Episode #013 – The Fiduciary Standard: How to put other people first and still come out ahead

There’s hardly a better feeling than closing a deal. It helps us feel successful. It makes us money. And it gives the seller peace of mind.

But in the real world, not every deal goes through that smoothly. Sellers often get “burned” and real estate investors have earned a notorious reputation because of it.

In this episode, you’ll learn how to build an honest reputation which attracts a consistent stream of leads even years from now….
…using a counter-intuitive method from the highly regulated financial services industry. And don’t worry, you need no complex math—you don’t even need a computer.

Show highlights include:

-Why you’ll always want to close deals—and why you shouldn’t always be trying to. ([4:00])
-THE most important moment in your business life (you’ll experience it dozens of times). ([7:20])
-How to win clients in the long-term… by turning clients DOWN. ([10:40])
-Why guilt and shame are the worst things for your life AND your business—and how to remove them from your life. ([13:35])
-Seller resistance sucks. How being ethical can banish your prospect’s doubts. ([17:05])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group

Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

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 Ad Words Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Alright, hello everybody, and welcome to this week's episode of the REI Marketing Nerds podcast. What is up? As always I'm Daniel Barrett, here from AdwordsNerds.com reaching out to you saying hello; hope you are having an awesome week. We are doing so many things behind the scenes. It's really wild. We are testing things in the investing spaces. We have been dipping our toe into the real estate agent space with listings. I have been working with mentorship students. We have had a lot of things happening and it's been really, really sort of a busy couple of months. Not to mention the fact that I moved and all these wild things.

There is a single concept that has continued to come up and it's come up as our level of work has gone up, as the level of marketing stuff that we need to do for our clients as increased and it's something that I want to put as the 12th episode, I think this either the 12th or 13th episode of this podcast. I am going to kind of cap off this recent run that we have been doing and I'm going to end it with something that is probably the most important kind of concept behind the Adwords Nerds business, something that I directly attribute a lot of our success to, and something that you can immediately apply to your investing business. You don't have to be technical to do this. You don't need to worry about figuring out how to do stuff on the computer. You don't need to worry about conversion rate. It's something that you can do literally just within yourself. It's something that is going to have over time a massive, positive effect on your business but also how you feel about your business, how people feel about you. It's one of these major quality of life improvements that is incredibly simple to do but has major, major ramifications long term. And that is this concept of the fiduciary standard.

Now the fiduciary standard, it's in the finance industry and basically certain kinds of financial advisors have to legally adhere by this standard and the standard is pretty simple. The standard is you need to do what is in your client's' best interest at all times regardless whether it is in your best interest. This comes out in the finance industry specifically because the way that it was set up was that if I'm a financial planner a lot of times I can make a recommendation to you buy certain stock or buy into a certain fund. I, the planner or the agent, will receive a commission for selling you that fund. Now look even in situations where the financial planner absolutely does not mean to do this and is not trying to sway you in any one direction or the other, they think they are being completely objective. But even in those situations, when you create an environment when you give someone a reason to go in a certain direction, you incentivize them to do a certain thing; you say I will give you money when you get someone to buy this stock or fund. When you put someone in that situation, all people, all people will subconsciously start to steer their decision making process in a direction that benefits them. So the case of the agent or the planner, most of the time, much of the time what's going to happen is that they are going to suddenly start to rationalize to themselves reasons why yes the stock or the fund or the plan that gets me the highest commission is in fact the best for my client. Again this is not something where they are setting out to deceive you and they are trying to be tricky. This is something that happens subconsciously, we all as people seek to maximize our own wellbeing and we will rationalize that even if we know deep down it's not really the best thing for the client, we will think of reasons to convince ourselves that we are making the right decision in sort of directing them to this outcome that is going to benefit us. This is just human nature. We all do this. You do this. I do this. Everybody does this.

As an investor, you are going to be put in so many situations where you have the opportunity to push someone into an outcome that is not actually the best for them but that directly benefits you. This is inherent. It is an intrinsic part of the business that you are in and indirectly it's an intrinsic part of the business that I am because I work with investors, I help investors to speak to more sellers, I help the investors to do more deals, and so I put my clients in those situations. Not to mention just the fact that when I get on the phone with an investor in my own business I have to decide is this marketing, this kind of online marketing, is this right for them? Is it right for them to work with us? I have to make that decision. Obviously I stand to benefit when somebody works with me. I get money from that. There is always an incentive for me to convince an investor to work with us just like as an investor there is always an incentive, often times a huge incentive to convince someone to sell to you. We are all in this situation. The fact of the matter is, that moment in which you make the decision to sway your potential client in a certain direction or to send them in a direction that is right for them regardless of whether it benefits you that is the moment in which our character as entrepreneurs, as investors, as marketers, as people, our character is demonstrated and is revealed in that moment. It's probably the most important moment in your business life. Because each time you reinforce your nature, your character, your moral fiber, every time you make this decision and not only that but you reinforce a sense of your reputation. Your reputation is really nothing more than what people think of about all the decision you have made. If you've got a reputation of being a real jerk that's because you have made many tiny decisions that have reinforced that reputation over time. One of my favorite quotes, I can't remember if it's Warren Buffet or it's Charlie Monger and I'm going to paraphrase it here because I'm not good at remembering quotes but one of the things that I think about all of the time is this quote from one of those two gentlemen that says, "Your reputation takes a life time to build and it takes a second to destroy." If you are trying as an investor to build a reputation as an honest person, as someone who is out there to help as many people as you can as someone who is out there to – yes – make a significant profit, make a really great living, do a lot of deals, yes, of course but you are also someone that people can trust. If that's the goal to build that reputation every single time you get into this situation where you have to make the decision, okay do I sway this person to sell to me no matter what or do I send them down the path that is the best for them regardless of whether or not it benefits me. Every time you make that decision you are reinforcing or destroying your own reputation. Every time I get on the phone with an investor, if an investor calls me or they call Lou, who works on our team here, and they get on the phone with us and we do a strategy session and we talk to them about their market and the kind of budget that they have and we figure out about their life and what their goals are and we figure out what their competitors are doing and we figure out what the housing market is doing, we take all that information and if we know deep down look it's not the right time for this person, the market is not great for this kind of marketing for them, they do not have the budget, they are going to put everything on a credit card, they are going to risk their livelihood to do this. If we know deep down it's not a good fit and we sell that person anyway, we will seriously damage our reputation. Our reputation or the reputation that I want to build for Adwords Nerds in this market is as truly honest brokers. We don't take people we don't think we can do significant work on. We don't take people, we think are bad fits. We don't take people who are putting themselves into debt to run their marketing. We don't. That reputation built over time, yes, it might cost me money on a single call. I might get on a call with someone and say look I would love to work with you but it's just not a good fit. I'm not going to pressure you into making this decision because it's not going to be good for you and that person might leave that call, they might be a little irritated at that decision, and I’m not going to make that money. But long term what ends up happening is that people are comfortable getting on the phone with us. They are comfortable taking our advice. They are comfortable believing in what we say because I will tell them multiple times to do things that clearly do not benefit me or the company in any way. That means when I do recommend, "Hey I think this is right for you, I think it's the right time for you, PPC is a good investment, I think SEO is a good investment, whatever it is." If I make that recommendation, people will believe me. Because I know that I don't always make that recommendation. In about 40% of the people that apply to have a call with us, we don't take at all. We just don't get on the phone because I say look I know this is not a good fit. You need to do something else. 40% calls we cancel every single week.

Are you an investor who wants to dominate your local market? Do you want more leads and deals online? Then download your copy of the Motivated Seller Blueprint absolutely free at www.AdWordsNerd.com/gift. What are you waiting for? Go to www.AdWordsNerd.com/gift right now to get your copy of the Motivated Seller Blueprint

Dan: Now for you as an investor thinking through what that reputation is going to be and what your red line is, what your bright red line is. What kind of clients you will not take, what kinds of deals will not do, what qualifies someone as a really good fit for you? And it's beyond do the numbers and the deal makes sense. Can I flip this house? Can I wholesale this house? It's beyond that, beyond the financial. But knowing what your red line for who you can't work with because it's not good for them, who you won't work with because you know they can do something else that will serve them better. Know that and then hold yourself to that fiduciary standard. This idea that you will very consciously make a decision that very consciously in the moment think this through; make a commitment to saying I will do what is in my clients' best interest regardless of whether it is in my interest. That's an incredibly powerful tool. For one, you're going to feel. You're going to go home every day feeling amazing. You really are. You're going to go home every day knowing that you did the right thing. I cannot tell you the extent to which guilt and shame will eat you alive as a person if you let that stuff fester in your life. This is not like a religious thing. It doesn't even have to be a moral thing. You will hurt your own quality of life over time by consistently doing the wrong thing when you know you should be doing something else. It's just a fact. It's a physical, physio, biological fact that stress will eat you alive. But the difference is that if you make that right decision to uphold that fiduciary standard, man, when you go home you can rest easy. You just feel good. You feel good.

And the second thing is purely selfishly; this is an incredibly marketing tool. If you can build that reputation for really doing what's right for your clients, people will feel more comfortable coming to you. They will feel more comfortable calling you. Your conversion rates will go up. Your cost per lead will go down. Your close rates will go up. Literally, everything will improve. It takes time. It takes time but I have to tell you as someone who came to the investing space from the outside. I didn't know about real estate investing when I started working with investors. I didn't intend to only do real estate investing clients when I started doing marketing that just kind of happened naturally. Coming into this industry from the outside, the single biggest issue you have to face as an investor that is doing marketing to get motivated sellers, the single biggest issue you have to face is the fact that people are scared of investors. And if you haven't thought about this in a while, it's absolutely true. People see bandit signs and their red flags go up because for one it kind of sounds too good to be true. I'm going to buy your house cash, geez my house has been on the market for three months, I haven't even shown it yet. This guy is just going to walk up and give me cash, something is fishy about that. Right, that's what they think, something is fishy about that. Then secondly, if you are truly motivated, if you really need to sell this house, if you know you're in a weak position, this is something we all acknowledge. The motivated seller is in a weakened negotiating position. And if you know you are in a weak position, how comfortable are you putting yourself in a situation where someone has got to get you on the phone, they are going to come to your house. I don't even let door-to-door candy salespeople come to my house. I'm going to let this person into my house. They know more about it than I do. They know more about these deals than I do. I am already in a weakened bargaining position; they are going to take my house from me. They are going to take my house. I'm going to get almost nothing. I'm going to get ripped off. All my friends are going to think I got ripped off. My wife, my husband is going to think I made a terrible decision. That's what's going through their heads. This is why so many people will say, "My online leads are all junk. I think it's my competitors. People filled out the form but the phone number doesn't work or it's the wrong address." I got to tell you most of the time those are real people. The reason they are not giving you their information is because they know they need help but they are afraid of you. It's like I know I want this guy to sell my house but I'm afraid to give him my real phone number. I'm afraid to give her my address. They are afraid. If you can put yourself in their shoes, you're going to get that. You'll understand why they are afraid. Nothing will help these people reach out to you. These are the most motivated people. Nothing will help these people reach out to you more; nothing will help them do business with more; nothing will make them seek you out more than your reputation for doing what is in their best interest regardless whether it is in yours. This is a principle I have tried to apply to almost my entire life. It's a principle that every single person that works at Adwords Nerds, it's the very first thing I tell them about working here. Whenever someone comes to work for me, they get a document and it says what it's like to work at Adwords Nerds, number one is the fiduciary standard. I'm going to tell you if you can make this the number one principle in your investing business for one it is an advantage that almost nobody else is bothering to use even though it's available to everyone. It's truly going to differentiate you. And two, it is going to have not only a positive impact on your bottom line, it's going to have an impact on the quality of your life. It's massive. It's truly, truly massive. Now does this mean you never make mistakes? No. Does this mean that every single deal you do is a success? No. Does it mean that every client that we work with has massive success? No. We are all humans. We are all human beings. We all make mistakes. We all make bad decisions. What matters is your commitment to doing what you can to uphold that standard. And if you can adopt that into your own life, I'm telling you the positive impact, the positive benefits to you, they are going to just outstrip anything you have ever done in your business.

You guys have been listening to this podcast for 12 or 13 episodes in. You have heard me talk about marketing. I'd say if you only listen to one episode, this is the one. And if you only take something away from me, rattling on about computers and marketing and motivated sellers and all this stuff, this is what I want you to take away. Adopting the fiduciary standard in your business is the key to not only better business results but a better quality of life.

I hope that makes sense. Let me know what you think. Send me a note, send me a comment. I would love to hear it. As always, thank you so much for listening to this podcast. You can see all the past episodes of this podcast at AdwordsNerds.com/podcast, got all our past podcasts and show notes. Come say, "Hi". We've got a free Facebook group, the REI Marketing Nerds Facebook group where tons of awesome investors share tips and tricks. I do free trainings in there every single week. That's AdwordNerds.com/group that will take you right to the Facebook group. AdwordsNerds.com/group. Hope you guys are having an awesome day. I'll talk to you next week. Cheers.

Episode #012 – The ROI Trap: How to know when your marketing is working, even if you haven’t closed a deal yet

Digital marketing is awesome: Done well, you get to generate highly targeted leads on autopilot while you invest a fraction of what you make back.

While this is the reality of many investors, many others try their hand at online marketing, think they don’t see results… and quit.

Most don’t know that you can calculate (and take home) massive ROIs even when the data doesn’t look so rosy. Doing this also allows you to silently leverage keywords your competitors might never bid on.

Show highlights include:

– Why you can’t predict even “reliable” marketing outcomes. ([3:30])
– The big problem with REI online marketing (this is why SO many investors struggle to market online profitably). ([5:50])
– Don’t stop “unprofitable” campaigns because of this common reason (a 5-figure deal might come from your next click). ([10:40])
– Why not to let low search volume or small audiences deter you from running your ads. ([13:45])
– Why paying triple market rate for clicks and leads doesn’t have to be a bad thing (this is where you can outlast your competition). ([20:20])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group
Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

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 Ad Words Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads in deals online. Outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Alright everybody, welcome to this week's episode of the REI Marketing Nerds podcast, as always Daniel Barrett here from AdWords Nerds. How are you? How are you doing? What are you doing right now? Are you driving, and are you running, are you puttering around the kitchen? I am legitimately curious, I am legitimately curious. What are you up to right now? I hope it is awesome, I hope you're having an awesome day. Day is just starting here in rainy, gloomy Connecticut and it's really good day to get into a really fun topic. This week we are talking about real ROI, real return on investment. This is a metric we use at AdWords Nerds, we use it with our clients, I use it with my own marketing when I do marketing for my business, I use this metric and it is a real lifesaver. I want to dig into what I mean by that, but to do that I've got to take a step back a little bit and talk about marketing, which of course you know this is the stuff I want to talk about, I love to get into these marketing topics that are going to be universal, that are going to be just as relevant in ten years as they are today and capable of really making a huge impact on you and your investing business. So let's take a step back and talk about what effective online marketing is really all about.

If you are going out there and you are looking for motivated sellers and you are looking to boost your reach, get more of these leads and help more of these people, you're going to have to make decisions. In actuality online marketing is essentially just it long stream of decisions. You've got to decide whether to run this ad or that ad, you've got to decide to run with this targeting or that targeting, this list or that list, this channel or that channel. I mean it's just decision after decision after decision, that's all that really is. And the better your decisions, the better your results. If you pick the ad that everyone loves you're going to have better results than if you pick the ad that everyone hates. If you pick the channel where there's a lot of growth, you're going to have more success than if you picked a channel that's dying. Effective decisions give us better results, it's all pretty obvious. So the question becomes like how do I make effective decisions if I'm getting into an online marketing universe and I'm targeting motivated sellers, I'm trying to grow my investing business, how do I make the decisions that put me on the right path. How do I make the decisions that are going to make me more money. How do I know I'm making those decisions. Well the best decisions, obviously, are based on data. We can't know really what's going to happen. We can't look into the future and with 100% certainty say, "Yes, if I do X I will get Y results." The best we can do is make probabilistic guesses. The best we can do is say, "Alright, based on all that I know, based on all the data I have, I expect this to happen." So the better the data we get, the more data we get, the better our decisions are going to be, and the better our decisions are going to be, the better our results are going to be.

Online marketing, one of the things that makes online marketing great is that it provides a lot of objective data. You can launch an ad really quickly, like we're doing AdWords, you can come up with an idea for an ad in AdWords, you can type that ad in, that ad will be launched in under an hour and it can get in front of thousands of people and you can see exactly how many people saw the ad, exactly where the ad was when people saw it, exactly how many people clicked, exactly what it cost you and exactly how many leads that ad generated. That's amazing, it's amazing. If you are coming from the direct mail world or you're coming from the world where you have to spend three months making an ad in photo studio with a model and then you ran that ad in a magazine and the magazine had come out and then some people called you and some people didn't, it's tough, man. You didn't really have a clear sense of what's going on. With online marketing we basically see everything that's going on as it's happening. It's really incredible. So the amount of data that we get is incredible, the objectiveness of that data, you know, the accuracy of that data is incredible, and that allows us to make really, really good decision. All makes sense, right? The more data I get, the better the decision I make, the better the results that I get. All that, I'm sure, makes some sense.

Here is the problem, and there's a problem specifically with a real estate investing. If you are a real estate investor, I hope you are if you're listening to this podcast, but if you're in real estate in general, specifically if you are real estate investor and you're going after motivated sellers, there is a very real problem with this model of get the data, make the decision, get the result. The problem is that real estate investing is relatively low volume. Real estate investing is relatively low volume. What do I mean by that? I mean if you look at any market, let's say whatever, Chicago, I'm going to pick off the top of my head. If you look at that market, you can picture a big circle containing everyone that's searching online in Chicago. So we've got a big group of people, everybody that's searching online, tons and tons of people. The hundreds of thousands of searches every single hour, who knows. Lots and lots of people, lots and lots of searches. Now out of that big circle, everyone who is searching about real estate that's a smaller circle within this circle. So we get all the people that search and then all the people are searching about real estate, well that's a smaller group within that group, but hey, it's still a pretty big group. And then within that group, so within the large group we've got the real estate group, and then within the real estate group we've got people who are searching for selling a home. That's an even smaller group of people. And then within the group of people that are searching for selling a home, we've got the people that are really motivated, and that's an even tinier slice. So we've got the big group of people searching and then the smaller group of real estate searchers and then the smaller group of people searching about selling, and then we've got even smaller group, a really, really tiny group of people that are really, really motivated and they're searching about selling.

The better you're targeting gets, meaning the more motivated your leads are, the lower the volume of them you're going to get, just in general. If you imagine going out and saying, "Okay, I only want to target the people that are 100% ready to sell tomorrow, they're not going to care what I say to them, the second I walk up to them they're going to give me the keys to the house and they're going to say, 'Take my house.'". That's the only kind of person you want. There just aren't that many of those people, there just aren't. And then even if you have the total number of those people in your area, you're talking only about the people they're searching online, and then even then you're talking about only the people that click on your ad, and even then you're talking about only the people that actually contact you. So the tighter the targeting, the better the targeting, the more motivated the lead becomes, the less of them there are, the lower the volume there is in your market. Therefore, and I'm going to bring this into AdWords, but it's true in Facebook, it's true in any channel you're going to work in. The very best keywords, by which I mean the keywords that produce the leads that are the most motivated often have very little data.

