea that Jay Abraham talks about in this book. It really, really blew my mind, because I was like, Oh, wow, not only do I need multiple channels of marketing, but my clients need that, too.
Let’s bring that into the real estate investing space, okay? How do we, as people that are generating motivated seller leads, working with investors, how do we incorporate this idea into what we're doing? [08:05.1]
Let's look at what is classically happening for most investors right now. If you ask yourself, Where do most real estate investors start when they're just getting started? When you're wholesaling or you're trying to get into flipping, whatever it is, where do people start for generating leads? Some people are going to walk door to door. A lot of people are driving for dollars.
Most investors are going to do direct mail, and if you ask yourself why that is, it's because direct mail is a good mix between scalable, meaning you can send out a lot of them, but low barrier entry. There's not a ton of costs. There’s certainly a cost involved, but the cost is relatively low, so there's just a lower barrier to entry. Most people understand mail. You don't have to be tech-savvy to do it. There's a lot of companies that help you do it, etc. It's a really good marketing channel in terms of scalability, but there's a low barrier to entry. That means that most investors can get into it. [09:02.4]
If you are expecting me to knock direct mail in this podcast, I'm not going to do that. I know I am the online marketing guy for investors and that's how people know me, but, look, direct mail is awesome. I do not look down on direct mail at all. It is really, really good in a lot of markets and direct mail has some really significant benefits. Namely, you have the ability to really drill down into your targeted lists and develop very highly targeted campaigns, based on the amount of equity or all sorts of things. It's really hard to do online in a lot of scenarios and that is a thing of beauty. A really well-executed direct mail campaign is really awesome and I'm never going to say you should not be doing direct mail. I think direct mail is still really good, but there are some drawbacks to direct mail and especially drawbacks to having direct mail be your only source of leads. [10:07.4]
To get to why that is, we want to talk about disruption and what to do when you are in a period of marketing channel disruption. I think a lot of people think of disruption as something that happens online like, I'm doing all these Myspace ads, and Facebook came along and kicked Myspace in the face, and now Facebook is the king of the castle and all my ads don't go anywhere, right? We think about online companies as disrupting each other and Google is disrupting Ask Jeeves or whatever it's disrupting, right? So, we expect kind of the online space to be chaotic and a lot of change, but this actually happens a lot in direct mail markets or, really, just in housing markets in general.
I'm going to give you an example. I'm pretty sure if you are listening to this podcast, you have experienced some variation of this or you've heard someone telling you this story, this should sound pretty familiar. You’ve got somebody who's an investor in their local market and they’ve been doing direct mail. They’ve been in it for years and doing really well. [11:09.5]
Then a coach program or a guru, or a seminar that trains people in investing swings into town. They do a ton of marketing. They get a ton of interest. People flood into that, and all of a sudden, in this seminar they are training a bunch of new people to be your competitors, right? They're going to give them some basic understanding, give them some basic tools where they can get them really pumped up. Then the seminar, the guru or the program, they're going to leave. They're going to go to the next market.
What happens in your market after that is done, right? A lot of times you're going to have sometimes hundreds of new investors, all doing pretty much the exact same marketing, sometimes using the exact same templated letter or postcard, because in the seminar, they're going to say, Hey, this is what worked for us. They're going to teach everybody how to do that exact same thing and the new people don't really have the experience yet to innovate or to invent their own thing. They're just going to do the thing that the people told them to do. [12:14.9]
In this case, they're going to send out the same yellow letter. They're going to send out the same postcard. Most of the time they're hitting the same lists, right? All of a sudden, that's a much, much noisier channel. You may have gone to one or two other investor postcards being in a motivated seller’s mailbox to, literally, five to 10 to 20 others of the exact same thing in every single mailbox you’ve mailed to. This probably may sound like I'm exaggerating this, but I was like this is probably the most common story I hear.
When people get on the phone and they want to talk to me, this is the story I hear all the time: I was doing direct mail in my market. It was working really well, but I've been seeing response rates drop off. There's way more competition. People are making crazy offers. There's all these newbies in the market. I mean, this is the story I hear, I would say, eight times out of 10, some variation on this. [13:13.8]
This is what we talk about, right? When we're talking about disruption, a market disruption can happen to any marketing channel. It doesn't matter if that marketing channel has worked for decades. Disruption can happen and it can be very intense. If you are completely invested in a single marketing channel and you don't have this Parthenon set up where you have multiple channels to support you, it can be really intense. It can be really disruptive. It can be painful.
