This is a step-by-step elaboration on the previous post. Help-U-Sell Brokers: I believe this is the single most important thing for you to do right now. That’s why I’m giving it so much voice.
Help-U-Sell Real Estate is a target marketing business. Seriously. We’re not like other real estate companies who leave marketing up to the whim of the agents. We actually work at it with intensity and focus.
Target marketing begins with . . . well, with the target. Where are you going to market? At Help-U-Sell Real Estate we make that decision dispassionately and guided by data. We look for marketplaces where the turnover rate is high and where there is enough business to sustain the office. In most cases, this boils down to a zip code or two. And that’s the problem: zip codes are a lousy way to target!
Think about it! In every zip code there are neighborhoods where you don’t want to spend your marketing dollars. You have that area where all the new construction is occurring; it won’t even be ripe for marketing for another 3 years. You have that area that is mostly industrial; not exactly the kinds of households you’re looking for because they’re not households at all. How about that side of the zip that is mostly apartments? Do you want to send your marketing pieces there?
Really: no. You are Help-U-Sell Real Estate, remember? Your marketing is aimed at one group: home sellers. Even though we acknowledge that Help-U-Sell is all about the buyer, we don’t market for them. We market our superior offer to sellers so that we can take a ton of listings that generate a healthy flow of buyers into the office. We get buyers by having inventory. Don’t forget that.
The problem with zip code targeting is that zips are loaded with irrelevancies. They also tend to be pretty large. Most zips come in between 14,000 and 20,000 households. To effectively market to that large a geography would take a ton of money. What usually happens with Help-U-Sell offices is they target a zip or two and go after it with a small budget. They end up taking a listing here and another there and another way over there . . . and never achieve the kind of concentrated visible success necessary to blast off.
Instead of targeting zip codes, let carrier routes guide you. A carrier route is the actual neighborhood the letter carrier walks to deliver the mail. Most zips are made up of a couple dozen carrier routes. You can choose carrier routes with higher turnover rates, the right mix of properties, in the right price range. The problem is: how do you get accurate sales data by carrier route? And how can you see where a carrier route is? Let’s solve those problems right here:
First, run a 12 month sold report from your MLS on each zip code in your overall market. That’s probably 2 -4 zips. Export the reports to an Excel or CSV file (if you are confused by this, drop a message to firstname.lastname@example.org). Send the exported data to Mike Paholke at Excel Print/Mail: email@example.com, and ask him to sort it by carrier route. He will return a report to you that breaks it all down, shows the mix of single family to multifamily homes, median household income and median home value. Most important, he will have a turnover rate for every carrier route in the zip code.
Step one: eliminate all carrier routes with low turnover rates. I consider 4% to be OK. Anything approaching 5% or more is great. I usually eliminate all carrier routes with turnover less than 3%. By the way: turnover rates change over time. That route with 1.6% this year may be at 4% next year – which is why you want to do this exercise at least annually.
Step two: eliminate carrier routes dominated by rentals. Your first indication of this would be the number of households in the route that are in the ‘Multi Family’ column. However, understand that the postal service classifies multi family differently than we do. They consider any household with its own street number to be single family. So an apartment at 123 Elm St. would be classified ‘Single Family.’ A condo with the address, 123 Elm St. Unit 4, would be classified as Multi Family. The only way to know for sure is to see where that particular carrier route is located, which brings us to the next step of the process.
Step three: go to https://eddm.usps.com. Put the zip code in you are considering and a map of the zip will come up. Click the button for ‘Show Table’ and select the carrier route in question. Click the ‘Hide Table’ button and the route will be highlighted on the zip code map. Do you recognize this location? Is it condos or apartments? Perhaps you might need to take a drive to be sure.
Go back and forth between your list of surviving carrier routes and the USPS website, looking at each carrier route. Be guided by the following criteria:
1. The number of households you select should be driven by the amount of money you are able to spend on marketing. We have a couple of rules of thumb for that at Help-U-Sell Real Estate.
- Marketing should account for 33%-50% of your overall budget, including marketing.
- Marketing should equal 10% to 15% of your anticipated annual Gross Commission Income.
2. Effective marketing is all about getting your logo in front of your target group every single day of their lives. That’s why we regard every listings as a marketing bonanza: each one provides ample opportunities for signs, mailers and so on.
3. While there is no hard and fast rule about what it costs to accomplish that kind of saturation, I find that smaller targets (2,000 – 3,000 households) take about a dollar a household per month to effectively establish the brand. As the number of households goes up, the cost per household declines somewhat. Once the brand is established and the office is enjoying at least a 20% share of the market in the target area, signs start doing much of the branding and the marketing budget can be reduced a bit – but why would you want to? Once you’ve achieved a reasonable market share in the target area, continue marketing and expand the target!
4. When selecting carrier routes, it’s best if they are contiguous. Four or five carrier routes clustered together benefit from synergy : a listing in one carrier route creates signage opportunities that can be seen in the other carrier routes. On the other hand, carrier routes at opposite ends of the zip code are like little islands.
5. It has already been mentioned, but do this exercise at least annually. Turnover rates – which are the key to marketing efficiency – change over time. A lower turnover rate today may become healthy in a year.
If you are serious about success, growth and HAVING FUN while building a successful business, you really must do this. It is Help-U-Sell Bedrock. It’s who we are and what we do.