I often use the example, and we're talking AdWords here, I often use the example of two keywords. We've got "sell my house" and we've got "sell my house fast". Two different keywords, "sell my house" and "sell my house fast". Now "sell my house" might have, let's say, 1000 people searching for it in a month in your market. These numbers are hypothetical. You might have 1000 people searching for "sell my house" in your market this month. You might only have ten people that actually type in "sell my house fast", and five of them are probably real state investors. So the difference in volume as you target higher levels of motivation is dramatic, it's dramatic. So the keywords and the targeting segments of the population that investors most want to go after often have the lowest amount of volume and have the least amount of data. What this ends up doing is like if you're an investor and you're managing your marketing, you're doing your marketing, you log in your AdWords account, you're looking at all your keywords or you log into Facebook and you're looking at all your ads and you say, "This one just isn't generating anything, no one's even seeing it, it's not running, it's not any good. I'm going to pause it." And what it's of happening is that you end up pausing stuff that would have been very, very profitable. It was just slow, it didn't have the data. Just because one person searches for "sell my house fast" in your market every month doesn't mean the keyword "sell my house fast" is not going to generate lots and lots of profit for you, it's just going to do it here and there.

Are you an investor who wants to dominate your local market? Do you want more leads and deals online? Then download your copy of the Motivated Seller Blueprint absolutely free at www.AdWordsNerds.com/get. What are you waiting for? Go to www.AdWordsNerds.com/get right now to get your copy of the Motivated Seller Blueprint

So this is a thing I always stressed with everyone, I said no leads and no data from an ad or from a keyword or from a campaign does not mean that ad or keyword or campaign will not have a really great ROI. This is a critical mistake that will absolutely cost you tens to hundreds of thousands of dollars over the lifetime of your investing business, and this is not an exaggeration. If you are getting rid of or giving up on things that do not have enough data, you are leaving money on the table. Someone else is going to come along and take that money, someone always does. It might as well be you. I honestly would rather be you, because you're listening to my podcast. So again, no leads, no data does not mean there's no ROI. But that begs a question because just because something doesn't have leads, doesn't have data, of course it doesn't mean there is no ROI, but it doesn't mean that it's a great keyword either. It might be a real stinker, we just don't know. So what is the solution? And this is where real ROI comes in, and I'm going to tell you exactly how we calculated, exactly how we use it and exactly how you can use it to grow your investing business over time.

So what is real ROI? Real ROI is a metric we use to calculate the potential payoff of a low volume keyword or ad. So the key here is that we are calculating a potential payoff, we are making a guess about what the payoff may be for something that doesn't have a lot of data behind it. This is critical to maintaining long term profitability because a vast majority of the stuff that you can target as a real estate investor is going to be low volume, and especially if you're working in a smaller market or you're working in a smaller budget, you're just not going to have the data, volume that some of the bigger people have, and that's fine. But we need to be able to calculate what our potential payoff can be so we know if we're spending our money in the right way, we know we're being smart with our budgets. Even with large budgets, a lot of your keywords, a lot of your ads are going to need you, especially in the beginning, to try to guess what their potential payoff could be. And if you're doing this you're going to be able to avoid pausing things too early, you're going to be able to avoid leaving money on the table, you're going to make a lot more money over time.

So let's get into calculation and how we do this. Now when we have a volume on a keyword usually what we're meaning is that either not a lot of people are searching for it, meaning we have low impression volume, nobody's seeing our ad right now and searching for it, or no one's clicking. And because no one's clicking we don't have a good sense of our cost per lead. I don't really know what it's going to cost me to generate a lead from this keyword. Either not enough people are seeing it, not enough people are clicking on it, just whatever, I don't know what my cost per lead is. Now to account for that what we do is we use national averages from other investors that we work with and the cost per click that we're seeing in the local market to make an educated guess. You can then combine that guess with your deal value, the amount that you take home per deal, and you're close rate, the amount that you typically, amount of lead you typically need to put a deal under contract, and you can use that to calculate the ROI. So again what we're doing here is we are using national averages for other investors that we work with, I'm going to give you a bunch of these averages in a second, but we use national averages as a rule of thumb and the cost per click that we see in the market, we combine that with the average amount of money we make per deal and our average close rate, and we use that to calculate ROI.

As a podcast, it's a little hard to do that. I've actually made a tool for you to do this. You know me, you know I love a good spreadsheet. If you go to AdWordsNerds.com/ROI-calculator, so AdWordsNerds.com/ROI-calculator, and by the way I'm going to put this link in the show notes for this episode so you can go to AdWordsNerds.com/podcast, that's a little bit easier to remember, AdWordsNerds.com/podcast, we're going to have a link to the spreadsheet, just find this episode, click the link, you'll be happy as a clam. So this is a spreadsheet, it is going to do the work for you, but I'm going to walk you through it.

Let's say we have less than five leads on a keyword, we really don't have any data for this keyword and I want to calculate the potential ROI. I went through this, I picked the key word "we buy houses CT", or "we buy houses Connecticut", a keyword from my market. I'm taking much of this data just from clients that I've worked with. So let's say the cost per click, the amount we pay when someone clicks on this keyword, which I can see in my ad account is really, really high. So let's say it's $75, which is incredibly high. That's like a three times the national average. So we're being really conservative here. So $75 cost per click. My estimated cost per lead is $1071. That's super high. How did I get that number? Well I'm using a 7% conversion rate on my landing page. That's about average for, let's say, if you're using an investor care website or typical investor kind of website for these keywords. About 7% conversion rate is pretty typical. So 7% of my clicks are turning into leads, so I'm going to guess I need about $1000, $1071 in ads, that's been the generated lead from this keyword. That is high, it's high. Now let's say my close rate is 10%, meaning for about one out of every ten people I talk to becomes a deal and a contract. This is probably the number the varies the most from investor to investor, so you've got to put in your own close rate here. A lot of people, their close rate is about one out of 20 for online lead, so we could do that. But the 10% close rate was a real number for a real client that we worked with in Connecticut, so I'll use that.

Now let's say your average deal value, which is the amount that he thinks he can take home on this flip on average, and look, everybody's deals very pretty wildly, so from one deal to the next you can be me making 5, 10, 40, you know, whatever it is. Let's say the average is $20,000, it's about average for Connecticut when you're doing flips. So again, $75 cost per click, that estimated in the spreadsheet about $1071 per lead, that's ridiculously high, I mean just so, so, so, so high. Estimated close rate about 10%, average deal value about $20,000. That means my cost per deal from this keyword, the amount it's going to take me to generate a deal from this really expensive keyword is about $10,714. So this guys has to spend with this keyword, just this one keyword $10,714 per deal. Now of course, he makes about $20,000, so the ROI, the return on this really, really, really cripplingly expensive keyword is about $9285 on one deal. So this keyword's generating $9000 of profit, but it looks terrible. If you look at the cost per click, if you look at the cost for lead, it looks terrible. And this is one of the things I always point out. We don't care about the cost per click, we don't care about your cost or lead, I don't care about how much you're spending, I don't care about your click through rate, I do not care. I care about your return, I care about how much money you are making. Is this account generating more money than you put into it? If you put in a dollar, does it give you two dollars? If it does, run it forever, run it forever.

Let's change some of these numbers. So let's put the cost per click for something's a little more realistic but still high, so let's say $30. That's a little bit more realistic. I'm going to change the close rate to 20%. I'm going to change the deal value down to $10,000. So we're going to go through this again. But let's say again we're looking to keyword, it's got $30 cost per click, that is pretty high. That's going to be similar to some of the more competitive markets in the United States, so $30 cost per click. That means my estimated cost per lead, and remember I'm saying I haven't generated a lead from this keyword yet, but we're going to guess using the 7% conversion rate. Estimated cost per lead is about $428.57. It's high, it's a high cost per lead, $428, that's high. I want my close rate to be 5%. Now that's one out of every twenty leads. So I'm spending $428 per lead estimated on this keyword and I'm only closing one out of every twenty. Let's say my average deal value is $10,000, that means it's costing me $8571 to close a deal, $8571. That's a lot. I'm only making ten, but that means that my return on this keyword is $1428, I made $1400 of this keyword. Now do I want to run that keyword forever? Maybe I do, maybe I don't, but it's making me money, it is a positive ROI, so even in a situation where the cost per lead's really high, my close rate isn't great, my deal values a lot lower, I'm still making money on this keyword over time. That's the key here, over time. I might not be making money this week, I may not be making money this month, but if I turn this keyword off I will make less money overall than I would have.

And what you do with this information? Look, I'm not saying you always want to run these things, I'm not saying you got to just keep spending money on something that doesn't generate data, not saying that at all, but I'm saying that you need the real information you require to make a smart decision. Objective data is only valuable to us if we actually use it to project forward and understand what we can make from the marketing that we're doing. So look, this is one of those things where it becomes a lot more useful if you actually get in and mess around with it. So I want you to go to AdWordsNerds.com/podcast, find this episode, it's episode 11, "Real ROI", find this episode and click the link to go to the ROI calculator, it's a free tool just like a Google spreadsheet, you copy it over, you make changes and you can start putting in your own numbers, put in your own keyword data, your own campaign data, your own ad data and start figuring out what your real return on investment from your marketing actually is.

Alright everyone, I hope that was useful. Let me know if you have any questions. Like I said, if you're not in our Facebook group, you got to jump in there. It's AdWordsNerds.com/group, Real ROI, the tool we originally posted it there and we post a lot of free training in there every single week. So if you're not in there, there's really amazing investors in there and it's an incredible group, no spam, no hitting everyone up for deals, just really high quality content. So again, that's AdWordsNerds.com/group to join the Facebook group, AdWordsNerds.com/podcast to find this podcast episode, all our other ones, download the free tool, and hey if you like this and you're getting value out of this podcast, let me know, subscribe leave us a positive review, I'd really appreciate it. Alright, I'll talk to you soon. Dan Barrett out.

Episode #011 – The Ten Year Rule: How to avoid google “slaps” and build a business that lasts

If you can pull off effective organic marketing, you’re golden: You get traffic on autopilot which then turns into leads (assuming your website converts)—without spending a penny on clicks, traffic or engagement.

What sounds like a dream to most investors stays a dream for most investors. They make mistakes which get them short-term benefits, but crush their rankings (and lead flow) overnight.

This episode teaches you how to avoid having your lead flow dry up over night and how to consistently get leads on autopilot for years to come.

Show highlights include:

– Why you need to do organic marketing—whether you started 10 years ago or 10 minutes ago. ([4:35])
– Why never to use any SEO „hacks“ or „tricks“ (yes, you might gain two ranks in the short-term, but you’ll crash in the long-term). ([6:00])
– How spammy organic marketing tactics can harm you—years after you stopped using them. ([11:15])
– The one simple rule to evaluate all your organic marketing and SEO decisions. ([15:20])
– You’ll hear investors use this popular marketing technique… avoid it at all costs! ([17:40])
– If an agency or marketer uses these techniques, run the other way. ([22:00])
– How bad marketers take advantage of investors who lack technical know-how. ([24:00])
– Warning signs you’re working with an agency which will leave you worse off. ([26:30])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group
Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

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 Ad Words Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Okay, hello everybody, welcome to this week's episode of the REI Marketing Nerds podcast. As always, this is Daniel Barrett, here from AdWords Nerds. Hope you guys are having a lovely day today. Right here in Connecticut it is rainy and a little bit humid and a good day to maybe stay inside and think about some deep marketing topics, so let's dig into this. I think this week actually, this week if you can, listen to what I'm going to say and internalize it and really get the base concepts here. This episode could save you a lot, and I mean a lot of heartache and pain and lost revenue and lost deals. I mean that sincerely because this is a topic that has come up with clients of ours, both current and past. It has, if I'm going to just do with a conservative estimate, probably cost some people, some investors that we really like and know really well and I know are good people, it has cost those investors hundreds of thousands, if not millions of dollars in deals. That's a serious, serious issue. So I'm going to get into this week and really focus on prevention and saving you from having to go through that kind of experience. This is preventative, and like a lot of preventive things, like when people say you don't smoke, it's bad for your health and you got to exercise and all that stuff, people are less attracted to that kind of advice. Right? We all are. We all want the cool tips, tricks that are going to give me five more leads, you know, whatever it is. The more "boring stuff", which is how to avoid being literally brought low and how to avoid having your lead flow go from a roaring river to just a trickle literally overnight, this is really critical important stuff. It might not be as sexy, it might not be as hot a topic right now, which is why really nobody talks about it, but we're going to get into it, because again, I've told you this before, the whole point of this podcast is for me to make something that is going to massively improve your lifetime ROI from your business, massively improve your quality of life and it's going to be as relevant today as it is ten years from now. So let's get into this.

This week we're talking about the Ten Year Rule. How to avoid to Google slaps and build a business that lasts. First things first, let's get into organic marketing. If you're not familiar with the term organic marketing, we're talking about anything that brings you leads online for free. Stuff you are not paying for. So you think about organic is the opposite of pay per click, pay per click like AdWords or Facebook Ads, you are paying every time someone clicks to come through to your website. Organic, for all intents and purposes here, when we say organic what we're talking about is things that rank you in Google. If someone goes on to Google and they type in "sell my house" you show up in the first non-paid spot. That's organic marketing, sometimes it's called SEO or search engine optimization. Now if you are not actively doing organic marketing to get motivated sellers, you really need to. You really absolutely need to start doing this process right now pretty much no matter where you are in your investing journey, if you're new, if you're experienced, whenever. You really need to be doing some form of organic marketing because the channel, for one, is absolutely massive. You're talking about something that's four times easily in pretty much any market, four times the size of the entire paid traffic market, and has the best ROI of any marketing you will ever do because if you spend some time and money and effort or whatever ranking your website for a certain keyword, everybody that comes to your website from that keyword, from that point on is free. You are not paying every time someone comes in, and so just ranking a single keyword can be worth one to five to tens to dozens of deal, and that's an incredible, incredible ROI, especially over time. Organic is really amazing as a channel. Really, really, really incredible, really powerful. There's actually less competition than you might think.

Now that said, let's say you agree with me, you're like cool, organic marketing to where it's at. There are couple things you really have to understand in order to do this well and to avoid disaster. And the first thing you need to understand is the relationship of Google, the company, to organic marketing. The fact is that Google does not want you to do organic marketing at all. They do not want you to do search engine optimization, they do not want you to try to get your site to rank more highly. You have to understand that Google, the power for Google lies in they're being the decider. They're being the arbiter, they are the judge that ranks everybody's website and they do not want you to try to reverse engineer that process and figure out how it gets done and make your website better. They don't want you to do that at all, Google will tell you pretty much any time you ask them, "Don't think about Google, don't think about us, just think about your client, just think about your customer and the rest will take care of itself. Just be the best you can be." I haven't had to date in a long time but this always reminds me of people who are like, "You'll find a girl or you'll find a guy, just be yourself." That's the idea. You just be yourself, Google's going to find out that you're super awesome and they're going to rank you all by themselves, you don't need to worry about it. The reason this is because if you remember that even though Google makes their money from advertisers, the searcher, the person that goes on Google and type something in, that's their real customer. Because if they don't have the searchers they don't have the people going on to use Google, they don't have the advertising inventory to sell to advertisers. If somebody goes into Google and they have a bad experience because they clicked on some website that was super spammy and used some kind of low down dirty trick to rank number one in Google, well a person's like a little less likely to use Google the next time. If that happens over and over again, they're going to stop using Google altogether. When searchers go away, again, there's less searches to sell to advertisers, and of course less money for Google overall. So Google's really core mission is to have the best possible experience for the person searching for stuff in Google. They're not worried about you as a business ranking your website, they don't care about that at all, what they care about is did that person who went on Google type something into, did that person have a good experience.

Now of course, that's not the way things actually happen because there is a lot of money to be made by ranking well in Google, and whenever there's a lot of money to be made, people are going to try to find a way to make that money. It's just human nature. Right? If I tell you there's a million dollars hidden in my walls, sooner or later someone's going to break into my house and put a hole in the wall. It's just what's going to happen. When you have a lot of money to be made by ranking well in Google, people are going to try to reverse engineer that process, try to rank their website first. Okay? And so Google has to constantly reorient and constantly change what they say is okay and what isn't. It used to be back in the day, let's say this like 15 years ago now. It used to be back in the day that the primary thing that determined where you ranked in Google was how many times you had a keyword on your website. If I sell mittens and somebody is going to Google to type in mittens, they want to buy some mittens, well if my website says "mittens" 100 times and your website says "mittens" 50 times, well my website ranks first because I say "mittens" more, therefore it's really about "mittens". This was like the old model. Very simplified, but that was the old model. Well what happens? Well of course people realize that this is how it works and I'm like, "Well that guy's ranking better than me, he's making all that sweet, sweet mitten money so I'm going to type in 'mittens' on my website 150 times." And maybe I'll start to do that by blogging about mittens and writing articles about mittens, but pretty soon I get lazy and what I do is I go to the bottom of the website and just type the word "mittens" in a million times. You may remember this if you're old like me and you remember using the internet back in the day, you would scroll down and like at the bottom of website they would have the word "mittens" a million times and that's just for Google.

What is Google have to do? Well they realize that once people understand how to game that system they've got to change the system, and so Google added over optimization penalty. What does that mean? Well means like well now you need to have the word "mittens" a lot, but if you have the word "mittens" too much, that's actually negative. So now the system gets more complicated. What was okay was back in the day having the word "mittens" a million times, it was okay. What was okay is now no longer okay. If you had that stuff on your website you got penalized. This is what's called a Google slap, it's Google changes the rules and then they penalize you for it. In real life if something wasn't illegal when you do it, they can't punish you for it after the fact. I'm pretty sure this is true, if you're a lawyer you can tell me if I'm right or wrong. I'm pretty sure it's like if we say like, "Painting your goat blue is now illegal." Well if I painted my goat blue last year before that law was created, you can't put me in jail for it now. With Google it does not work that way. With Google, if they decide that like hey what you're doing is spammy and it's bad and it wasn't technically against the rules but now it is, they can and absolutely will penalize you for it. When Google penalizes you, how do they do that? Will they can knock your website down a bunch of pegs so you can go from rank number one or two to all the way down at the bottom of page number one, or they can just delist you all together. So magically your website, poof, disappears, you can't find in Google anymore. This is happened to major companies, really big websites, it's happened to people big and small and it is a real issue. It wouldn't be that big a deal if Google was not essentially a monopoly on search traffic on the internet. I mean it really is.

Maybe some of you listening to this, you use Bing. More power to you, but the vast majority of everybody is using Google to google stuff. Google is a verb, just like it's a noun. And so we don't you disappear or are not just delisted but you're knocked down a bunch of pegs that is like a massive, massive change in how easy it is for people to find your business. It would be like you open up a big store on Main Street and then the mayor decides that he doesn't like you and so he just moves your store from Main Street like five streets down on some off street residential area. That would be a huge deal if you could actually do that, if you could move a building that way. Well Google can do that by delisting you or knocking you down a bunch of pegs. That's a huge risk. If you are investing at all in your website, not even like doing organic but you spent any amount of time on your website, you have any plans for people to find you via your website, you have any plans to do paid traffic, you have any idea at all that you're going to send anyone for any reason to your website, the idea that that website could be so fundamentally devalued completely without reproach, there's no way to apply for leniency, there is no way to appeal that decision, it could just happen overnight. That is a huge risk. It's a huge risk that I think very, very few people understand, and definitely very few investors understand.