Now, again, I am not knocking direct mail because I think pretty much every single investor should be at the very least testing direct mail in their market or have direct mail be a part of their setup, but it shouldn't be the only tool in your bag. Just if you were only doing online marketing, I would tell you, hey, add in some direct mail, right? If you're only doing direct mail, I'm going to tell you to add in some online marketing or billboards, or, I don't know, build yourself a house costume and walk around down the street. Right? Whatever. [14:14.4]
Maybe don't do that. You can wear one of those sandwich boards that you always see people wearing in the Depression that say “Hamburgers 2 cents” or whatever, something like that, right? So, it's not about any one tool it's about having multiple tools in the tool bag in order to give you the highest level of security in case of a market disruption.
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The thing I want to get across is, while that's important, it's actually not the only reason to have a Parthenon-type strategy where you have multiple marketing channels. [15:15.5]
The stability is huge and that’s what I focused on because I really think this is insurance against some really potentially painful disruptions in your market. This is the thing, we always try to cap our downside. We always try to look out for the worst possible scenario and make sure that we are protected, right? You do this with your life insurance, with your health insurance. You do this with your business insurance, right?
But stability is not the only thing we unlock when we use multiple marketing strategies. What we get is synergy, and the way I'm using the word synergy here is I'm using it to mean when you get a bigger effect from combining two separate channels than you would have gotten from running those things simultaneously but separately. These marketing channels, when you use them together, a lot of the times, they don't just add up to 1+1=2. They add up to 1+1=3 or 4, because you're able to allow them and to use them to expand and multiply each other. [16:17.0]
And this can sound very abstract. It's kind of a little philosophical almost, so I want to break this down into very specific instances of how you can do this now and how this is working with our clients when we work with investors or other investors that I'm talking to every week, people who are using this really successfully, and specifically, I'm going to focus on combining direct mail and online sources, but you could get something like this with pretty much any marketing channels that you combine, right? But let's focus in on direct mail and online.
Let's say, we've got someone who is doing a combination of direct mail. They're doing organic marketing online, so they're doing search engine optimization and they're trying to rank their website really well in Google, that kind of thing. And they're also doing paid ads, right? In this case, they're doing retargeting ads, which is just a fancy way of saying they're showing ads to people who have been on their website. [17:09.3]
This is actually a real-world example of something we've seen with a real client. Let's say, this client sends out direct mail. They're hitting their regular list of potential motivated sellers sending out postcards. Now, one of those people is going to get that postcard and think, Hmm, I don't really know what this is. I don't know what's going on. So, they Google the company name and “scam,” right?
This is real, actually much more common than you might think it would be. Let's say, Barrett Homebuyers is the name of the investor company, so this person's going online and they're typing in “Barrett Homebuyers scam.” Why are they doing that? Because they want to know if you're a scam. I think if you're an investor, you've done this any amount of time. The people who aren't familiar with investing and where investing fits into kind of the marketplace, they get confused and they want to know if it's legit, right? So, they type in “Barrett Homebuyers scam.” [18:02.7]
Now, that person sees an organic search result, so this is a web page that this client made that showed up in Google for free, targeting this keyword, so “Barrett Homebuyer scam.” In this instance, it would be like, I made this page, this Barrett Homebuyers scam page, and they click on that page to see what it's all about. On that page, I've created an article that breaks down like, Hey, some investors are scams and some aren't. Here's what you need to look for in an ethical investor. And, by the way, if you want to talk to someone to break this down, you can go ahead and contact Barrett Homebuyer, right? Not pretending to be someone else and not pretending that I'm not this company. Just breaking it down in a really objective way.
So, this person, they got the postcard in the mail. They typed in “Barrett Homebuyers scam.” They landed on our page that targeted that keyword. They read it and spent some time there, but they didn't fill out the form. They just left. Okay?
Now, I have it set up so that I can show ads to anyone that has been on any page of my site, so when that person then goes on Facebook later in that day sharing memes and clicking on baby photos or whatever it is, they actually see an ad from Barrett Homebuyers with a little video and an invitation to fill out a form and get a free offer on their house. [19:18.0]
So, then they go ahead and fill that out. I get the lead notification. Then I contact them on the phone. Right? In this instance, what would have happened if I was only using direct mail is I send out the direct mail; they type in “Barrett Homebuyers scam.” Maybe they find something, maybe they don't. Maybe they land on the Better Business Bureau, that's it, right? That's really it. The likelihood of me pulling in that person is fairly low.
In this instance, because I'm using mobile channels where they get the postcard, they type in “Barrett Homebuyers scam” and they land on my organic marketing page. Then they bounce off of that. Then they land on my paid ad, and then they fill out the form. It's allowing me to get a much higher yield out of the direct mail money I'm already spending and for a very low marginal cost. [20:04.4]
So, the effect of the online stuff is that it's expanding the effectiveness of the direct mail stuff that I'm doing and this is really, really powerful. If you extend that out over time and say, Hey, every postcard I'm sending out gets this benefit. We're doing this every time I send out any piece of mail for years and years and years, the utility of that is absolutely huge and the effect on your bottom line is going to be absolutely huge.
