[Hovis]

Has anyone ever had any success with postcard mailers to merchants for MCA?

[DirectMedia_Scott]

Hovis, I'm biased, but with any marketing campaign, if you can pay only for the response, that's the best way to do it. Whether its radio, television, online, or mail.

Has anyone ever had any success with postcard mailers to merchants for MCA?

[Franklin]

While trying a variety of different methods for marketing, I've seen the best success is when you select one method and stay with it until you MASTER it. Trying one avenue and failing, then trying another one and failing, then another one, and another, is the same as gambling that this brand new batch of magic beans you just purchased will be any different from the last 3 bags of magic beans you just bought, planted, and watched not grow.

You have to learn why they're not working. Try different methods but commit to selecting one and testing it over and over and never stopping until you are an expert at it. Then you'll see that in reality, every form of advertising has about the same chance of failing or succeeding, the difference is your knowledge, application and experience. One or two tests for a few hundred bucks does not give you enough education to understand why you failed to the point where the next inhouse marketing decision you make will be a good one.

I know a direct lender that gets 60% of their business from mailers, I know an Iso that gets 200 leads a day from voice broadcasting, and I've seen email campaigns using a gmail account generate 20 leads a day, that would pull in multiple 7-8 figure owners per batch, including chefs that were on Jay Leno, restaurants featured on Food Network, businesses owned by NFL players (they look for loans too!), and a hotel commercial deal with Jeff Lewis from Bravo. These are done by marketers who took the time to fail repeatedly until they reached mastery.

These people out here are begging to give you their money. Are you man enough to take it?

Go and do likewise...if you don't, I've got no sympathy for you.











-
www.UCCRadar.com

[MCNetwork]

Franklin, I understand what you're saying but there's a fine line between sticking with something that is not initially working and knowing when to fold your cards and walk away from the table. Einstein said the definition of insanity is repeating the same thing over and over and expecting a different result. It's clear that all of the marketing practices you described can work to a certain extent, but the key is to keep your customer acquisition cost as low as possible. Some of those lead campaigns have extremely high acquisition costs, so it really depends on how deep the marketer's pockets are. The trick is to identify the most cost effective campaigns and then master them as opposed to throwing good money after bad money on the under performing campaigns and trying to master those.

[Hovis]

Franklin, I understand what you're saying but there's a fine line between sticking with something that is not initially working and knowing when to fold your cards and walk away from the table. Einstein said the definition of insanity is repeating the same thing over and over and expecting a different result. It's clear that all of the marketing practices you described can work to a certain extent, but the key is to keep your customer acquisition cost as low as possible. Some of those lead campaigns have extremely high acquisition costs, so it really depends on how deep the marketer's pockets are. The trick is to identify the most cost effective campaigns and then master them as opposed to throwing good money after bad money on the under performing campaigns and trying to master those.

Amen to that

[GRP Funding]

Has anyone ever had any success with postcard mailers to merchants for MCA?

Yes - we work with a few sales offices that use postcards and other direct mail as their primary lead sources

[Franklin]

Franklin, I understand what you're saying but there's a fine line between sticking with something that is not initially working and knowing when to fold your cards and walk away from the table. Einstein said the definition of insanity is repeating the same thing over and over and expecting a different result. It's clear that all of the marketing practices you described can work to a certain extent, but the key is to keep your customer acquisition cost as low as possible. Some of those lead campaigns have extremely high acquisition costs, so it really depends on how deep the marketer's pockets are. The trick is to identify the most cost effective campaigns and then master them as opposed to throwing good money after bad money on the under performing campaigns and trying to master those.

If your cost per lead is $135 per lead, and you were funding 1 out 3 leads, at an average of $25,000 per deal, would your CPA be acceptable? Of course it would.

The skill that comes only with repeated practice is the ability to gain a CPA with acceptable quality in an acceptable amount of time that can be done with your current resources. Practicing until you perfect this, has nothing to do with insanity (and Einstein's aforementioned quote alludes to THIS point, as he failed hundreds of times consecutively in order to complete his best inventions). You make little changes each new attempt, track and analyze the results, and then go again and again.

If your cost per acquisition is prohibitively expensive, it means you're trying too much without knowing what you're doing, and then it gets frustrating and you call it quits, when you should have tested on a much smaller scale and iterated a lot more frequently, making attempts to correct all the problematics areas you came across, (lack of opt-ins, unqualified leads, low sales volume, high volume of DNCs, expensive cost per opt-in, etc.) before spending a considerable amount of money, time and resources to go big and fail miserably.

You went into a ring with a professional MMA fighter when you should have practiced knocking out some 8th graders first and worked your way up the ladder. Start small and cheap and analyze your failures, and then try again small and cheap. All marketing methods are expensive if you have little experience in that area, folding isn't the strategy, practice and education is. Learn from others that do this successfully; people think it's the advertising medium that doesn't work, when it's simply the advertising platform not being executed properly. When it's done right, there's no concern about cost per acquisition.