Are you an investor who wants to dominate your local market? Do you want more leads and deals online? Then download your copy of the Motivated Seller Blueprint absolutely free at www.AdWordsNerd.com/get. What are you waiting for? Go to www.AdWordsNerd.com/get right now to get your copy of the Motivated Seller Blueprint

So that brings us to the rule that we use, we personally at AdWords Nerds behind the scenes with my clients, with my coaching students, we use to mitigate that risk. And understanding this rule is by itself pretty much going to solve this problem for you, if you can really internalize it, really use it. That rule is the Ten Year Rule, I mentioned at the top of the episode, and here it is in its entirety. When you are marketing your website online only do things that you think Google will be okay with ten years from now. I'm going to say that again. Only do things when you're marketing online, only do things that you think Google will be okay with ten years from now. And if it's on the borderline, meaning it's like it's probably okay, but something feels weird about it, you scrap it. You stop doing it, you get rid of it.

Now this is absolutely huge. I will be the first tell you, I did paid as SEO for maybe five or six years before we started getting into paid traffic and I will tell you as someone who's been in this industry for a long time, this rule is not the norm. It is not the norm. If you are an online marketer and someone hires you to promote their website, you know that if that person doesn't start to see movement on their website, they won't hire you back, they won't pay you next month, they may not pay this month. As a search engine optimizer, as a marketer, there's a ton of pressure to get results really, really fast, and that drives the vast majority of people in this industry to do borderline sketchy things. There's even a term for it, which is "gray hat". There's white hat SEO, which is only stuff that everybody agrees is okay, there is black hat SEO which is things that people know is spammy, things that we know are bad, and then there's gray hat SEO which is it's kind of the borderline. It's not cheating, but... It's probably not okay either. Tons of pressure as a marketer to engage in that kind of marketing. I'm going to give you a good example, and this is something that is current inside the investing world today, that is I know for a fact that investors are doing this right now. This is a really good example of a gray hat technique, and this is something called PBNs, or private blog networks, personal blog networks, whatever it is.

Private blog networks, essentially the idea is that your web site is going to rank better if it has links. I think most people understand that. If more websites link to your website that's good for you. Google likes that, they'll give you a higher rank. It's also the case that if the people that link to you also have a lot of links, then the links that they send you are more valuable. So if you think about this, it's kind of like you imagine your high school, high schools a big popularity contest. Well if you have a lot of friends that's good for you, that makes more popular, but if all your friends are also super popular, meaning you popular with the most popular people, well that makes you king popular. I'm going to assume the kids say things like king popular, sure, that's fine. So you get it anyway. If I'm linking to your website, my link is more valuable if a lot of websites also link to me. So would a private blog network does is try to set up an artificial way to make that happen. I do that by getting a whole bunch of different websites, whole bunch of different blogs, these are all websites that I'm creating, I'm stocking typically with fake articles or just information that I made purely to make these things. Let's say I have ten websites. I just set up ten blogs all over the internet, whatever. I put some kind of like 100 or 200 word articles on them. Fine. Then what I do is I link all those websites together. So website A links to website B, website B links to website C, and then C links back to A and A links to G and G links to D and whatever. They're all kind of linking to each other. So out of nowhere I've created, let's say, ten websites, each of which has a bunch of links to other websites. I created every single piece of this. Then I link to your website from that network. Now I've created ten websites, each of which has ten other websites linking to them, and then from each of those ten websites typically I will link to you. So it's like basically you roll into high school with a big group of friends and no one's ever seen before and you say like, "Oh yeah, totally, don't worry about it. These are my friends from band camp and they're all super popular in Canada where they go to high school." No one's ever seen them and no one's seen their friends and they all seem to be friends with each, and whatever else, seems a little weird. So that's a private blog network.

For a long time this was not technically against Google's terms, but it's very, very clearly artificial. It's very clearly not something that is really about cool websites linking to you, it's obviously not really for the benefit of the person that's searching, it's purely for Google's benefit. Just like in Home Alone where he sets up all like the paper cutouts of people to pretend like he's having a big party so that the Wet Bandits don't break into his house. It's like that. It looks like there's a party there, but there's no one at home. So Google knows this is artificial, and over time they've become better and better and better at detecting it. And then last year what did they start doing? They started to penalize people that were using these networks. So people that were getting benefit from them, all the sudden, because... And I want to be clear, this did help them in the short term. It's why people were doing it. It helped them in the short term, they saw links coming in, they saw their rank improve, but when Google figured out what was going on and they figured out a way to detect it, those people, not only saw their advantages disappear, a lot of times they were penalized past that point.

Now what does that do? Well that sort of drives marketing people to find sneakier and sneakier ways of doing it. So they'll say like, "Well this is a high quality blog network. Before it was just because we had low quality content, now we have really high quality content." It's all the same stuff. It's "I got caught breaking into houses, therefore the answer is not to stop breaking into houses, it's to be sneakier so I don't get caught." And people play this game right now. I guarantee you right now if you were an investor and you've been approached about a SEO or you've thought about working with an SEO company, I guarantee you that company has either used private blog networks in the past or is using them right now. They may call them something different, they may say it's a totally different time, "This time it's different, this time it's different." It ain't, it's the same stuff over and over and over again. Again, this is not a problem if you don't care if your website is around next year.

And to be clear, maybe Google never figures it out. Maybe the marketers have figured it out this time, it's totally going to be fine, you're never going to be caught, it's not that big a deal, it's fine, this time it's different. I know if I'm looking at a contest between your marketing guy who you hired from who knows where and Google who's has an army of hundreds of engineers, I know who I'd bet on most of the time. I'd bet on Google figuring it out. This is why vetting is so important because if you hire someone to do this kind of stuff, even if you don't know this or what they're doing, you run the risk of getting your website completely demolished, and it might get demolished a year after you fired these people because the work that they do, it sticks around. So you might think it's fine, you might have hired this person five years ago, and then all of a sudden it turns out like, "Oh hey, Google changed the rules and now something that person did is no longer okay." Poof, there goes your website. This is one of those things that I get very fired up about because I think essentially marketers take advantage of the lack of technical know-how that investors have. I think most investors, even if you're very technically savvy, don't spend their whole day thinking about this stuff. So it's very easy to do something kind of, you know, wave your hand and do something underneath the hood that that client doesn't know about that's going to actually come back and really hurt them down the line.

So to review, understanding Google's relationship to SEO, meaning they don't want you to do it. Understand that they're constantly shifting what is okay and what isn't, and then they can punish you for doing something that used to be fine, understanding that there is a lot of pressure on marketing experts to produce results very quickly and then that often pushes them to do shady or borderline shady stuff, and understanding that there's essentially an arms race between marketers and Google, and that Google is probably going to win the arms race 99% of the time, and that when they do you are risking your website's standing. All those things considered. Am I saying you shouldn't do SEO? No. You should do SEO, I said that at the top of the episode. Everybody needs to do it. But the key here is using that Ten Year Rule.

Acting as if Google is looking over your shoulder and acting as if everything you have to do, everything you're going to do to market your website has to be okay ten years from now; really changes your behavior. This is the rule we use at AdWords Nerds when we take on a SEO clients, everybody here knows the Ten Year Rule and we talk about it all the time. It's the reason that we don't use PBNs. It's not because they're not helpful, it's not because it would make our job a lot easier, it actually would. It's because we think it's unethical and dangerous to the client. So going into any potential relationship or going into any marketing strategy that you're doing with the Ten Year Rule in mind is really going to help you long term. This is why vetting the people he work with is so important. Okay? I've got some other general rules to give you when you're thinking about doing SEO, when you're thinking about hiring someone, these are things you can look out for, that are going to be really helpful.

One, if they are building you dozens and dozens of links every month, like if you get into a thing where they're like, "Hey, we build you ten links every month." Chances are that's low quality, it's going to hurt you more than it helps. If they're promising fast or easy results, chances are they're going to hurt you more than they help. The same thing for, by the way, if you hire a personal trainer or diet person, if they say, "No problem. You'll be 10 lbs down by next week." Chances are you're going to end up in the hospital. If they keep their process secretive, meaning that they don't want to tell you what they're doing or they don't want to explain it, that's a warning sign. And then finally if they say like, "Hey, we have a one size fits all approach, this is one thing that works for everybody, every time.", that's a huge red flag. So you understand those things, but more than anything else you understand that Ten Year Rule, that's going to allow you to really design a marketing program for your website that one, not only taps into that huge organic channel, which is absolutely massive, and has a lot of really high quality leads in it, but two, is going to make sure that your website's actually still around in a year. Much less two years, much less five years, much less ten years. And if you've got nothing else out of this podcast other than that, it's very possible that I just saved a lot of time and a lot of heartache and a lot of money.

So hopefully that makes sense, let me guys know if you have any questions, obviously you can follow up with me. We've got the REI Marketing Nerd group on Facebook, it's at AdWordsNerds.com/group, that will forward you straight there, we' love to see there, I post every week tons of free content. And then, of course, if you have any questions about anything in this episode or you want to check out our past episodes, AdWordsNerds.com/podcast, we've got all the episodes up there with show notes, links all that fun stuff. So AdWordsNerds.com/group, come and hang out with us on Facebook, AdWordsNerds.com/podcast, check out our past episodes. And seriously, let me know what you think. I'd love to hear from you. Hope all's well, talk to you soon.

Episode #010 – Smart Risk: How to move forward and get rich – even when you’re scared

As a business owner and investor, you risk something every day. Every dollar you spend on advertising, every investment in coaching, every new idea you turn into reality. There’s always a chance things don’t work out.

To many entrepreneurs, risk is scary. They run from it like a field mouse from a combine. With good reason: Too much of the wrong risk kills businesses. On the other hand, even the world’s most successful ideas were risky when they were first conceived.

So you need to take some risks if you want to innovate and dominate your market. But you need to find a balance so you stay afloat when your risk-taking doesn’t pay off.

In this episode, you’ll learn how to take “smart risk” so you can maximize your upside and minimize downside.

Show highlights include:

– Why this podcast doesn’t include more “tactics” and how-tos. ([2:20])
– Most content (“hacks”, “tricks”, etc.) doesn’t deliver you a long-term advantage. Here’s what does. ([5:20])
– The 5 questions to ask yourself before taking any risk (you’ll know whether you’re taking “smart risk” or “dumb risk”). ([8:40])
– What most people get wrong about calculating upside and downside. ([10:00])
– How to think negative to determine whether you should take the risk—and how to calculate exactly what you can put on the line. ([14:15])
– Why NOT to charge ad spend to your credit card when you’re worried about spending too much—and how to invest while capping your downside. ([21:35])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group
Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

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 Ad Words Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads in deals online. Outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Hello everybody, welcome to the REI Marketing Nerds podcast. As always, I am Daniel Barrett here from Ad Words Nerds. Yeah, super happy to have you. This week's episode is going to be an interesting one, and before we get into it I want to talk a little bit about some of the feedback I've gotten on this podcast. So first of all, thank you so much to everyone who has subscribed, who has left to review, who's left the positive comments in the REI Marketing Nerds Facebook group, the people who sent me an email, Facebook message. We got a ton of feedback on this show and the vast majority of it was super positive and that means the world to me, and I definitely want to encourage you if you're out there you're listening you want to let me know what you think, leave us review, good, bad, indifferent, I want to know what you think. Go on wherever you get your podcast, subscribe if you dig the show, leave us a review, yatta, yatta. But we certainly got some feedback that wasn't so positive, just like anything else. And that's absolutely what I would expect, because I think if you are going out there and you're trying to do something a little bit different, which we are trying to do with this show, this is not your average real estate show where I interview a million people, we're trying to do something a little bit different here, you get some feedback that's not super positive.

I got some feedback from someone that I've done some work with in the past, really good investor, really smart person. That's a shorthand way of me saying I respect their feedback. She was saying, "Hey, I downloaded the podcast, I checked it out, and got to be honest, I was a little disappointed. I thought it was going to be more tactical. I thought I was going to get more kind of specific, technical information how to do XYZ." I want to save right off the bat that's absolutely valid feedback, I get it, and there's absolutely places in which we try to put out that kind of information. The Facebook group is one, we put out trainings all the time. With this podcast of trying to do something a little bit different, and that is create a marketing podcast for investors that's going to be just as valuable today as it's going to be ten years from now and really view this this way, that this podcast for however long we do it is going to have the capacity to change the way that you market, change your business, change your income, change your lifestyle, just as much today as it will ten years from now. That's hard to do in the online marketing space, I'm going to be honest. AdWords has changed so much even since I started doing this whatever it is, six or seven years ago now. Facebook is changed so much. In the future who even knows what we're going to be doing, whether it's YouTube ads or virtual reality ads, who knows what it's going to be. It's going to be different than it is today.

So if I make a podcast that says, "Cool, I'm going to walk you through for example the top 800 Keywords.", which is a guide we did with investor care a little while ago. "Top 800 keywords for AdWords." Well that's awesome and it's valuable right. Not saying it's not valuable, but it's going to change. It changes over time, it changes based on what's happening in the marketplace, it changes based on people's perception, it changes based on the housing market, it changes and we have to constantly keep that stuff up to date, but there are parts of the marketing process and parts of the process of building your business that are never going to change. Ever. As long as we are in a capitalist society, it is going to be true that if you can develop a way of delivering more value to people than anyone else you are going to be successful. That is going to be as true today as it's going to be ten years from now, as it's going to be 50 years from now. What I want to do is establish this little corner of the internet for me to speak to you directly and rather than giving you, the top five hottest tips for AdWords this week, which by the way, those are still valuable, come to the group we talk about that stuff all the time, but this little corner of the internet is really for me to speak directly to you and give you the knowledge you need to be successful long-term. And the fact is that the tips and the tricks and everybody gets those, everybody has those. Those are not a long-term advantage for you. What is a long term advantage is improving the way that you think, improving the way that you handle risk, improving the way that you view and process and deal with the world. That is what is going to be most valuable to you long-term. And it's absolutely true that I would probably make more money short-term by giving you tips and tricks and stuff because that's what everybody wants, I'd probably have more listeners on this podcast, that's probably true, but it's not going to have as big an effect on the world, and it certainly wouldn't have as big an effect on your life.

I wasn't going to talk about that at all, but I wanted to get into that as sort of a prequel to this week's episode, because this week's episode is not going to get specifically into like, "Hey, here's what you do in AdWords this week." This week's episode is about risk. Risk is obviously incredibly important for investors. I think as real estate investors, you people have a unique way of viewing risk, you really need that in order to be involved in this industry. I think that's fair to say. But many real estate investors will leave that mindset behind when it comes to marketing or online marketing, and that's a permanent weakness. That becomes a long standing problem. If you don't understand how to evaluate the risk associated with marketing, it's either going to cause you to underestimate that risk and over commit and run into a potentially catastrophic problem, or it's going to cause you to overestimate the amount of risk involved with marketing and that's going to cause you to spend less in marketing than you probably should, and that's going to cause you to grow significantly less over time. It's going to cost you growth. It's going to cost you income, it's going to cost you freedom. I really believe this by the way, this is something that I've thought a lot about, I apply it very directly to my own business, to my own private life. This is really important.

I want to give you five steps to looking at risk. And you're going to be able to apply these five steps directly to your marketing and your business, you're going to be able to use this to directly judge your own marketing processes online or otherwise, but you're also going to be able to use this in your personal life when you are thinking of taking on a new project or going in a new direction. So this is a broad topic, but it's an important one. It's one you can apply immediately, but like I said in the beginning, it's also going to be one that you can use ten years from now. This is all about what I call smart risk, and taking smart risks is what gives you long term growth. But of course, the question is like how you decide which risks are smart and which risks are dumb, because we've all taken dumb risks. If you've ever been a teenager, I'm sure you've done something incredibly dangerous and stupid because you thought it would be cool and for very little other reason. So we've all taken risks that are not smart. The question is always how do you separate them, how do you tell which is which, and that's easier said than done, of course. I have a process I run through a little checklist, I run all my decisions through, and I think it's going to be really helpful for you to go through. It's five simple questions I ask myself whenever I'm deciding whether to take on a risk or not. Here are the five questions, we're going to go through them in order, I'm going to break them each down, and when you have these are going to be able to really make far smarter decisions over a long period of time, and that is going to be huge for you. Alright? So let's get into it.

First question when we're dealing with a risk situation, we're dealing with a decision we have to make, we don't know if it's a good decision, bad decision we don't know if it's smart risk or dumb risk, here's the first question we have to ask ourselves, "What do I have to gain?" "What do I have to gain?" This is probably the easiest one for most people. And by the way, this is where most people stop, when most people are put in a situation where they have to weigh a certain risk they primarily look at the upside. They say, "What do I have to win?" If I was sitting at the roulette table, "What do I have to win if I put $100 down? I win a million dollars." They focus on the upside. Now this is not necessarily a bad thing, you have to think about the upside. But I want you to get really specific, "What do I have to win? What's the potential upside of making this decision? If I make this decision and it goes well, what do I have to win?" That's question number one, that's where most people stop. We still got four more to go, though. Alright? Question number one, "What do I have to win?"

Question number two, "What do I have to lose and what's the worst that could happen?" Now most people when they are weighing the downsides of a potential risk, they fundamentally unbalance this equation right in the beginning, because when they think about the upside, they think about the maximum potential upside. "If I win in the most defining, huge way what do I have to gain? If I hit it big what am I going to win?" But when they weighed their risks, when they weighed the potential downside, they think about what's likely to happen. So they say like, "Okay, I could win a million dollars, but maybe I'll lose a thousand bucks." They're not thinking about what's the worst that could happen. Right from the beginning it's unbalanced. You've got what's the best thing that could happen and what's the worst thing that's likely to happen. The way we do this correctly is by weighing what's the best that could happen versus what's the worst that could happen. And you really get into this, and I want you to when you go through this process you really visualize, "What do I have to lose? What do I have to lose?" So a classic example of someone who is thinking of engaging in an affair, they are cheating on their spouse. What do they have to win? Well they get all the fun and the danger and the intrigue and it's very exciting, and then what's likely to happen, "I might get caught, and whatever, it will be bad but we'll patch things up." That's kind of what's going on in their head. They're not thinking about what is the absolute worst that could happen. Yeah, you've got the danger and the intrigue and the fun of the affair. By the way, I have never had an affair, my wife is listening to this, I have nothing about this at all, it's just a good example. So you've got all the exciting pieces of the affair, but what's the worst that could happen? Well the worst that can happen is you go through a really traumatic divorce, you lose half your income, you lose access to your kids, your friends cast you out. There's an extensive downside, and when weighed against the worst possible scenario, the upside looks very different then when you weigh it against something that you just think it's likely to happen. So go back over this, step one, "What do I have to win? What's the potential upside?" Step two is, "What's the worst that could happen?" Really getting into the downside.