Let me give you another example of combining online marketing channels specifically. Let’s say, you are running AdWords ads. You're running ads in Google. When someone types in “sell my house fast,” they see your ad. Now, one of the secondary effects of that is that you can get your AdWords account, very accurate local keyword data, and this is very hard to find. There are free keyword tools out there where you can do research on who's searching for what in your local market, but they are very inaccurate when you try to drill down to the local level. I mean, really just kind of unusable, in my opinion, and the only way you can really get hard numbers is by running ads. [21:11.6]
So, when you run ads, you get this really accurate keyword data. Now, you can look at those keywords and say, All right, you know what? Based on this, I'm going to change my organic strategy, my search engine optimization strategy, because based on this paid data that I generated, I can see that most people are searching for really only two or three keywords. So, I'm going to change my strategy to focus entirely on creating content around those two or three keywords.
Now, let's say, you're working on that and a couple months go by. You're doing all the work for your SEO. You're still running your ads. Now when someone types in, let’s say, “sell my house fast,” I'm just going to assume that's the keyword we're talking about, someone types in “sell my house fast,” right? They still see your ad. Your ad is still, but now you also have an organic page, a free page that ranks for that keyword as well. So, you're running an ad and you have an organic page. [22:05.1]
Now, what most people don't want I realize is that when that happens, your organic page, so the page you are not paying for, actually gets a 15% higher number of clicks. So, when you run your ads and your organic page together, you actually end up getting a higher percentage of clicks on the organic page and on the ad. This is a really good example of this synergistic effect, right? You use the data from your ads to drive a more focused SEO strategy, which made your SEO more effective, and then because you did those two things together, you've got a higher percentage of clicks on your ads and on your organics, right? This is really powerful.
Once you start to do this, you start to see these little opportunities for connection pretty much everywhere that you look where you understand, Hey, by doing this together and making sure that I'm swapping data back and forth, and best practices and all that stuff, I'm starting to get a bigger effect, a ripple effect across all of my marketing channels, right? [23:10.5]
Now, how do you get started with this? My personal recommendation is to do a combination of direct mail search engine optimization, and pay per click. These to me are the ones that combine with each other in such a way that they address each other's weaknesses and they amplify their strengths.
Direct mail and PPC give you immediate lead flow that brings in some leads, brings in some cash flow that's extremely important. Direct mail and PPC give you extremely high levels of targetability offline and online, respectively. SEO really gives you a massive potential volume over time. SEO tends to be slow to get started, but over time, it's going to have the biggest potential audience and the highest ROI. So, while direct mail and PPC are kind of fast in short term, SEO is building out your long-term profitability. [24:02.5]
They all give you objective data for testing. They give you enough data, so you can test different landing pages, different postcards, different websites, different calls to action, different phone numbers, whatever it is, different logos. So, these are really good channels to put together because they really magnify each other.
And you don't have to do all three. You could do two of the three. I personally liked doing all three at once because it's really powerful, but if you have a smaller budget, you do direct mail and SEO. If you've got a bigger budget, maybe you do direct mail and PPC. You can do some combination of those, get all the effects of having a Parthenon that you can keep building on and get the synergistic effects that are going to drive higher response rates across all of your marketing.
Again, this is one of those habits where once you get into it, the cumulative effects over time are absolutely massive. They are massive. This is the difference between really scaling up over time and an investor business that just kind of stays at a certain level, static level, and kind of stays there for a long period of time. [25:12.0]
I'm telling you, it's not just about growth. It's not just about making more money. I mean, that's awesome. It's really about stability and security, because the more you depend on only one channel, the more you put your eggs in only one basket, the more risk you take on. And for a lot of us, myself included, this business is not just about me. It's what I use to feed my family. It's what I use to support my employees. If you're anything me, you take that responsibility incredibly seriously. So, this is the kind of thing that really has incredible downstream effects.
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That is going to do it for this week's episode of the REI Marketing Nerds podcast. As always, you can find all of our past episodes, show notes, more information, all sorts of cool stuff at REIMarketingNerds.com. [26:02.1]
And if you want help with your online marketing, if you want help finding motivated seller leads online, that's us, AdWords Nerds. We are the company that will help you do that. I'd be happy to get on the phone with you or have someone from my team get on the phone with you for free to help you put together an online marketing strategy for your market that works. You can get that at AdWordsNerds.com/Strategy.
Finally, if you want to stay in touch, the best way to do that is the REI Marketing Nerds Facebook group. I am in there every single week, posting trainings, posting reactions, posting news about what's happening in online marketing for real estate investors, and you can get there at AdWordsNerds.com/Group.
As always, thank you so much for listening to this show. I could not do any of this without you, so thank you, and I hope you have an amazing rest of your week. [27:02.4]
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