I spoke to a gentleman who wrote the first algorithm that duplicated Equifax, Trans Union, and Experian's credit scoring system (he did this before creditscore.com or all those other copycats even existed). He had a call center that would call up people who got their credit score checked, interview them, and determine what type of lead they were. His COST to generate a verified lead was $50. I asked him why he wasn't doing things to get that cost down and he politely said, who cares? Lending Tree buys everything I can generate for $250 a lead (10,000+ leads a week, mortgage and auto repair, this was before the pre-2008 mortgage meltdown). This is where I learned about trigger leads and they DO exist in the funding industry.



Proper practice, (not practice), makes perfect.
Applied knowledge, (not knowledge), is power.














www.UCCRadar.com

[Finance1]

One thing I didn't see touched on in this thread is the lifetime value of each closed deal. One off transactions are a small minority compared to the ones that renew. Our average client renews 2.8 times. We ran numbers going back to 2010 and the renewal rate has increased over time and not decreased (renewal rate was just under 2.5 back in 2010-11).

We did a 2 year analysis covering 2012-2013 and the #'s looked like this:

Average deal size: $33,200
Average comp: 6.7% (on initial funding. 5.1% on renewals)
Average gross comp on new deals: $2,224
Average gross comp on renewals: $1,185
Average lifetime comp per deal: $2,224 + ($1,185 x 2.8) = $5,542

I'm pretty sure we're on the low side with comp % but since we fund deals as well it's not as important to maximize comp on broker stuff. It's easier for us to work with thinner margins and I think that helps through put rate compared to others but that's just a guess. Even with us running thinner on broker margins, $5,542 per booked client is a solid #. Our cost to acquire typically runs about $500 per booked deal (funded or brokered).

There would still be plenty of margin left over even if it cost $1k per booked deal. Sometimes I think agents lose sight of the longer term aspect of booking a deal even if it means running lean on comp to win the deal. The franchise of this business is definitely the renewal aspect. The more people you book today, the more paychecks you get over the next 2-3 years.

[Franklin]

So Finance1, what's your ratio of new funded deals to renewals or do you know what the industry average is?

[Finance1]

Franklin, 40-45% of our monthly funding is from our existing book. I'd have to look at the broker side but 40% of monthly broker comp revenue is a decent guess.

We're not a good example on the funding side because we are direct acquirers. We don't accept ISO biz. We turn the marketing volume up and down as we see fit so some months are slow for new fundings and others are busy. But this is by design and not random. Large cash companies are much more steady.

[JSL23]

Yes - we work with a few sales offices that use postcards and other direct mail as their primary lead sources

GRP- I have had a lot of success in the past (pre-MCA) using Direct Mail or postcards. We would send out 10,000 at a time and get back 300-400 usually and 30%+ would close. Unfortunately we were a small shop with a relatively low ticket item($400-$1500) so we switched to email and fax marketing, which was more cost effective.

What, in your experience has been the rate of return for direct mail?

[Finance1]

GRP- I have had a lot of success in the past (pre-MCA) using Direct Mail or postcards. We would send out 10,000 at a time and get back 300-400 usually and 30%+ would close. Unfortunately we were a small shop with a relatively low ticket item($400-$1500) so we switched to email and fax marketing, which was more cost effective.

What, in your experience has been the rate of return for direct mail?

Back in 2010-2011, all we did was direct mail. We used to mail 25-50k pieces a month. Response rates ranged from 1-4%. The high responses were from UCC lists. This was good and bad. High response keeps agents busy but UCC lists are probably the lowest quality calls you can get so lots of wading and weeding. The low responses came from targeted lists (chiro's, dentists, salons, auto, etc) but they were much higher quality.

Postcards has the lowest response. Official looking pieces like check letters and notifications did the best by a mile but they cost more. We did an analysis of over 500k pieces of mail and the marketing cost per closed deal was around $700.

Mail is tricky because it takes several months for each mailing to run its full course. This makes the initial investment scary for many. Mailing anything less than 5k is typically a mistake. Small mail campaigns have skewed results. If you take a 10k list and break it up into (4) 2,500 piece drops, each separate drop will perform differently because of the small sample size. Too many folks make the mistake of an initial small drop. If you get a crappy result then you quit at a loss. If you hit a home run then your expectations for future drops are out of whack.

Mail is a great marketing tool but it takes plenty of guts and a solid starting budget. The calls are only one piece of the puzzle. You have to have really good people answering the phone. Calls come in way beyond business hours so you have to account for that as well. Never let a direct mail call go to voicemail. A live person must be ready from 7am to 8pm to take calls. Saturdays as well. Not a big call volume on Sat but each call is worth its weight in gold. You never know when the big 200k deal is coming. Those are what make profits. 5-10k deals pay the mail bill.

[Franklin]

Good points Finance1.