Are you an investor who wants to dominate your local market? Do you want more leave than deals online? Then download your copy of the Motivated Seller Blueprint absolutely free at www.AdWordsNerd.com/get. What are you waiting for? Go to www.AdWordsNerd.com/get right now to get your copy of the Motivated Seller Blueprint

Alright. So that's first two steps. Step one, step two. Step three is asking ourselves a slightly different question, "What is my acceptable loss?" I do this a lot when I'm talking to online marketing clients and they're saying, "What should I budget? I don't know what to spend." And I say, "What can you afford to lose for six months?" That's kind of a depressing question. People often refer to me as the world's worst salesman. This is why, because we get into sales conversations and I like to ask questions like, "What can you afford to lose for six months?" which dampens people's excitement a little bit. I say like, "Look, it's not like I think you're going to lose money for six months, but what can you afford to lose for six months?" puts us in the realm of what your budget should probably be. "What is your acceptable loss?" If your acceptable loss is significantly less than what you're being asked to risk, well you need to know that. If you can only afford for example to lose $1000 a month for six months and I'm asking you to risk $5000 a month for six months, well guess what? The potential downside is massive, it is catastrophic. If you can afford to lose $1000 and I'm asking you to risk $500, well that's a very different situation. So knowing what you can afford to lose, knowing what your acceptable loss is helps you judge what you should risk. And again, you realize that most people never get this far, and so their risk is permanently kind of imbalanced. They're risking too much or they're not risking enough, honestly. So again, three steps so far. We've got three. Question number one, "What do I have to win? What do I have to gain? What's the potential upside?" Step two, "What's the worst that could happen?" Question number three, "What is my acceptable loss? What can I truly afford to lose?" Be honest with yourself, because if you can't afford to lose something and you lose it, you're out of the game. You've got a stay in the game. So those are the first three questions. We got two more to go.

Question number four, "How can I cap my downside?" This is one of my favorite things to think about. How can I make it so that no matter what happens, no matter if the risk works or doesn't, if I'm successful or not, I make money or I don't, how can I make it so that the downside can't exceed my acceptable level? An easy way of thinking about this is when you're doing AdWords for example or you're doing Facebook Ads, something like that, you set your budget. You set a budget cap, you say, "I don't want to spend more than $30 a day." And so from that point on no matter what happens, no matter if your ads are successful or not, you know you're not going to exceed $30 a day. You're capping your downside. For example, I'm going to give you kind of a non-investing example. When I decided to do this podcast I spent money on the folks, wonderful folks who I'm sure are listening to this that edit this podcast and put it out for me, I have had to invest the money and I certainly had to invest time and effort, I had to plan out the shows, I've got to record it, I've got to outline them beforehand, all that stuff. Right? So significant investment for me, both for time and money. Well how can I cap that downside? The downside for me is like I spend all this money in this time and nobody listens to this thing and we don't get any new clients from it, nobody likes it. That's a potential downside. Well I knew I could cap the downside because even if no one listened to it I can put these episodes in my Facebook group. So it creates content for me that I can use in a different channel. Likewise, I can use these as additional educational materials for my mentorship program, I knew that I could turn these episodes into blog posts after the fact. So I knew that even if the podcast part of this was completely unsuccessful, nobody listened to it, which would be the potential downside, I'm going to get more content for our other channels and that's going to save me time, it's going to save me effort elsewhere. So no matter what, worst case scenario, I still get something out of the podcast. Now it turns out podcast is really popular, people like it, it's awesome. I still get the blog posts and emails and the Facebook group, all that stuff, I still get that stuff, but I knew that if the worst happened it wasn't going to be that bad. So in every situation you say, "How can I cap the downside of this risk? How can I make it so that my potential losses do not exceed a certain point?" It's like the equivalent of you going to the casino to gamble and you bring along a friend and you're like, "If at any points I lose more than a $1000, I want you to knock me out, just like hit me over the head with the bag of pennies and knock me unconscious, drag me to the car and drive me home. So that way you know, look, no matter what happens, no matter how wild I get, no matter how addictive I am, I'm not going to spend more than a $1000. I cap my downside. That's four questions so far, we've got, "What do I have to gain?" We've got, "What's the words that could happen?" We've got, "What's my acceptable loss?" "How can I cap my downside?"

The fifth one is, "What systems do I need?" This is a big one because you've heard me talk about systems before, I'm a big systems person. I really believe that it's not goals that really matter, it's not willpower, it's not motivation, it's not really anything other than systems. If you have the right systems you will eventually get the outcome. No matter how badly you want the outcome, no matter how badly you're connected to a goal, you will not reach that goal without systems designed to get you there. So systems are incredibly important. Whenever you are undertaking a risk you need to ask yourself what systems you need in order to make sure that risk turns out. For me, again, let's go back to the example of the podcast, when I launched this podcast I get weekly reports of the downloads and I check them out. I keep track of all the people that call us and become clients that mention the podcast. I keep track of the ROI of this podcast, so I know it's working and I know people like it, and if it wasn't turning out I wouldn't keep paying for it and doing it, I would cut that risk short. Again, I cap my downside. But because it's working, because I have the systems in place to check on it, I know it's fine, I'm going to keep doing it. If you are investing in your online marketing, what systems do you need in order to make sure that money actually does what you want it to do? Maybe a system for you is just hiring a manager, hiring someone to take care of it, that's a system. Maybe your system is you check in every week and you have a checklist that you go through and you check your cost per lead, you check your conversion rate, you check to make sure that things are going okay. Maybe a system for you, for capping your downside is you get a prepaid debit card, you put whatever your budget is on there, you hook that debit card up to Google and you're like, "Look, I know that once Google hits the bottom of this prepaid debit card it's not going to keep going. They're not going to let me keep doing ads without paying for them." I will have to consciously reload that card, and I'm not going to do that without checking my numbers and making sure that it's working. That's a system. Doesn't have to be complicated, doesn't have to be wild. The whole process I just said of, "Hey, I'm going to bring my friends and my friend's going to knock me unconscious at the casino if I gamble too much money.", that's a system.

What systems do you need that are going to make sure you're moving in the right direction that risk works out? It's not enough to just throw the money in there, it's not enough to just trust. You got to have a system. Everybody is a little different, every system is going to be a little different, you're going to have different issues, different obstacles, you are going have different things that you need and that's okay, but if you understand, number one, what you have to gain, number two, what's the worst that could happen, number three what your acceptable loss is, number four, how you can cap the downside, and number five, what systems do you need to do that, the decisions you make to take on risk are going to be far smarter and far more effective and you are going to get a far better return over your lifetime than most people could ever dream of. It doesn't mean you never make bad decisions, I make bad decisions all the time. I think most people can relate to that, we all make bad decisions all the time, you're going to make investments that don't pay off, you're going to take risks that go south, that is the name of the game. We are not eliminating risk, what we are doing is being smart about the risks we take on. That's a process you're going to apply to your online marketing, it's a process you can apply to your investing, it's a process you can apply to your personal life, to your relationships, it's a process you can apply pretty much everywhere.

It's just about making smarter decisions. By the way, smarter decisions, this is something that is not going to change in the next ten years, making smarter decisions is going to be the exact same thing it has been since 1000 years ago, since 500 years from now. It's going to be the same thing. It's going to be about understanding what you have to win, what you could lose and how you rig the game so that you have the best possible chance at success. That's what taking smart risk is all about. Hey, let me know what you thought about this. If you thought this was good and you dig this kind of stuff let me know, I would love if you could leave a review for the podcast. If you like it, subscribe, we put out episodes every week. If you are not in our Facebook group you need to join that, it's AdWordsNerds.com/group, that's AdWordsNerds.com/group, and as always, I've got this episode and every other episode, show notes, links, all that fun stuff at AdWordsNerds.com/podcast, AdWordsNerds.com/podcast. I hope you're having an awesome day and I hope you have an awesome rest of your week, and I will talk to you very soon. Cheers.

Episode #009 – Barrett’s Razor: How to make more money by working less

You’ve probably heard people tell you that FB ads or AdWords is the way to win. Maybe you’ve even tried to run a campaign yourself.

Whether you’ve failed or made money, one question probably bugs you:

What’s the right amount to spend?

In this episode, you’ll learn how to adjust your spending to create the lifestyle YOU want.

Show highlights include:

– Why “What do I need to spend?” is the WRONG question to ask—and how to think about ad spent instead. ([4:20])
– A step-by-step plan on how an investor could generate $10k (a 900% ROI) on just $100 a month in ad spend. ([6:20])
– How “Barrett’s Razor” allows you to win leads and close deals profitably while wasting most of your money. ([10:05])
– What you can learn from martial artists about marketing your REI business profitably. ([12:35])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group
Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

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 like you get more leads in deals online. Outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Alright, hello everybody and welcome to the REI Marketing Nerds Podcast. So happy to have you as always. Daniel Barrett, here from Adwords Nerds and yeah, I'm very, very happy to be back here. I was actually gone the whole of last week. I was away. I went to Paris with my wife. It was super fantastic. This is a trip we have wanted to take forever and took a trip away from our kids for the first time in a very, very long time. I am back in the office and I got to say, being away is amazing and it's rejuvenating and all those wonderful things and obviously I am very, very lucky and grateful for that experience but there is something about the joy of coming back home to the routines and habits and familiar things that I really, really love and one of the things that usually happens to me when I go away on vacation is I come back with a ton of ideas and a ton of things that I'm really excited to talk about. It's like you force your brain to take a break and you force it to focus on other things for a while. You're usually going to find that your subconscious kind of surfaces all of this cool stuff. That definitely happened to me on vacation, although I got to say – you know walking around Paris and having nice dinners and wanting to talk to my wife about real estate investing stuff didn't go over super, super well so I'm going to dig into one of the things today that was on my mind while I was on vacation and maybe this is just a really good sign of how how nerdy things really get up in my brain.

But this week, I wanted to talk about Barrett's Razor. Barrett's Razor, first of all no one is going to accuse me of being super humble for naming this after myself. But the subtitle for this episode is "How to Make More Money by Working Less" or you could also call this "How to Make More Money by Spending Less." This is a major mental model that I developed when I was still running this company entirely on my own and doing all my own account management. Most of you guys know I have a wonderful team. We're a team of 9 people, I think right now, purely doing real estate investing marketing and that's amazing. But back in the day, I was doing all the work myself. I was really starting from scratch. When I started doing this stuff there was not really anybody talking about it, nobody was sharing techniques or tactics. In fact, this is not that long ago but really very few investors were doing online marketing at all and one of the scary things and the exciting things about that was I really had to come up with everything on my own. There was no one to say, this is what works, this is what doesn't work. I really had to just figure it out. That's been a big challenge but it's also been a huge sort of a factor in our growth and success is that we did the work.

Not to belabor the point but I was doing all the management myself. I was doing all these Adword accounts for myself and investors trying to figure out what worked and what didn’t. One of the questions that I would always get is "what do I need to spend?" So investors would say, "I'm interested in working with you, I'm in Houston or I'm in Dallas, or I'm in Connecticut" or whatever. They would say, "I'm in this market, what do I need to spend to get deals?" For the longest time, I really did not know how to answer that question, it's a really hard question to answer because obviously every market is different and you guys have heard me say this on this podcast a million times, every market is different, it's different day to day, week to week, month to month much less Houston being different from Dallas being different from Connecticut. So it's hard to give someone an exact number but I would kind of estimate something that would be helpful to them. Over time I realized that the reason that question is so hard to answer is because it's the wrong question. It's the wrong way to think about the issue of what you need to budget for your marketing and what you need to be spending and what you need to be spending in Adwords or Facebook or really anything. Because in reality you don’t need to spend anything, there is no minimum; there's no maximum, there's no necessary amount you need to spend in order to make money with online marketing.

Let me give you a concrete example to break that down because that may sound like a hand-wavy answer but let me explain what I mean here. For Adwords, specifically most of our clients, we require them to spend a minimum of $2000 a month. Now you might say, "Well Dan requires $2000 a month to spend that must mean that $2000 a month is what people really need to spend." But that isn't actually the case, the reason that we require that is because if you're spending less than that you really don't need management. It's got nothing to do with what you need to spend in your market to be successful, that $2000 minimum has to do with working with us. So let's say, you don't have $2000 a month at all, let's say you only have $100 a month so way less than our suggested minimum. Does that mean that you can't do online marketing for motivated sellers? Absolutely not. In fact I had someone ask me this recently what would you do if you only had $100 a month? I would spend it online, 100%. Here is what I would do if I knew I had only $100 a month. I would really, really, really laser focus on a very small number of keywords, I mean I'm talking about like five keywords. I would run with low bids. So I would low ball the bids on those keywords. I would use modified broad match keywords in order to generate more traffic for less money and I would use a very extensive list of negative keywords in order to filter out everything that could possibly come up that's not what I want. If you don't have the technical background, you may not be super sure about all those things mean individually but just know that basically what I'm saying is if I had $100 a month, I would run a very restrictive and very low ball style of strategy. Now that kind of strategy, that might generate one deal a year. So we are not setting the world on fire, I'm probably not quitting my job, I'm not retiring, well maybe I could retire to Costa Rica who knows? I'm not buying a new house or whatever. I'm doing a deal a year. Think about what that means, I'm spending $100 a month that's about $1200 a year if I run that all year. Now let's say my average deal size is 10K because I'm doing wholesaling, I think that's very, very reasonable looking national deal values right now. I'm spending $1200 a year and I'm making $10,000. That's almost nine times return on my investment in that marketing spend. If you could do that in the stock market, people would think you are a wizard. So that's very good ROI with a very tiny budget by the way that's very, very doable for pretty much anybody. So it's not the case that you need to spend a certain amount of money and if you don't spend that amount of money, you're not going to do deals. It's just about matching your needs and your expectations to the strategy that you're going to use. If you can only spend $100 a month, no you're not going to be doing five deals a month off that. That's just realistic but you could get a really significant return.

So the reason that I was having so much trouble answering this question of "What do I need to spend?" The reason I'm having that trouble is because it's not the right question. Thinking about the problem in a fundamentally wrong headed kind of way and that's going to send us down these blind alleys. Now that's going to bring us into this idea of Barrett's Razor. Barrett's Razor came about from this process – I have all these clients, I'm doing all the work myself, I'm really struggling in a lot of cases to manage that workload and to manage people's budgets and help them understand what they should spend. So over time, I started to notice patterns in all that work. I started to notice things that would come up again and again. The mental model I developed to describe this is Barrett's Razor. Barrett's Razor goes like this, at any point, most of what your ads spend is waste. I'm going to say that again, this is the mental model, this is Barrett's Razor, at any point most of what your ads are spending is waste. That's a pretty dramatic statement but it is going to be broadly true even of very well run ad accounts. It's true in our ad accounts. It's true with anybody pretty much you're going to pay to manage your stuff. It's going to be true if you manage your own stuff. It's just true generally across the board. Most of what your ads are spending is waste. That's because this whole idea of understanding what you need to spend and understanding how much time and effort you need to put into managing and understanding what you need to spend in your market; it comes down to the trade off between efficiency and volume. It's one of those things that when you really start to understand it; you're going to be able to use it time and time again on your own stuff. You're going to be using it time and time again if someone else is managing your stuff in terms of understanding first of all if they know what the heck they are doing and two: understanding their strategy and how they're actually going to go out there and make you money.

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Alright, so let's talk about this, let's talk about this trade off between efficiency and volume. The way I think about this is I like mixed martial arts. I like to watch UFC and stuff like that. If you're not familiar with that, you can just think boxing or any kind of combat sport. Now you got these two people, real tough fighters and they are competing in a specific weight class. For people who that like fights, they already know this but if you're not familiar with this at all; let's say we are in the same weight class that means we both have to be 170 pounds, no heavier than 170 pounds in order to fight on fight day.

Now what ends up happening is both of us, both people fighting in this competition here, we don't walk around at our normal weight at 170 pounds, oh no, no. In reality we're both much heavier than that. So I might weigh 190 pounds let's say on Monday and by Friday I have got to weight 170 in order to compete and so what I do is I cut weight. This is this really dramatic process of dieting and if you've seen videos of people in the sauna with the garbage bags over them or they are on the bike cycling in like full sweats and sweatshirt while the heat is blasting all over them. It's like what are they doing? They are trying to lose weight. They are trying to lose a lot weight really, really quickly. They are losing water weight to get their weight all the way down to 170. So they weigh in at 170, cool, I weighed in at 170, I passed the rule so before the fight, I get most of that weight back by drinking the water and stuff now when I actually walk into the ring I might be 180 or 185.

So not to get lost in the weeds here, but basically the idea is when I'm a fighter, I've got to learn to cut weight so I can get down to a low weight in order to compete. So let's think about that. When I'm losing weight, what am I really doing? I'm becoming highly efficient. I'm getting rid of everything that is extra in anyway, every bit of water, every bit of salt, every pound, or ounce or kilogram whatever it is; I've got to get rid of it so I'm really efficient. Nothing but muscles and bones, that's the ideal. This is where by the way if you see people and they look really, really ripped, they've got like a six-pack, and rippling biceps and veins popping out everywhere, you're most efficient in this state. But the thing is in that state, most people are most actually at their weakest point. If you think about it, it makes sense. I haven't eaten anything in three days. All my water weight is gone. I'm dehydrated. I'm really, really weak and in fact in some cases people have gone to the hospital or have even slipped into comas because they did this wrong. Right? So even though, I'm highly efficient at this point where I've cut all this weight I'm also very weak.

Now contrast that with a really strong athlete, someone who is really their physical prime, someone who is at their peak state like I'm ready to rock whether that is fighting or boxing or running or whatever. I am at my absolute best. It is likely that in that state of being at my absolute most ready, my absolute best, I've got a significant amount of body fat hanging around. I've got significant extra calories to burn. I've got extra water that I'm carrying around. My body is carrying around more than it actually needs so I'm not the most efficient I've ever been. I am not at my most lean but I can generate a lot of force. I can be extremely strong. I can be extremely powerful. This is the trade off between efficiency and volume. I can be at my most efficient in my marketing meaning I have no waste. I've got nothing that is spending money and not generating leads, I'm at my most lean. There is literally nothing extra happening, only the things that are absolutely required are in there but in that state that marketing campaign or marketing account is likely to generate a lower overall lead volume. And the converse is also true if I've got an account that's generating a ton of volume and a ton of activity and a ton of leads, it's probably also generating a fair amount of waste. It's got extra stuff that isn't' really necessary. This is just true across the board. It's going to be true in any kind of marketing. Think about it in direct mail to bring this back to something that I think a lot of you are going to be more familiar with, if you have a list of just purely – only the people who match this, really, really strict criteria, you know they have a certain amount of equity and in a certain one mile radius and they have a certain amount of income and they have certain this and a certain that and really, really, really specific list, that list is going to be really responsive but it's probably going to generate less deals overall than if you mail everybody in your state a hundred times. Right? You're going to get less deals that way of course one's going to be a lot cheaper but the other one is going to generate more deals. This is always the question we have to answer. Do I care more about efficiency or do I care more about volume? Do I care more about hitting a certain weight or do I care more about athletic performance? Efficiency versus volume. We are always trading one for the other.

Now in the case of Barrett's Razor, Barrett's Razor is about recognizing this and saying if any account that's generating volume, it's likely that a significant amount of it is going to be waste. So you can really focus on cutting the waste and cutting the amount that you need to spend or you can focus on really boosting the volume. It's very hard to do both. Like if you want to cut costs, there is a fairly straightforward checklist for doing that. There really is. I mean this is something that we do pretty much everyday for clients. It's a relatively restrictive list of things that you do. You can cut the number of keywords that you're running, just run the stuff that is generating leads for you. You can look at the position of your ads and say, "What positions are my ads in when they generate the most leads?" You can look at the devices that you're running. You know people on mobile, people on desktop, people on tablets, where do most of my leads come from? You can look at zip codes or regions and say, "What zip codes are generating leads and which aren't?" You can look at the time of the day or the day of the week, which of those are generating lead and which aren't. Out of all those categories typically only about 20% of the things that you are targeting are actually generating leads for you or results of any kind. If you look at your keywords, about 20% of your keywords are generating pretty much that you're getting. If you look at the position of your ads, it's going to be 20% of all positions; usually the ones at the top. You're going to be looking at mobile, desktop or tablet, usually one of those is generating the vast majority of your stuff. You look at zip codes; maybe 20% of your zip codes are generating all your leads. You look at the time of the day or the day of the week, they are going to be clustered around certain hours of the day typically. So pretty much all the time, 20% of the stuff that you're doing is generating most of your results which means by definition about 80% of what you're doing is waste. This is Barrett's Razor. At pretty much any moment, most of what your ads are spending is waste. But that's not necessarily a bad thing. Remember there is a trade off here between volume and efficiency so we can cut our waste all the way back but we are going to sacrifice volume and likewise we could boost our volume all the way up but we're going to sacrifice efficiency. So there is no right or wrong but it's about understanding you and understanding what you are looking for and understanding your market conditions and what's important to you in the moment. This is pretty much what we do for all of our clients. It's like sit down and try to understand this and dial it in over time. Can we dial in a little less efficiency for a little more volume? Can we get a little less volume but really make a dent in our cost per lead? It's a process. But it's understanding the mental model that allows you to actually go through that process otherwise you're going to be trapped in this loop where you're constantly trying to cut weight and get the most athletic performance at the same time and you really cannot do that. It's got to be one or the other most of the time.

So I hope that is super helpful for you. Hey listen, if you are listening to this podcast and you are not in our Facebook group, you should get in there because it is free and it is awesome. We post in there every single week. We do weekly live shows. We do tons of posts. We do tutorials. I've got a thing on "How to use YouTube to Find Motivated Sellers." I've got an SEO guide. I've got deep PPC trainings. We got all this stuff in the group. It's totally free. So you can go to AdWordsNerds.com/group to find that. Likewise I've got the show notes, links to everything that I talked about here, all sorts of cools stuff over at AdWordsNerds.com/podcast. So again that's AdWordsNerds.com/podcast to find all the notes for this episode and our past episodes. If you like this show and you got some value out of it, subscribe, leave me a review, I would really appreciate it. It helps other people find the show and it's fun to do so I want more people to find it. Let me know if you have any questions. Hope you're having an awesome week. I will talk to you guys next week. Cheers. Bye.

Episode #008 – How To Get a Permanent Unfair Advantage In Your Market

You can control many things: You control which marketing you run, who does your accounting, which agency you work with, which ZIP codes to focus on, etc.

Now, there’s one thing you have no control over—the market. The market does whatever it does. Sometimes you’ll think half the town wants to sell their house, the next year it’s hard to generate just a few leads. You could be one of a few investors in town for years—but a real estate seminar can always flood your market with competition.

In this episode, you’ll learn how to thrive under any situation the market throws at you.

Show highlights include:

– Why today’s real estate market is especially hard to win in (if you’re an investor, you’ve probably felt this “squeeze” before). ([3:15])
– The two major factors making REI extra hard today—and how to win anyway (and long-term). ([7:00])
– What to do when you get less leads AND pay more money for them (this will also help you box out your competition). ([9:20])
– Why a “fair” competitive advantage is useless in the long-term (even if “unfair advantage” sounds spooky to you). ([12:25])
– The three major categories you can build your unfair advantage in. ([19:35])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group
Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

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 like you get more leads in deals online. Outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Hello everybody and welcome to this week's episode of the REI Marketing Nerds. As always, I'm super happy to have you here. I've been sipping iced coffee, it's been sort of a long day. My wife and I had just closed on a new home for us in our kids and we're super happy about that, obviously real estate is on my mind, and I'm taken sort of a detour. If you've been following along with the show, first of all I really, really appreciate it, and if you have gotten value out of the stuff that we've talked about here today or any of the episodes, any of the weeks, if you've ever gotten any value out of this show, please go head on iTunes or Stitcher or wherever you get your podcasts, leave us review, honest review, subscribe to the show, whatever you can do, that helps other people find us which I really, really appreciate.

But I've been following kind of set plan. I've had, like in my head a series of episodes that I want to do, that are going to cover major, major issues that investors face when they get into online marketing for motivated sellers, and I've been kind of going on the list and taking care of those episodes. I'm going to swerve a little bit to the left and I'm going to get into a subject that is very current for me, current for the company, current for our clients, because I think it's so important. Originally I was going to leave this till week 20 or something like that, and I'm going to do it now. I'm going to do it now because it's timely and it's urgent and it's something that I think can have a really huge effect on you if you understand it, you understand how it impacts your business and how to use it in your investing. So let's get into this.

First things first, I want to take a step back and I want to talk a little bit about the investing market that we are in right now. I'm going to date this podcast a little bit because, obviously, if you are from the future and you're listening to this 500 year from now, obviously, I'm sure the real estate market is very different, we all live on Jupiter or whatever. But for right now, when I'm recording this, it's a tough market for investors. It really is. And if you're out there, you've been doing investing for any amount of time, I can almost guarantee that you felt the squeeze a little bit. That's for a variety of reasons. I'm going to pick up the ones that I think are the most important and the ones that you can really use in your own decision making. Obviously, there's a ton of things that go into affecting the real estate market, any given market right in any given moment. Here are the things I've really pulled out as being major drivers of difficulty for investors right now.

The first is that we are just in a national seller's market right now. I mean if you are out there and you're doing motivated sellers, you will have noticed that there are a lot of people that are just content to sell on the MLS, list their house because they know they're going to sell that relatively quickly. In the seller's market, you lose some of the leverage that you get as an investor from offering speed. Speed is one of the major elements of why people work with investors, and so if they can list on the market, get retail value relatively quickly, things just become more difficult for investors. I would say overall, if you look at the national kind of environment, there are probably less truly motivated sellers right now than there have been any time in the last five years. It doesn't mean it's going to continue forever, we're never going to get to a point where there are no motivated sellers, but we're definitely in a tougher market now than we have been. And at the same time, there are more and more investors in this space.

If you look right now at the real estate investing coaching business, so people who teach people how to invest or these companies that are doing big seminars and coming to town, they get couple hundred people and they teach them no money down investing or whatever it is, those businesses, those coaching businesses are booming. They are booming. They're doing record profits, record revenue, and they're having record numbers of students come through those programs and enter into the marketplace. By the way, I'm not saying that's a bad thing, I think it's awesome, I want people to get into investing, I want people to make money, I want people to have that freedom that comes with this lifestyle that we all enjoy. I'm not saying that's a bad thing, but if you are an established investor, you've been in the market for a while, or even just you're new, but you're from the last couple of years, you will have noticed the increased levels of competition. Whether that it's way more people are sending out postcards or yellow letters, whether that's you get to an appointment with a potential seller and they've got three or four other people they're also putting down offers. Actually, this is a really common thing that people will tell me, that they see people making offers in their market where they know they're going to lose money. Like the experienced investor can look at this deal and say, "Look, there is no way these people are going to make money on this deal." They don't know that yet, and so they come in and they make these wild offers and they kind of distort the market. If you are more used to this game or you've been doing deals for longer and you know how to price those things out, you're kind of left scratching your head saying, "How do I compete with people that are losing money?" I think about like people who compete against Amazon.

So that's really tough because Amazon's willing to lose money, and they can lose money for a long time. Most businesses, most investors, you can't lose money for very long. So it puts you in a really, really tough position. So, you have these two major factors. You have the seller's market and you have increased competition from newbie investors. And what that's done is put a real squeeze on the old channels that investors have relied on for marketing. If you look at direct mail, if you look at bandit signs, you look at postcards or yellow letters or whatever you're doing, those channels become really noisy because you think about if you go to a seminar you go through a coaching course and you're learning how to market for the first time, what do they give you? They give you a postcard. They say, "This is the letter that I sent, it works for me, so you send it out too." So those channels get really crowded really fast.

So we've got big seller's market, seller's market nationally, and that's putting the squeeze on investors and you've got a lot of newbie investors coming into the space, that's putting the squeeze on experienced investors, this makes the traditional marketing channels really noisy. So when the traditional marketing channels get noisy, experienced investors go online. And that's been the case for the last three, four, five years. I mean, it's wild to think about it now, but when I first started AdWords Nerds and I just started working with investors, that's like six years ago now, not very long ago. When we got started, most investors hadn't even heard of AdWords. Really nobody was doing AdWords, very few people were doing Facebook Ads. I mean it was really pretty wide open. That is just fundamentally different now, because as those traditional channels get more and more squeezed and more and more noisy and more and more competitive, the experienced investors have had to go online, because they've got to make up that difference. These are people, definitely if you're listening to this and this is you, you're going to know what I'm talking about, you've got staff, you've got people who you got to pay for, you've got overhead, you've got an office, you've got costs. If business starts to dip, if you start to get less leads or those leads start to be more expensive, you've got to find additional channels. You don't just retire. You've got to go find those leads somewhere else.

The answer for those investors has been to go online. They've been going on Google AdWords, and Google AdWords got more and more competitive and then people jumped over to Facebook and Facebook was the big thing and now Facebook is more and more competitive. So we see this process where seller’s market, bunch of newbie investors, that makes the old channels really crowded, that drives the established investors online, and now the online channels are getting really crowded. You see really sharp increase in the cost, you have to spend to get leads in Google AdWords, you see a really sharp increase in the amount of competition on Facebook, and it is tough. These are dangerous times. I did a training recently where I call these "lean times". There's a lot of competition and there's less and less leads, less and less food, whatever metaphor you want to use, to go around. There's more competition and we're competing over smaller and smaller amounts of stuff. and that makes things really, really tough. If you are out there right now and you are investing, you will have noticed this that things are getting really tough really fast.

Now how do you compete in a market like that? I didn't even touch by the way, I do mean get into players like Open Door and Red Fin that are backed by literally billions of dollars of investor capital. Okay? I don't even get into like what they're doing to the market. So how do you compete in a market like that? How do you compete in a market where there are less leads and there is more competition? Where your cost per lead is going up and your profit per deal is going down. How do you compete? Well I spent a lot of time thinking about this last couple months and I've come to the conclusion that what you need is an unfair advantage. And I want to talk about this because I think understanding this is really crucial. I'm going to get into specifically what I mean, I'm going to get into how you build this, but I want to take a second and talk about what I mean when I say "unfair advantage". I think most people when they hear the term "unfair", you have kind of a natural reaction to it. Like we're moral creatures, and most people generally believe in fair play and they believe in equality and all these things, and that's all great. I'm not saying not to do that at all. But if you want to compete long term in a hyper competitive market where things are very hard, you need an advantage over everyone else. Now if it's a fair advantage, in my terminology here, that's an advantage that other people can eventually replicate.

So let's say you design a really good ad. Everybody's sending out the same ads to everybody, everybody is mailing the same stuff to all the same leads and you're like, "Okay, I need to innovate, I need to do something different." So you sit down at your desk and you spend a couple hours just working out the perfect letter. This is like a killer letter, it's never been seen in real estate investing before, the copy is amazing and it's got pictures in there and it's personalized, it's just incredible. You start to mail this out and you get significantly higher response rates than everybody else. You are crushing it. That is an advantage, and it's a fair advantage, meaning that, you know, look, you didn't do anything that no one else could do. Everybody could have sat down at the desk and put in the time, you put in the time and you put in the work and so you got an advantage and you're crushing it and that's awesome. More power to you, everybody needs to do that, not saying that's a problem. But let's be real, let's be real. If you do that what happens two weeks from then? So you sit down at the desk, you do the copy you get the perfect letter, it's amazing, you send it out, you're crushing it, end of week one, you're crushing it. Send it our week two, you're crushing it, end of week two you're crushing it. Now in week three what happens? Well in week three, Joe Blow down the street, your competitor is going to say, "Hey, this dude is crushing it. This lady is doing amazing. This copy she sat down to write is amazing, it is pulling way better than my letters." Is Joe Blow going to just say, "Well I guess I lost, I guess it's time to retire." No. What Joe Blow's going to do is copy the letter.

So this is what happens when you are in a competition with people and you get an advantage and that advantage really works and it really pushes you ahead of the pack. Everybody else will copy you, it's just the way that it is. That's the smart thing to do in their position. I'm sure you agree. So Joe Blow starts to send out a letter and then Mary down the street starts to send out the letter, and pretty soon everybody is sending out your better letter. If everyone sends out the better letter, guess what? No one's doing better than anyone else anymore. In biology, this is called the Red Queen effect. You're a badger and I'm a badger and you evolve claws because claws are awesome and they help you survive and so you start winning, but then I evolve claws. So now we both have claws and now no one's ahead of anyone else. As you start to get advantages over other people, those advantages tend to equalize over time, and no one is any further along than anyone else so that's what a fair advantage is.

Are you an investor who wants to dominate your local market? Do you want more leave than deals online? Then download your copy of the Motivated Seller Blueprint absolutely free at www.AdWordsNerd.com/get. What are you waiting for? Go to www.AdWordsNerd.com/get right now to get your copy of the Motivated Seller Blueprint.

To really survive the kind of times that we are in right now, and not just survive, but massively profit and massively improve, we don't need a fair advantage. what we need is an unfair advantage. And when I mean by that is an advantage that no one else can copy. They can't figure out what you're doing and do the same thing, they can't copy it, they can't duplicate it. It is permanently yours, and therefore does not allow the rest of the market to equalize. If you've ever heard of a book called “Blue Ocean Strategy”, it's a pretty popular business book, I definitely suggest that you check it out. In fact, I'll put a link to this in the show notes, you can go to AdWrodsNerds.com/podcast, that's AdWordsNerds.com/podcast where you can find this up episode, and I'll have a link to it there. “Blue Ocean Strategy”, really great book. Basically the idea here is that in the ocean you've got these areas where there are lots of fish, really good fish to eat, and lots of sharks tend to congregate there and eat those fish and the water gets all red with the blood and the chum, all this stuff. They call that the Red Ocean, and then over in a different section of the ocean, there's much less of these fish and so there's much fewer sharks, so there's a lot less competition. And if you're like the only shark in this part of the ocean, you can eat to your heart's content, you basically don't have any competition, it's actually much better for you. Okay?

What I'm talking about here with the unfair advantage is the process of turning a red ocean into a blue ocean, because if you have an advantage that no one else can copy, you are playing a profoundly different game than everyone else. So the question becomes, okay, if we're in these really dangerous times, getting cost for leads going up, profit per deals going down, more and more newbie investors in the market, older channels are getting crowded, online channels are getting crowded, how do I get an advantage that no one else can copy, how do I turn my red ocean into a blue ocean, how do I get an unfair advantage?

I'm going to talk about this right now. I'm not going to keep this high level, I'm going to get into this. In my way of thinking there are really three primary ways you can build an unfair advantage, and these apply to a lot of different businesses, but I'm going to apply directly to real estate investing, because obviously that's what this podcast is about. Three major realms, categories that you can build an unfair advantage in. For one you can have brand recognition that so far surpasses your competitors that they're not even really able to ever overtake you. To be perfectly transparent and blunt, that's my strategy for my company, for AdWords Nerds. I want to be the just so predominantly the most well-known, most trusted, best respected marketing company in real estate investing that even though we have competitors, they might as well not even exist. That's my strategy for AdWords Nerds. You can do the same thing in real estate investing. If you're doing TV, you're doing radio, you're all over the place, you've been in the same market for a long time, you can build that name recognition, face recognition, brand recognition to the point where other competitors' advertising is kind of like inconsequential.
The second thing is you can have abilities and skill sets that far surpass everyone else. So if you are able to close at a significantly higher rate than everyone else, that's an unfair advantage, it's very hard to overtake. If you have a system that is just so well thought out and efficient and just incredibly effective, that's very, very hard to overtake because you can just keep the volume up in a way that people can't catch up to. But the problem is with those two, so we have brand recognition, you have skills and systems, abilities. The problem is that if you don't already have those, it's kind of hard to develop them. It's like the old saying where it's like the best time to plant a tree is twenty years ago and today. If I tell you need to have dominant brand recognition in your market, that's all well and good and you might be nodding your head and saying like, "Yeah, of course." but it's really hard to actually go and do that now if you don't already have it.

That brings us to the third type of unfair advantage, which I think is the one that you as a listener of this podcast are most likely to be able to use and apply to your business right now, and that's having access to an audience that no one else has. Because the primary lever we have for improving our performance, specifically online, but I mean this applies to direct mail, literally everything, but let's talk specifically online. The primary lever we have for improving our performance is audience, it's audience, it's always been audience. If you think about the days where there was no online and direct mail was all we had, what was the biggest lever you have to pull to get a better response, to get more deals, to get a higher profit margin per deal? It's the list. Who are you mailing. Are you just mailing every house in your zip code? Are you mailing absentee owners, are you mailing absentee owners of a certain kind of property, that kind of thing. The more finely grained you get in developing your list, the better your direct mail tends to do, and it's exactly the same online. If you're doing AdWords you're talking about keyword selection, if you're doing Facebook you're talking about some kind of demographic.

Now the problem with online marketing is that everybody basically has access to the same audience. If I go on Google and I want to target "sell my house fast", well unless I'm the only person on earth to ever think of that, pretty much every other investor has access to that audience, just like I do. If I run my ads on Facebook and I say I want to target you know men and women aged 35-65 in these five zip codes. Well that's awesome, but every other investor with Facebook account can do the exact same thing. So what ends up happening is that online everybody tends to slam the exact same audiences with very similar ads, and things get really expensive really quickly. So if you can, develop an audience that no other investor has access to, so it's an audience of motivated sellers that only you know about. Like if you were going to get a direct mail lists that no one else knew about, you figured out some weird thing, like people with purple mailboxes are 50% more likely to work with an investor or whatever it is, you figured out some weird criteria, no one else knew about it and you were the only person that could mail that list, well you would kill it. And likewise online, if you found some kind of audience that only you knew about and only you knew how to target and no one else had access to, you would kill it.

That is the definition of an unfair advantage. Essentially what we're talking about here is the ability to skip the competition altogether and get straight in front of motivated sellers all by yourself. Now we can get into some weird technical stuff, like online you can keep this going, because if you have, let's say, access to a list that no one else had access to, you could then optimize that list for conversions and you could retarget just the people that converted or didn't convert or make it look like audiences, and it starts to keep spiraling into itself. You can use the technological stuff to keep building a deeper and higher performing audience. But the technological stuff, honestly, doesn't matter. The core idea here is having access to an audience that no one else has access to. So the question then becomes, of course, how do you do that. And it's different for every channel. It is.

What I've done is I'm going to send you to a series of trainings that I'm doing this week and if you are getting late, don't worry about it, you can go check in out, it's going to be it at AdWordsNerds.com/unfair, AdWordsNerds.com/unfair. And I'm going to put that on the show notes, AdWordsNerds.com/unfair. You're going to be able to pop in your email, I'm going to send you the videos I did on this, because I am doing the in-depth training on exactly how to do this. I've been testing this out with some of our clients, we took some clients we really know, like and trust, people past and present and we ran these what I'm calling "unfair audiences", so audiences that only we had access, that no one else in that market could get access to. We ran these ads to these audiences, we actually ran really boring, dumb ads, and we were honestly kind of shocked by the results that we got. I'm not going to say 100% of people had success because that's never going to be true, but I would say about 80% of the people that we tested this on either got leads significantly cheaper than their market price, or closed way more often, or both. And almost everybody, almost everybody that we ran that test on had at a minimum of two to three times ROI on their ad spend, it was awesome.

I'm so excited about this. I literally had to change the structure of this podcast and I go do these trainings because I'm really, really excited about it. So if you want to get those trainings, like I said AdWordsNerds.com/unfair, I will show you exactly how to do this and let me know what you think. I think the specifics, the technical specifics that I'm going to get into in those trainings, that's awesome, that's one thing, this core concept, this is going to be true in every market, in every economy for every kind of investing you want to do. So if you can remember the core concept of what is your unfair advantage, you're going to have a real leg up on your competition and be able to survive really, really tough times.

Okay everyone, that's going to be it for this week. Hope that makes sense, and let me know what you think. And as always, if you like this podcast, you've gotten some value out of it, leave us review, really appreciate it, and I will talk to you very soon. Alright. Bye, bye.

Episode #007 – Systems Thinking: Why everything online is hard, and what to do about it

In business, we often want things to be as easy as 1-2-3. If you had a single cause-and-effect relationship for each of your goals outlined, you would achieve them in record time, every time.

The problem is: Reality is more complicated.

In reality, an action doesn’t have a single specified outcome, but influences many different outcomes. This is true in relationships, athletics and, of course, real estate markets.

You can either ignore this complexity and get surprised by sudden changes like exploding lead costs and powerful competitors—or leverage complexity to box out your competition, even if you’re less established.

This episode teaches you how to leverage our complicated world to dominate real estate markets anywhere. Show highlights include:

– How most people normally think—and why that way is insufficient for running a profitable REI business. ([3:45])
– The important difference between a system and a “straight line”. ([5:00])
– How your leads get more expensive by making the obvious choice to get cheaper leads. ([5:55])
– Why outbidding your competition can ruin a market. ([8:00])
– How to think in systems to beat your competition. ([10:40])
-One metric to watch which gives you an almost unfair advantage in the two most popular paid ads networks. ([11:00])
– Why spending $100 on a pillow can yield a gigantic ROI (it sounds odd, but this is systems thinking in action) ([18:05])
– Which book to read to learn how to solve life, business and even societal problems using systems thinking. ([19:30])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group
Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

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 like you get more leads in deals online. Outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Hello everybody, welcome to this episode of the REI Marketing Nerds podcast. As always, I'm Dan Barrett here from AdWords Nerds. I got to tell you guys, it has been quite the day here at AdWords Nerds headquarters. I had a very rough morning, very rough afternoon, but I definitely wanted to jump on here and talk to you guys, because this is going to be a slightly different episode. I am going to get into a subject that is going to seem a little bit far field of the classic REI online marketing stuff that we cover, but I promise, this is going to come back to things that you can absolutely apply, not just to your real estate investing business, and not just to marketing for more motivated sellers and more deals, which of course, is always what we want, but this is going to be something you can actually apply back to your personal life, and hopefully make your personal life a more pleasant, rational, wonderful place. I think this is going to be really exciting, I think you're going to get a lot out of it, so bear with me, it doesn't seem super, super obvious how it's going to connect right in the beginning.

Today I want to talk about one of the biggest improvements I have made to my mindset over the last year, year and a half, or so. I think of this very similarly to kind of downloading software onto a computer. You've got a computer and it does the stuff that it does and it's great, but you can download new software to that computer and expand its capacity. Much in the same way, I'm always reading and I'm looking for new things to learn and new things to understand that are going to help me live my life, and one of the most important ones, the highest impact ones, the highest leverage ones has been Systems Thinking. This had a huge effect on how I run my business, how I run my personal life, how I think through problems, how I do my marketing, literally everything. It's just had a huge impact on me and it's something that I'm going to get into a little bit today, and hopefully just wet your whistle. If people still say "wet your whistle", I'm going to wet your whistle about systems, and hopefully just get some curiosity so you can go out and learn more about this on your own.

What is Systems Thinking? Systems Thinking is actually an academic discipline, something people are studying in college, in academia, something they're writing very, very fancy books on. We're going to keep this high level here, and primarily just talk about how you can use it, what it is, how you can use it. Alright? And the way to get into what Systems Thinking really is, is to contrast it with the way that we normally think through problems. We usually approach our problems linearly, which is in a straight line. That's kind of how we naturally think about things. If you think about a problem or an issue that you're running into, you really think about it like saying, "Okay, what is the cause of the problem and what's the effect that causes having and how do I then fix the cause or change the effect?" Right?

So you think about this a classic problem, you've got to walk to work or you're walking down the street and it's raining. So the problem is it's raining, if I walk outside I'm going to get wet. Right? So that's that cause and effect chain there; really pretty straight line. If I want to solve the problem, what do I do? Well I get an umbrella. I get the umbrella, I'm not going to get wet, therefore I've solved the problem, linear thinking, cause, and effect, A and B. Really straightforward. That's an amazing way to think of it, a very rational thing to do; there is nothing wrong with that. But the problem is that most of reality isn't the straight line. Most of reality is not one cause having one effect, most of reality is a system and a series of interlocking systems, and systems don't run in a straight line. In fact the defining element of a system is that it's got multiple elements, all interacting with each other. And so there's not one cause and there's not one to affect, everything affects everything else.

So let's give you a slightly different example. Let's take an example from investing, and let's specifically get into online marketing to connect this all with the subject of this podcast, and we'll think about this through the lens of Systems Thinking. Okay? Real common issue is that an investor will get into online marketing, let's say they're going to do Google AdWords, but it could be Facebook Ads, whatever it is. It can even be direct mail, doesn't matter. They're getting into this and they're saying, "Okay. I want $50 leads." So they get online, they hire someone to run their ads and they're working with this person and the leads are more than $50. Okay? And basically they say, "Hey, you know, they’re kind of expensive. If we want to lower our cost per lead, we got to have more leads. And the way to get more leads is by bumping up your bids. So you're going to raise your bids to get a higher position for your ads, that's going to get you more leads." So again, linear thinking here. "I want more leads; I got to get a higher position. To get to a higher position, I got to raise my bids, meaning I spend more per click. So therefore raise a bit, higher position, get more leads, bing, bang, boom, it's going to be great."

Now if things worked in a straight line that would make sense. You would raise your bids, you'd get a higher position, you'd get more leads, everybody would be happy. AdWords or Facebook Ads or any market, it's not a straight line, it's a system. And remember what we say about systems? In systems, all the parts interact. So let's say this investor wants more leads, they raise their bids, and the position of their ad jumps up and they start to get more leads. Awesome, but it doesn't stop there, because there are competitors in this investor's market. Maybe their competitors are like, "Hey, hold on a second. My ads used to be number one. Now I'm number two." Joe Investor down the street now he's number one. What's the deal?" Now are those competitors going to take that lying down? Maybe, but probably not. Probably not. Instead what that investor's probably going to do is they're going to raise their bids too. Joe Investor, remember in the beginning, he wanted more leads and he wanted a higher position for his ads to get those leads, so he bumped up his bids. Okay? But now his competitor is also raising his bids. Now everybody's raising their bids. Now what ends up happening is that Joe Investor goes back down to number two now, because this competitor bumped up their bids, so competition, bidding level, everything's going up. Now, everybody is exactly where they started. Joe Investor, our guy, he's back at number two, the competitor's back at number one, but now everybody is paying more. Nobody's getting any extra leads, nobody is anywhere other than where they started, but everyone is worse off. That's what you get when you don't understand how the pieces of a system interact.

If it's a straight line you do A, you get B that has same result, awesome. But in a system, you do A and that affects B, but it also affects C and it also affects D and then G and F and H and I and everything else is interconnected, and the thing that ends up happening, well maybe you predicted it, maybe you didn't, it's very hard to understand what drives what outcome. So we can go from linear thinking where it's like raise your bids, get a higher position, get more leads, easy to understand, versus the system situation, which is much closer to reality, which is, "Hey, I raised my bids and now I'm paying more, but I'm not giving anything extra." You got to understand in a system situation how those different elements interact.

Are you an investor who wants to dominate your local market? Do you want more leave than deals online? Then download your copy of the Motivated Seller Blueprint absolutely free at www.AdWordsNerd.com/get. What are you waiting for? Go to www.AdWordsNerd.com/get right now to get your copy of the Motivated Seller Blueprint.

Now let's go back, let's start with that same problem. We got Joe Investor, he wants to raise his position so we can get more leads, and we know that the first time we did it we kind of approached it with that linear mindset, he raised his bids, the competitors raise their bids, everybody was worse off, nobody got any extra leads. Let's take a step back, let's think about it from the beginning with a systems thinking perspective. I might think through all the possible scenarios that might happen and say, "Okay, if I do this, what will my competitors do? What will the market do? What will AdWords do? How will this change how many impressions, how many clicks, what key words?" I think through all that stuff, and instead of raising my bids, maybe what I decide to do is focus on increasing my quality score. The technical details are not super important, so to say quality score or relevancy score in Facebook, these are just numbers that basically these ad networks used to rate your performance, and the better your score, the less you have to pay. So it's like an incentive to make better and better ads, which is cool. So if you raise your quality score in Google, you raise your position but you don't have to pay more. In fact, many of the times you end up paying less.

So remember in the first scenario I raised my bid and I took over the top spot of my competitor saw that and so he raised his bid and I went back down and everyone is paying more? But if I increase my quality score instead, so I don't raise my bid, but I make my ads better, my position still increases, but now I'm paying less. So I’m not paying more, I'm paying less, but I'm actually getting more leads. Now my competitor, I'm sure, will notice this, just like in scenario number one, my competitor will notice this. What's he going to do? He's going to do what he did the first time; he's going to raise his bids. So he bumps up his bids even more. But remember, I never raised my bids. I just improved my quality score. So I'm paying less, he's paying more than he was before. Now that puts his in a real disadvantage. Now if I raise my bids I can probably crush him over the long term. He's going to be paying way more than me, because I have this quality score advantage. So we can see how approaching problems in a different way, in a System Thinking way, thinking through the potential outcomes, repercussions of how every element is related to every other element gives us different options for attacking the same problem.

Now I originally started thinking about this during this podcast because I mentioned in the beginning I had a real rough morning, rough afternoon. This morning I'm getting out of bed and my kids, I've got a two year old and a four year old and they are crawling all over me, jumping on me. I'm like all bleary-eyed, tired, stagger into the bathroom to brush my teeth. My youngest comes in any kind of knocks my iPhone off the sink where I'd put it, and it kind of smashes on the ground. I got real angry. I got angry. I don't I don't usually get angry at my kids, I'm usually pretty calm around my kids, but I got upset and I yelled. That made him feel bad, made me feel bad.

So then I got into the office and I just couldn't focus and I had a lot of trouble concentrating and I'm just like, "Something is bothering me. What is it?" Right? And I realize I'm having trouble focusing, I'm having trouble working because I yelled at my son. I had guilt, dad guilt. If you're a parent, a mom, or dad, you know this parental guilt thing is very real, it's very real. Everybody gets it because everybody screws up with their kids, so you know you have this real sense of guilt and it's messing me up. I'm not on my game. So I'm thinking through this problem and it's like if I'm thinking through this in a linear way, I might say like, "Well, I've got to work harder at not yelling at my kid. I've got to make sure that I don't yell, I've got to be more calm." I might think of like all these things I could do. I'm already trying to do that. So instead I thought of it, I took a step back and I looked at this problem, I was like, "Okay, what are all the things that affect my behavior that might have attributed or might have contributed to this problem? Because I'm not focusing at work. I'm not focusing at work because I yelled at my kid this morning. What contributed to that?" I just kind of do just a general scan of like how I feel, what's going on my life. I'm like, "Well you know, I have a lot of work stress lately, we're changing a whole lot of systems, we've been growing, our team is growing. It's a lot of things changing. We're moving, we're in the middle of a move, that's super stressful. New environment, old routines aren't there."

And I kind of realize too it's, "I can't sleep well. I haven't been sleeping well all this week." And when I don't sleep well, you know, definitely my temper flares up. So that's a big part of it. Why aren't I sleeping well? I'm not sleeping well because I'm not in my bed, I'm actually in a temporary house while we're waiting for our new house to close, so I'm in this new house on a new bed and the beds not super comfortable, and even more than that I have these pillows where it's like... You ever like go to a hotel and you go stay at a hotel and they have that pillow? I swear these pillows are always at hotels where you go and you lay down on a pillow and then five minutes later your head is like touching the mattress and all the fluffy stuff in the pillow has like shot to the sides and it's like around your ears instead of under your neck? Do you know what I'm talking about? I really hope you people know what I'm talking about. It's like it flattens out and there's like nothing there and then you basically don't have a pillow anymore. Well that's the kind of pillow that I have on this bed that's in this house that's not a mine. I end up waking up multiple times during the night and try to like re-position the pillow and fold it over, prop it up. It's pain in the butt, it's waking me up, it's fragmenting my sleep, and because it's fragments my sleep it's making my temper worse, and because my temper is worse, when my son woke me up early and then knocked over my phone I got angry at my son, and then because I got angry at my son, I felt guilty at work, and because I felt guilty at work, I wasn't able to focus.

I'm like, "Okay, well there are a lot of things contributing to this issue, but one of the things I have control over..." I don't really have control over the move right now, it's going to close when it closes, we're just on schedule, I can't speed it up. The stuff that work is actually good, it's a little stressful, but we're growing, things are going well so I can really do a lot about that, then I can affect is the pillow. I can buy a new pillow. In fact, there's like a Tempurpedic store down the street from where we're staying and I can go down there and get really, really nice pillow, and that whatever it is, I don't know how much they cost, let's say $100, a lot for a pillow, but that investment of $100... If that investment of $100 to get a better pillow, to get a better night's sleep so that my anger and temper is better so that I don't blow up my kids so that I don't feel guilty so that I can focus that work, and if all I do is get 5% more productivity out of my day at work, I'm going to make many, many, many, many, many, many times the investment of that $100.

And that's Systems Thinking. It's looking at a problem not just as a straight line from one cost to one effect, but thinking about how all the elements of a system interact with each other, and then trying to have the biggest possible positive effect with the absolute smallest input or change. Again, bring this back to real estate marketing, bring it back to real estate marketing. If you're looking at a market, think about the market not just as a straight line problem, but as a system where all the elements connect, and think about what small element you could change or move or modify that's going to affect the system as a whole. So a really, really interesting way of thinking through your problems. There's a lot of stuff out there about Systems Thinking, there are people out there that know way more about this stuff than me and there's a lot of really, really classic books.

I'm going to recommend a book that I finished reading couple weeks ago. It was like the fifth or sixth book I've read on Systems Thinking lately, but this is, I think, the best beginner's book of Systems Thinking, because it not only gives you the basics of how Systems Thinking works, but it also tells you directly how to apply it to your everyday life, and even to some really cool societal problems. The book is called The Art of Thinking in Systems, The Art of Thinking in Systems, and it's by Steven Schuster, SCHUSTER, Steven Schuster. By the way, I'm going to have a link to this book, as well as all the stuff from this episode in the show notes. You can get to those at AdWordsNerds.com/podcast. That's AdWordsNerds.com/podcast.

By the way guys, if you are not a member of the REI Marketing Nerds Facebook group, what are you doing? First of all, it is free. Second of all, I am in there every single day during the week posting nonstop content, there are tons of really amazing investors in there sharing tips, tricks, strategies, sharing numbers, showing what works for them, showing what hasn't worked for them. It's an incredible community, there are no hard pitches here, this is not a sales vehicle for us, we constantly police it for spam, so it's not one of these investing groups where just people constantly post deals and hard money or whatever it is. This is an incredibly high quality community. If you're listening to this podcast and you're not in that group, you are missing out. I want you to go to AdWordsNerds.com/group. That's AdWordsNerds.com/group, you'll be taken directly to Facebook group, apply to be a member, we would love to have you. Let me know if you use some Systems Thinking either in your business or your personal life. It's been a real eye opener for me, it's massively, massively valuable. I hope you got some value out of this. I am going to go home today and I'm going to go buy a fancy pillow and I'm going to sleep like a frickin' baby. Okay? I wish you the same. Hope you guys have awesome rest of the week; I'll talk to you soon. Cheers.

Episode #006 – Dominating your local market by boxing out your competition

As a real estate investor, you’ve probably wished to “dominate your local market” before. Maybe it seems like a distant goal to you, maybe you’re moving closer to domination every day.

Whatever your case may be, this episode will help you accelerate the process, because you’ll learn what dominating your market really means (not just getting a lot of leads) and how to box out your competition to keep your position in the market.

Show highlights include:

– What “dominating your market” really means. ([2:30])
– Two metrics to evaluate if your lead generation is setting you up for market domination. ([3:25])
– Why spending more on advertising is NOT the only key to success. ([4:50])
– How to get caught in a virtuous cycle which reinforces your market position. ([6:50])
– Why just doing something in every medium won’t work. ([13:00])
– 3 advantages to “third-party listings” like the yellow pages. ([14:55])
– An underused, yet well-known technique to get high rankings quickly. ([17:00])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group
Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

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 Ad Words Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online. Outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Alright everybody, welcome to this episode of the REI Marketing Nerds podcast. Super happy to have you here. As always, this is Daniel Barrett coming from AdWordsNerds.com and this week we've got a really cool topic because we're going to get into both something that lots of people want, this is something I'm going to hear from investors pretty much every single week, and we're going to talk about our customs strategy, the strategy that we use for the investors that we work with to get that thing done. And so the goal that we're talking about is dominating your local market. This something I hear all the time. It's very, very common for investors get on the phone with us and say, "Hey, I want to dominate my local market." It's hard for people to figure out how to do that. Most people are going to think that that is purely a money game, it's purely going to be a thing where they've got to dump tens of thousands of dollars every week into ads and do all this crazy stuff. It actually doesn't need to be like that, because this was something that happened so frequently or something we got told so frequently and asked for so frequently, we actually developed a strategy for doing now that that's specifically focused on REI. I'm going to break down that strategy today. This is something I've only ever done with my paying clients or with my coaching students, so I'm really excited because it's something that I'm personally I'm very proud of and I think it's going to make a major impact, hopefully on your business and your marketing. So let's jump into this.

First thing we need to do is we need to define what we're actually talking about, because it's one thing to say like, "Hey, I want to dominate my market." but there are a lot of different variations on what that might mean, that might mean a lot of different things to different people, so let's define our terms. For me you when I'm talking about dominating a market, what I'm talking about is consistently getting the majority of the leads in that market and getting them first. Okay? So there's two aspects to this, right. There is the volume, getting the majority of the leads that are available. We're talking about search marketing, we're talking about people searching, grabbing those people, getting them as leads, but also getting them first, because it's very common for people to come online and fill out a whole bunch of forms on different investor sites, and if I'm getting those leads last or tenth or whatever, they're going to be worth significantly less. Because generally for investing, when we're talking about motivated sellers, the faster you're going to touch base with someone, get them on the phone, form that relationship, the more likely they are to do a deal with you. So really there's these two aspects here to dominating a market. There's the volume of leads and you are getting and there's the speed with which you get them. You really need both. You need both to truly be dominant, have a position that's very hard to attack.

Now an important note, you don't actually have to dominate your market to do a lot of deals. It isn't necessary, and I don't want everyone listening to this to think like if you want to make some money as an investor, if you want to be successful as an investor you have to dominate a market, because it just isn't true. We work with people every single week that are spending $2000 a month or whatever there is they're spending, they're doing significant numbers of deals, they're making a lot of money, and they're super, super happy. But there is a really common thread in the investing community where people want that dominant position, they want to know that they're on top. So if that's you, this is what we're talking about today. Alright?
Now, most people are going to assume that dominating the market is basically what that means is you got to spend a lot of money. And yes, to do this consistently and to consistently dominate a market, you will need to spend more than just saying to an investor, it's like, "Hey, I want to do a couple deals a month." But lots of investors pour lots of money into their marketing every single week and do not dominate their markets. So it isn't a case that dominating the market is simply a matter of spending money, and the reason that is, is quality. Quality and understanding how the idea of quality factors into online marketing is absolutely critical to understanding why some investors absolutely crush and absolutely dominate their markets, and other investors that spend the exact same amount of time and exact same amount of money do not. Alright? Now let's break this down even further.

When we're talking about quality in terms of online marketing, what I'm really talking about is better performance. If an ad is higher quality, it gets more clicks. If the landing page is higher quality, it gets more leads. So the higher quality the marketing that you're doing, the better the performance you're going to get from that marketing. And the better the performance you're getting, generally the lower the cost you're going to have to pay. This is really, really important to understand, Okay? When your ad is performing really, really well and generating lots of clicks, pretty much every marketing channel that's online is going to give you some kind of benefit for that. Because remember, like Google, Facebook, you know, if we're talking about ad channels here, they only get paid when people click. Even if you're doing SEO and you're doing organic marketing, you're not paying per click, Google wants sites that people click on because if people come to Google over and over and over and they never find anything they want to click on, slowly but surely they're going to stop using Google. Right? So Google, Facebook, all these channels, they prioritize ads and marketing campaigns that generate performance that get clicks.

So what happens is you get caught in a virtuous cycle. You write really, really good ads, make really, really good landing pages, you target it really well, you have a very high quality marketing campaign, that allows you to get more leads, And then the advertising channel gives you a bonus and they allow you to get those leads more cheaply. So what's happening here is you are now getting a higher volume of leads, and you're getting them more cheaply than your competition because your quality is higher. That leaves you more money in the tank that you can then reinvest back in your ads. And so your ads get better and better, you get more and more leads, the leads get cheaper and cheaper so you have more money to invest in ads, you run those ads more often and you get more leads and they get cheaper and cheaper and you have more money to reinvest in ads. And it's a cycle and it continues and it gets better and better and stronger and stronger. This is how you build the momentum that allows you to really dominate. I mean really sit there at the top of your market and get the majority of leads faster than everyone else. This is a really important, even if your goal is not necessarily to dominate your market, understanding this dynamic is critical. Because if you are just dumping more and more money into an ad campaign that's not particularly high quality, you're not going to get much of a return from that campaign. If you dump more and more gas in an inefficient vehicle, you're not going to get as far as someone who's highly efficient and also putting gas in their tank. Those two situations provided your input is equal, the person with the more efficient car is going to go much further, and the person with the higher quality campaign is going to get a lot more leads.

Markets tend to get dominated by the people who can get their least the cheapest and can get the highest value out of them. If I'm able to get leads at 20% lower than everyone else and I'm getting 20% more money out of all those leads, slowly but surely I will eat the entire market. It is inevitable. So, understanding this dynamic, and specifically how it applies to online marketing, is really the difference between having an incredibly effective campaign and just constantly putting money into something struggling and not being able to get a return on it.

Alright. So, let's say we have nailed down the quality issues, you understand that, you're crushing it, you have really high quality campaigns. Okay? And you're investing what you need to into those campaigns. You're putting in ad budget, you're putting in time, you're putting in effort, whatever you're investing, you're doing what you need to do and you're nailing the quality. So assuming that is the case, what is the strategy that actually lets you box out the competition and dominate the market? Because it's not enough to just do everything well, because there are other investors in pretty much every single market that are already doing things well. You need a strategic advantage on top of that. So, the strategy that we used to do this and it is really proven very effective and very hard to compete with is something we call content stacking. Okay? Content stacking.
The idea behind us is that we are going to be everywhere at once, so that if a searcher goes on to Google, wherever, they go on Facebook, wherever they go and they type in "sell my house fast", whatever they're selling, or they're typing in, we have a much higher chance of getting that lead because we're in multiple places at once.

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Dan: How does this work? Well the idea here is that we are going to stack different pieces of content on top of each other. So let's say someone, again, we'll use Google as an example. Someone comes on to Google, they type in "sell my house fast". First thing they'll see from us, if we're using this content stacking strategy, is an ad. Probably the simplest thing to understand here, we're just targeting the keyword, we show the ads, our ad's at the top of the page. Okay? Awesome, that's piece of content number one. Then our website has a page that organically ranks for that keyword in Google. So we've got the ad and we've got our website organically ranking, so that's two pieces of content on that page. Then we probably have a Google map entry or google my business entry, whatever you want to call it, so that's a third piece of content probably rank something from Facebook for that keyword, so that's a fourth piece of content. We get reviews or articles written on third party sites, so that's a fifth piece of content. We'll rank a YouTube video for that keyword, so that's a six piece of content. And so for the exact same search, let's say like "sell my house fast" your town or whatever it is, you're going to get to a point where nearly 30% of everything that that person is seeing in Google is actually you. It's actually about your business, it's about what you do, it's leading that person to work with you. And no matter what positions you are in, like even if you can't grab the top position, dominating such a high percentage of that first page is going to drive a lot of traffic. It's a very, very powerful technique. So the chances of you getting that lead, that person searching, really skyrocket at that point.

Now, the key to doing this well and not driving yourself crazy in the process is having a very clear strategy, because each of the pieces that you build need to be working in harmony. You need to be really clear on what you are targeting and how. If you try to do this for a thousand keywords, you're going to burn out. It just isn't possible. I mean maybe over a really long period of time, but it's just massively, massively difficult. So you need to be really, really clear on what you're targeting, who you're targeting and how you're going to target them and then how all those pieces connect with each other, where they're sending people, what they're saying, what they're linking to, etc.

So there's different categories to doing this. We can kind of break it down generally to give you a sense of what you want to do. There's no one thing you always got to do, the internet is constantly changing. And I want this episode to be evergreen. So I'm not going to say like you have to go to this website, because who knows. Maybe that website won't even be there two years from now. But there are general categories that are pretty much always going to be there that you can use to create your own content stacking strategy. Ads are the easiest place to start. They’re going to show up at the top of the page, they're easy and fast to get going, advertising on the internet is not going anywhere. Ads give you a lot of control over your targeting, so you can really zero in very quickly on just the search terms that you want. If you just want "sell my house fast Phoenix" and you don't want to "sell my house fast Mesa" or whatever it is, you can just put that into your ad campaign and boom, you're there. So really, really fast, really, really high impact, get to be at the top of the page, really nice. Of course the downside is you're paying for it, but that's the downside to all advertising.

So ads are the obvious kind of first category where we get started with this strategy. So after that, generally we are moving on to third party listings. Third party listings are also pretty quick to do, they're pretty quick to rank, and they're relatively easy. So it's like if you're doing like a yellow pages or there's some kind of local website, something like that, it's not your property, it's not specifically like a business listing thing like Google Maps, it's just something that you can get a listing on, you can get an article on. Those things are really good because you can kind of ride the coattails of other web sites that are already ranking pretty well, so that's usually really good place to go next. Of course, you've got to have your own search engine optimization on point, meaning your main website needs to rank and rank well. Because generally that's going to drive the biggest percentage of clicks and leads. I generally get into that a little bit later in the process just because the work tends to be more in-depth, it's not like something you just click a button and get it done. You really got to think about what you are writing, how you're writing it, how well optimized it is, but it's such a big chunk of the traffic that you're going to get that it's absolutely critical that you do it. So it's a little bit more difficult, the time horizons a little bit longer so it's slower to get going, but man, if you can get it going, the impact is absolutely huge so you definitely want to dig in there.

Google Maps listings are another one that we typically do pretty early, and those are also very fast to do. You really only going to have one. I mean Google Maps is the dominant one. There are other kind of map companies you can work with to get a listing for, and those are really only going to help you for local searches, so if somebody is generally located near the town that you're targeting. So we used that Phoenix, Arizona example, generally going to see that local map kind of enter, show up in Google when they're in Phoenix. So it's not going to get you necessarily out of state searches or out of state owners, that kind of thing, but still really powerful, free, quick to do, easy to do and those are going to rank really well.

YouTube videos is a big one. This one is very, very fast. Google owns YouTube, I think most people know that at this point, and so You Tube videos can rank very quickly. The reason we don't do it earlier is because generally they don't stay in the search rankings as long as everything else. YouTube videos seem to have kind of a half-life where you'll rank them, they'll kind of drift out of the rankings over time, but optimizing them can have a really great return, people like to click on videos, it's an attractive search result in Google because it gets, usually it gets a little video icon, so they get a lot of clicks. Now you don't own it, much like the third party websites we were talking about, you don't own this, Google owns it, so it's not on your website, but really, really powerful, really easy way to get an extra thing in there.

Facebook pages can be very stable and rank very well, but it's hard to do a lot of them, and so it's kind of hard to do keyword targeting for them, but it's something that's really powerful. Generally you're only have one or two of these, so you really want to target that around your highest impact, highest traffic keywords. Even Twitter accounts can do really well, but like Facebook, there needs to be engagement on that account for it to rank in Google and show up in Google. So you really need to work it like its own marketing channel, put the effort in. And most investors generally don't do that. It's hard to do investor marketing for motivated sellers in a way that people really engage with socially, it certainly can be done, I've seen people do amazing jobs with that, but it's one of those things where it's like just because you have a Twitter account doesn't mean it's showing up and going to rank in Google. It's really got to be something that people are sharing, people are retweeting, people are liking, people are commenting on, that kind of thing.

So if you kind of take all those pieces together, right, if you've got an ad and you've got your own search engine optimization on your website, you've got third party listings, you've got Google Maps, you've got YouTube videos, you've got Facebook pages, got a Twitter account, all of these things are unified in their strategy around who they're going after, what kind of keywords are going after. You're going to massively increase your footprint in Google. And what that's going to do is get you a much higher volume of leads and a much higher quality of leads while lowering your cost, and that's what content stacking is all about. It's about combining this pursuit of quality with a strategic advantage that's really, really hard to topple.

If you're ranked number one in Google, that's awesome, but if that's all you have, sooner or later someone is going to try to take that from you. So having a diversified strategy not only gets you more leads, it gets more leads for cheaper, and it makes you safer in the long run from competition. It's massively powerful, it's something we do pretty much every day for our clients, I love it. I would really love to get your feedback on it, if you have any thoughts let me know because for us this makes a huge game changer of a strategy, it's really, really helped our clients.

That's it for the episode, you guys. As always, let me know. I'll have the show notes for this episode and some goodies you can download, maybe we'll do like an outline of the strategy and everything. You can go to AdWordsNerds.com/podcast, that's AdWordsNerds.com/podcast, I'll have all that stuff for you. Let me know what you think, I'd love to get your comments on this, and let me know if you use this strategy because it is very powerful, and if used well can really, really, really help you dominate your local market. Alright, thanks everybody, talk to you soon.

Episode #005 – How to know when you need online marketing (and how to avoid wasting money when you start)

When it comes to marketing your real estate business, you have many options: Direct mail, bandit signs, yard signs, various forms of online marketing and much more.

Many think online marketing is the best way forward for real estate investors. But there are intricacies.
If you’re considering online marketing, this episode is for you.

You’ll learn to decide if you should advertise online and how to use online marketing depending on the situation you’re in.

Applying what you learned in this podcast could save you from wasting hundreds or thousands of dollars on ineffective online marketing.

Show highlights include:

– How to decide if you need online marketing at all—and when to NOT do online marketing. ([2:50])
– The one question to ask yourself before even considering online marketing. ([5:40])
– What to spend 10-20% of your money on to keep advancing your business without risking ruin. ([8:45])
– The two primary strengths and the biggest weakness of paid online advertising (don’t waste money on ads if these strengths aren’t what you’re looking for). ([11:55])
– What “organic marketing” consists of and when to use it instead of advertising. ([16:00])
– Why organic marketing has the absolute highest return on investment ([18:00])
– The biggest weakness of organic marketing. ([18:25])
– A simple “if-then” rule to determine which online marketing you should use. ([21:25])
– How much budget you should have to get into online advertising. ([22:45])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group
Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

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 like you get more leads in deals online. Outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: All right, hello everybody and welcome to this episode of the REI Marketing Nerds Podcast. Super happy to have you here. It is like a mind-blowingly beautiful day here in Connecticut. I got the sun shining in through my office window, and that’s making me feel good so I hope you are feelin’ good wherever you’re listening to this.

Today, we are going to be talking about how to know when you need online marketing and how to avoid wasting money when you start. This is a pretty deep question because really what we are getting into is how to figure what the highest and best use of your money as an investor, right, if you’ve got a certain amount of money that you’re putting aside for marketing; how to find the highest and best use of that money just like you would try to find the highest and best use for a piece of real estate. This is not really an easy question because we all go out there, and we try a whole bunch of stuff whether it’s in your business or it’s in your personal life or whatever. Maybe you’re having trouble sleeping, and you start taking melatonin. I am pulling this from my actual life. You start taking melatonin, and you sleep really well, and that’s really cool, but you don’t really know what to compare that to; maybe there’s a different supplement where you would sleep better; maybe you wouldn’t feel so groggy in the morning; maybe if you just stopped looking at your iPhone five minutes before you tried to fall asleep, you wouldn’t need melatonin at all. So we always get into this question of "Hey I did this thing but I don't know if it’s the best use of my effort or the best use of my time." So we are going to get into this for online marketing because I think one of the worse things you can do really is just kind of jump into this without any kind of plan or any kind of sense of what your risk tolerance is or what your spend tolerance is. I mean, you're just not going to have a good time. You're not going to know to whether you're being successful. You're not going to know when to quit, and you really have the opportunity or the potential rather to leave a lot of money on the table.

So let's start, I think, with the primary question, which is like do you need online marketing at all, right? Like should you get into this world of internet leads and trying to find motivated seller leads at all, and I think most of you listening to this are going to assume that I'm going to tell you that like, yes, you totally need to be on the internet, the internet is the future, man… You know, like that kind of thing, and I'm actually not going to tell you that, right? Because I think… Look, I could definitely throw stats at you, and I've done this in the past, right? I could throw stats at you about tons and tons of people use the internet, and Google search volume is going up every day, and Grandma is on the internet, and I think everybody understands, everybody listen to this. I mean, after all, you are listening to a podcast, right? You get the internet is a big deal, the internet is changing the world, yada, yada, yada, soon we're all going to be virtual intelligences inside drones or whatever. You get it, right? [laughter] We've all seen someone literally walk into oncoming traffic while playing Farmville on their phone or whatever it is, Bubble Bobble, or whatever, [laughter]… Bubble Bobble… They're playing a video game from the 80s… Whatever! We've seen people just completely walk into traffic on their phones, so we all get it's a big deal, but the question is, not like is the internet a big deal? That's kind of like a hand-wavy marketing guy-way of skipping the question because we all get the internet's a big deal. The question is does it make sense for you? Is it the best place for you to put your marketing dollars in order to do more deals?

And that's not always the case, right? It just isn't always the case for everybody. You can assume that I'm going to say yes because I am like The Guy to do online marketing for real estate investors. That's like my entire career, right? [laughter] And obviously I've seen enormous positive impact that this stuff that we do has on our clients and coaching students and everything, so it's something I deeply believe in, right? It's something that I deeply believe in and see and work on every day. You've got to take what I say with a grain of salt always, but I don't think it's right for everyone all the time. I think that's a myth, and I think a better way to get at this question or a better way to kind of ask this question of yourself is, okay, you've got to find that highest and best use for your money, all right? So how do we do that? Rather than saying, is the internet a big deal, is the internet the highest and best use of marketing dollars right now?

I've got a couple ways that I sort of approach this. One is like do you have a profitable marketing channel you can scale right now by just spending more? The most common one is direct mail, and if you are doing direct mail, and it's crushin' for you, like you're just doing awesome, and you're sending out pieces, and you're making money, and it's got a positive ROI, could you just scale that by putting more money into it? If you can, I generally like to scale what's working first, right? Because I'm like, hey, it's just the easiest way to make more money if I know if I'm putting out a dollar and I'm getting out 3 dollars, just keeping putting in money until you can't do that anymore. There's always going to come a natural point, and this is true in direct mail just like it's true online and it's true of every marketing channel ever, there's going to come a point where you can't do that. You're gonna be like, hey, I'm maxing out my list; hey, I'm mailing too many pieces already, right? My ROI is dropping. If that's the case, generally that's when you're going to start looking for a new marketing channel, or if you don't have a marketing channel that's working for you right now, like direct mail has never worked for you, bandit signs aren't working for you, then yeah, you start looking at the online space, or I think if you're generally just really tech savvy and that's what you like, that's a big deal. Actually, I didn't even write that down in my notes, but I do want to take a second and talk about that.

If you like doing the online stuff, do it, right? That's how I got in this business. I generally like it. I think a lot of investors don't. [laughter] A lot of investors do not like it, and they don't want to touch it. This is the example I use is I have a riding lawnmower at my house, I have like a decent riding lawnmower. It's actually got a little drink holder so you can put like a beer in there, that's pretty cool, and I did it a bunch of times, and I'm like this makes me feel cool. I feel like a homeowner, you know? I feel like an adult, mowing my lawn on a riding lawnmower, but genuinely, I don't really enjoy mowing the lawn, and I don't do a great job at it, so I pay some dude $25 to mow my lawn, and I have a riding lawnmower, I still pay someone because it's just not what I want to do. Online marketing is kind of the same thing. If you dig it and you want to get into it, get into it because it's a fascinating field, and if you don't want to get into it, don't get into it. You can always pay someone.

But generally back to direct mail, if you can scale it up by spending more, spend more. Don't make it more difficult than it needs to be, but if you are having trouble scaling and/or you're new and you're just looking for the first channel that you want to get into or you've tested a bunch channels and nothing has really worked, online is a really good fit for you.

The other thing I'll point out is that don't think of this as something where you have to jump in with like a bajillion dollars, okay? Because I don't think that's the case either. There's a really fantastic concept, and I wish I could remember the book. The guy that wrote from Good to Great, which is a really classic business book. He's got a like a million books that all have basically the same title, like it's from Great to Better Than Great, and then From Awesome to Awesomer, and I can't remember the titles, but this one is particularly in this idea, but he has this idea of small bullets, and the idea of small bullets is like at all times, you should be spending about 10% to 20% of your time, effort, resources testing something new. It can be a new marketing channel, it could be a new offer, a new way to sell, whatever it is. So you're testing things that have potentially a really big impact on your business. That's a really good, kind of mental model to use for this because that way you're not sinking a bunch of resources into something you don't know is going to perform, but at the same time, you're not just growing stagnant. You're always trying to spend some percentage of your time testing something new. I think that's also a really useful way of thinking about it.

But honestly, the question of does online marketing make sense at all is very hard for me to answer in this kind of environment because I don't know much about you, and one of the main takeaways I want you to get from this particular episode is this question is all about you. It's not about the market. It's to about online marketing, it's not about what you need to budget. It's not about your competition. It is about you and what is right for you. So, I'll just say, if you want to dig more into that specific question, you really need to talk to someone, and I would just say talk to someone on my team. They do this literally every day. All they do is talk to investors, learn about their markets, figure out if online marketing makes sense, so if you want to do that, you can get a free strategy session with them by going to adwordsnerds.com/strategy. So adwordsnerds.com/strategy if you want to just talk to someone and figure that out for yourself, but for the sake of the podcast and for most people, most investors have a basic idea of whether they want to do online marketing or not.

So let's assume you want to, and what we're trying to break down here and answer is how do you get started? You know you want to do online marketing, how do you get started in the best way? How do avoid wasting money? To do that, we need to break down the two primary modes of online marketing, and this is going to be a review for some of you, but I want you to definitely listen to this, think through it, listen to what I'm going to say because these are big, strategic decisions and have a huge impact on how things go for you long term.

The two primary modes of online marketing, we divide this up into paid and organic. I'm going to break down what those mean.

Paid are basically ad channels like Google Adwords, Facebook Ads, Bing Ads, YouTube Ads, whatever. Anything that runs an ad that's a pay traffic channel, and usually this is something that is going to be charged on a cost per click basis, meaning you pay a certain amount whenever someone clicks on your ad or a per thousand views basis. So you're basically paying whatever it is, 1 dollar, 3 dollars, 5 dollars, whatever, every time a thousand people view your ad, view your video, whatever. So we've got cost-per-click and cost-per-view. That's the most… Cost-per-thousand views, I should say. That's the most common pricing model.

Now, the primary strength of paid traffic as a marketing channel is speed and focus. What do we mean by that? Well, paid traffic… You can get started right away. I could literally… You could start up a Google Adwords account today. You could create your stuff in less than 30 minutes. You could have it running within an hour. That's no joke. If you compare that to direct mail or even like bandit signs, you've got to make the postcard, you've got to mail them out, you've got to get the sign, you've got to drive to the thing, you've got to climb the telephone pole, like I don't know… [laughter] I don't actually know how people do it. I picture investors climbing telephone poles. I'm absolutely sure I'm going to get emails telling me that that's not how it is done. [laughter] You don't have to send me that email. That's just what I like to picture. That's what I like to picture, okay?

It's very, very fast. You can get started right away, get started generating traffic right away, leads right away, it's fast, right? And the focus is no joke either because you can get very, very focused on very tiny audiences, whether that's a very small list of keywords, whether that's a certain kind of interest, a certain demographic in certain zip code, whether that's a mailing list that you have. These are very focused audiences, and so that can give you a really good performance rating. Whether that's how often they convert on your website, how often they click, that kind of thing. They tend to be well motivated. It's relatively low labor. Like I said, you can set up an Adwords campaign, and if you're not really in it all the time and managing it all the time, it can pretty much run on its own. There's not a ton of labor there, depending on how you want to run it, and the data that you're getting is highly actionable, so you're learning where people are clicking, what ads they're clicking on, where they're converting. You can use that data to really increase your performance, lower your costs. That's a lot of strength in that channel, right?

Now the primary weakness… Remember we said the primary strength of paid is speed of focus. The primary weakness is cost. You are going to pay for the privilege to have that speed and focus. To get that data, to get that actionable data, to have that relatively low labor, to have that quick setup cost, you are paying for that privilege, and almost all of these paid traffic channels are going to run as an auction, and the thing about auctions is that the more competitive they get, the more expensive they get. If you're in a really hot market, you're in a competitive market, you're in a market with high deal values, you will pay more for clicks in that market, and there is really almost no way around that.

The analogy I'm going to use is the stock market. If you are a really good stock investor, you can get great returns for your clients, right? If you're like a stockbroker or whatever it is, but if the market is up, you are paying more. That is just how it works, and so similarly with paid traffic, you can get your costs down by increasing performance, but where the market goes… If the market is floating up and prices are floating up, your costs are floating up. So the primary weakness to paid traffic is always going to be that cost. We are paying for every click that we generate.

Now that's paid traffic, right? Primary strength of paid traffic is speed and focus. Primary weakness of paid traffic is cost.

Are you an investor who wants to dominate your local market? Do you want more leads and deals on line? Then download your copy of the Motivated Seller Blueprint absolutely free at www.adwordsnerds.com/gift. What are you waiting for? Go to www.adwordsnerds.com/gift right now to get your copy of the Motivated Seller Blueprint.

Now let’s get into organic. Now organic… Really when I say organic method or organic marketing, I should say, what I mean is anything that pushes your website up the rankings in Google. Someone types in sell my house; you want your website to show up higher in Google. That's going to get you more clicks, and so organic marketing is really anything that does that.

If you want to get pedantic about it, usually organic marketing is going to include just posting on Facebook, not doing paid traffic, just posting on Facebook. I'm not even going to talk about that. It's just not a huge deal for investors. I don't think of it as a primary or even a secondary channel for motivated seller leads at all. I'm not saying you can't do it. I just think it's not super common. It doesn't work very consistently. We're talking about organic, not paid on Facebook. So, really what organic is for investors is hey, Google, like me! [laughter] Right? You're basically sucking up to Google, that's what it is. Now typically you are doing this by improving your website, you're getting valuable links to your website, you're making awesome content… You know that kind of stuff.

The primary strength of organic as a channel is cost. The primary weakness of paid was cost. The strength of organic is cost. It is a huge channel with many potential leads. We're talking literally like 4 to 5 times the size of the paid channels that we're usually looking at, and when you get clicks from organic, they're free. You don't pay per click. What you do is put in the work and get the clicks for free, and so the marginal return on investment for organic is incredibly high, and, in fact, I would say that out of any marketing channel you could use, direct mail, bandit signs, TV, radio, paid traffic, everything, organic marketing, search engine marketing, search engine optimization, whatever you want to call it, has the highest return on investment of any marketing you could possibly do. That is a huge strength.

The primary weakness of organic is speed and focus. You remember the strengths of paid were speed and focus, and the weakness was cost? For organic, the strength is cost, but the weakness is speed and focus. What do I mean by that?

It takes a relatively long time to really get going. We're talking about months of consistent effort with relatively high labor in order to really get the needle moving, and I'm not talking about like your first month, you only get five leads. I mean like months 1 through 4, a lot of time, you don't get anything, right? So that's a lot of time to get the needle moving, and it's a lot of effort. You don't really control also what you rank for. So you can target whatever keyword you want on your website. You can say, hey, I’m optimizing my website for sell my house fast, but in reality, you are going to rank for whatever Google thinks you should rank for, and you don't have a ton of control over that. So unlike with pay-per-click, where I can pick say just one keyword and only target that keyword and only get traffic from that keyword, for organic, it's kind of all over the place. You just kind of put yourself out there and see what happens.

I'm going to try to put together a metaphor on the fly. Paid traffic is lot like Tinder. Now, caveat here, I have never actually used Tinder. I'm a married man, so I've never… I got out of the dating game before these things were a thing. So I don't actually know a whole lot about how Tinder works, but I'm trying to make this hip for the kids. [laughter] So let's say you're on Tinder, and you see a girl or a guy that you think is really cute, and you swipe on them, and they swipe on you, and it's like, hey, you match, and you get to choose basically who you're matching with, okay? That's like paid traffic. You get to choose.

Organic is kind of like you just dress yourself up and you try to look real hot, and then you just walk around the mall and see who approaches you. [laughter] Okay? So like you're dressing up real nice, lots of people are going to approach you, you're getting a lot more people approaching you then you would on Tinder, but, hey, you don't really have any control over who decides to make that leap and say, hey, can I get your number or whatever? I have no idea if that's a helpful metaphor. You can let me know in the comments! [laughter] I don't know much about how modern dating works; that's how I imagine it works!

Anyway, you just remember that paid is all about speed and focus but has a high cost, and you think about organic is all about low cost, high ROI, but has a really long time horizon and a lack of focus.

So the question becomes if you want to do online marketing, you're looking for more motivated sellers, you want to grow here. We're looking for the highest best use of our time, effort, dollars. How do you choose what to do and what to start?

I have a general rule for this, okay? I have a general rule for this. I use this with clients. I use this with coaching students. I use this online. Basically I throw this question out all the time. It's not even a question. It's an if/than statement. If you have more money than you have time, you do pay-per-click. You do paid marketing. If you have more time than you have money, you do organic.

I'm going to say that again. If you have more money than you have time, you go paid. If you have more time than you have money, you go organic.

So let me break that down. If you are doing pay-per-click, you're doing paid traffic, paid online marketing for motivated sellers specifically, I want you to think of that as a 6-month experiment, and the 6-month number is not arbitrary. It my opinion, you need to give paid traffic at least 6 months to prove its case. This doesn't matter if you're working with someone, it doesn't matter if you're doing it on your own. It doesn't matter. You need to give it 6 months to prove its case. You need to think about it that way because if you don't give it that amount of time, you're really not going to answer the question of does this work in your market? You just can't. It's just not statistically significant. It is just not particularly useful. So think of it as a 6-month test.

Now think about what you could budget every month for 6 months if you knew – if you knew for a fact – it would not pay off until the end of month 6. All right? I want you to think about this again. What could you budget every month for paid traffic for 6 months if you knew for a fact it wouldn't pay off until the end of month 6?

If your answer to that question is over $1000 a month, I say get into pay-per-click. I put it this way because when I talk about budgets, everyone wants to talk about budgets, what do I need to budget for pay-per-click in my market, and I come back with kind of like a vague answer. It's like, well what can you afford? And people always… Investors will pretty much always say the exact same thing. Investors will always say, well, look, if I know it's paying off, I can put way more money into it. If I know I'm making money, if I know I'm doing deals, I can definitely spend more. And that is the point, okay? You don't know it's going to pay off. You do not know that. There is no way you can know that. If you're in the end of month one, and you haven't done a deal, it doesn't mean it's not positive ROI. It could be your best marketing channel. You just don't know. You don't know if it's going to pay off. Of course, you are going to put more money into something that is an infinite money machine. If I give you a machine, and I say if you put a dollar, you get 10 dollars out, of course you are going to put a bunch of money into the machine. The question is how much money are you putting into the machine if you don't know what it's going to pay out? Right? So the question here is not would you put money into something you know is working? The question is do you have the cash flow to float when it's not working? Do you have the cash flow to be consistent when the market is quiet? When you're not getting any leads? When you haven't done a deal in 6 weeks?

When you are doing the work to make it work, when you are tweaking and you're improving and analyzing and optimizing, which by the way is what you need to do, do you have the money, the risk tolerance, the cash flow to do that? Because sometimes paid traffic hits right away and it's awesome. We've literally had clients do deals in their first week, and that's awesome, and like we all celebrate, but that's not normal. Sometimes it doesn’t hit. Sometimes in the markets with the biggest… actually I would say this is the most common situation... The markets with the biggest potential payoff, competition is the toughest, and it takes the longest to work.

Alright? Think about that. The markets with the biggest potential payoff, the highest potential ROI, competition is usually the toughest and it takes the longest to make it work.

And that makes sense, right? You expect something with incredible ROI and a high payoff potential to be competitive, to be difficult. If it was easy, everyone would do it. So the question is, is the payoff worth the investment to you? Can you even handle the investment? That is what you need to know.

So, again, think about this rule. Think about it like a 6-month experiment. This is for paid traffic. Think about it like a 6-month experiment. What can you budget every month for 6 months if you knew for a fact it wouldn't pay off until the end of month 6? If you're over $1000 for that, I say get into pay-per-click. Obviously, everyone is going to be a little different, and I'm not saying you need to spend $1000 to do well on PPC or paid traffic. I don't think that. But I think that's an incredibly useful rule of thumb for answering this question for yourself.

Now let's get into organic. Organic is highly labor intensive. It takes a long time, but it takes no upfront investment if you're doing it yourself or if you hire someone to do it, it takes significantly less investment than paid because you don't have to pay for ads. So SEO is both less of a financial investment if you want to go that route, but it's labor intensive if you go the do-it-yourself route. So organic can really build a foundation for you. It can a build a lot of cash flow. It can a build a lot of deal flow. It can really be the bedrock on which you build your other marketing channels, but it's going to take time, and you need to have that patience. This is like if you plant a garden, and you put your seeds in the ground and you water them and you fertilize them, and then a week in, you don't have tomatoes so you just dig up your garden, right? It doesn't work that way. You need to have that patience. You need to have the mindset and the sort of frame of mind where you're putting in the work and you know you're not going to see the results until a ways down the line. Are you patient enough? Do you have time horizon to handle that? Some people need to do deals right now. They need to do deals right away and waiting 6 months to get their first lead is not good for them. That's too much pressure, it's too much work, it doesn't fit in.

The return on investment for both of these channels is absolutely massive. We've seen that time and again. It's just something that so many people have done at this point. I don't think that is really up for debate, except for specific situations, but both of these channels require effort. Of course they do, right? Of course it's competitive. If I was giving away deals, you'd have to fight to get to my front door. And so similarly if Google and Facebook and these channels are giving away deals, then you're going to have to fight to get to their front door. It's not like other investors aren't hearing this podcast. It's not like no other investors know about Facebook ads. People know about this stuff now. It's competitive. You expect that competition going into it, and you increase your chances of success by picking the marketing method that aligns best with your needs, your personality. This is what I meant when I said in the beginning that this is really about you, whether you are ready, whether you are ready for the investment, whether the investment… whether it is of time or effort or money is worth it to you.

Remember like I said in the beginning, hey, man, if I've got an easy marketing channel to scale up, that’s going to be a lot easier than starting a whole new thing.

All the metrics and the numbers and the stats and the fancy stuff I can throw out, they don't make sense, and they're not going to make this make sense if it doesn’t make sense for you as an individual, as an unique investor with your own set of strengths and likes and dislikes.

I can't stress this enough. Picking the thing that makes sense that you know you can work with, that you have the right expectations for, that's what maximizes your chances of success. If you pick the thing that's like the hot thing now because somebody told you to do it, and it's not right for you and it's not right for the business, you're never going to make it, and that kills me when it happens because I see investors with tons of potential, tons of growth potential, tons of potential in their market, and they just can't grab onto it because they put themselves in a tough situation from the start.

So guys, I hope that makes sense. I hope that was useful. As always, you can get Show Notes to this episode at www.adwordsnerds.com/podcast, and hey, this podcast came out of our Facebook Group, which is totally awesome. The REI Marketing Nerds Facebook Group. It's totally free. I'm in there every week doing a bunch of free trainings, lots of cool investors sharing their favorite tips and strategies and data. It's just a really incredibly high-quality place. No spam. No spammy-stuff. It's just a really great place to hang out. If you're interested in joining the group, you can go to www.adwordsnerds.com/group, and it will forward you to the Facebook Group or just search on Facebook for REI Marketing Nerds.

Once again, www.adwordsnerds.com/group to find the group, and www.adwordsnerds.com/podcast to get all the Show Notes from this podcast, and listen to all our other episodes! I would really appreciate that!

Thanks guys, I hope you're having an awesome day. I’m going to go outside and enjoy some sunshine, and I'll talk to you soon. Bye…

Episode #004 – The Multiple Close Model: How to maximize your online return

You might use online marketing, offline marketing or just get leads through word of mouth.

But no matter how good you are at generating leads with the marketing channels you use, you need to be able to leverage the leads you generate.

This episode teaches you how to get the most out of your leads by implementing the “Multiple Close Model” to make much more money—with the same amount of leads.

Show highlights include:

– What you need to learn from art auctions about real estate leads. ([4:05])
– How to get lower leads than your competitors. ([7:10])
– The characteristics of an investor who dominates markets. ([11:15])
– 3 ways to generate profit from almost any lead you get—even those you think are “lost”. ([13:35])
– How long to follow up with your leads to close the deals (the numbers on this might blow your mind). ([20:45])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group

Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

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 like you get more leads in deals online. Outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Hello everybody, welcome to this episode of the REI Marketing Nerds podcast. As always, this is Dan Barrett here from Adwords Nerd. Super happy to be with you here today. Sipping some ice coffee, it's sort of a rainy, gloomy day here in Connecticut, it's the perfect time to cuddle up with a hooded sweatshirt and talk about marketing, which is why we are here. Actually this week's episode is going to be interesting. We are getting a little bit off the marketing path and I want to talk a little bit about more of the investing side of your real estate investing business, I'm talking about the kinds of deals you are doing. This isn't something I usually talk about, because honestly it's like not my realm of highest expertise, and generally I'm really, really focused on that lead generation side, that's what I do. I want to talk about this because no one really talks about it, and it is increasingly important. I see the importance of this more and more as we do lead generation for investors, as I work with investors, as I talk to investors, hand out on message boards and all that stuff, I really see the impact these decisions have on the long term success that you have in your investing business. I want to dig into this, and I want to dig into the multiple close model. I'm going to tell you kind of an uncomfortable truth here, which is that no matter how awesome your marketing is, even if you are invested heavily in something like pay per click marketing or you want to be invested in that channel, no matter how awesome you are at it, when the channel gets expensive, your lead costs go up. So before we get to the multiple close model, we need to take a second and understand market pricing online. This is, I think, really illuminate some issues that you might be having or you might be seeing people have, because there's a lot of confusion about how this works.

I want you to think of online leads. We'll talk about pay per clicks, that's the one that this applies most directly to, but it's also true even in direct mail, and it's true in search engine optimization, all that good stuff, but we'll stay in the pay per click world, that's easiest place to understand. Online leads are going to have a market price, and this market price you can define this as the price the average investor is going to pay when they go and they get these leads from a pay per click channel, whether that's Google Ad Words or Facebook Ads or Bing Ads or whatever you want to. The market price depends a lot on the level of competition in your area. So let's say, I'm going to pick a market at random, let's say you're in Memphis Tennessee. Alright? You are down in Memphis and you are competing, you want to go online, go into a pay per click channels, start generating motivated seller leads. Well the prices you pay when you first get started are primarily determined by how many other investors are competing there, because all these online marketing channels work on an auction model. You imagine if you go to an art auction, like let's say they're selling the Mona Lisa. I don't know why they would be doing that, but let's say they're selling the Mona Lisa. Everyone's like, "I hate this painting. It's too small." They don't want it anymore, they're selling it, and they're auctioning off. You go to the auction because you really like the Mona Lisa. Now if nobody else is at the auction, you are the only one, you can pretty much set your price. Be like, "I'll bet a dollar." They'll be like, "Fine, seems cheap, but no one else bid on it so that's what it is." They bang the gavel, you give the dollar, you get painting. But you also understand that if there are a lot of other people that want to buy the Mona Lisa, and a lot of other people at the auction, and a lot of other people bidding and they're big high and they're bidding hard because everyone wants the Mona Lisa, well then you can't set your own price. Prices are going to go up, the competition drives the cost of the painting up. It's the exact same thing that happens with online advertising, pay per click advertising, where the more investors you have that are bidding on the keywords that you want, the higher the prices tend to go.

No matter how good you are at that marketing, the costs in that channel go up, then your average cost is going to go up, that market price, the price at the average person is paying goes up. Now in every pay per click channel there are systems that allow us to lower your lead cost over time. Because it was just set on competition it would be really hard to, you wouldn't be able to make a difference, everyone would get the exact same result. It would kind of be annoying, really be just a game of who could spend the most money. Systems like Facebook Ads and Ad Words build in systems that allow you to lower your lead cost over time by producing really good ads. So Facebook, this is called relevancy, your relevancy score, in Google AdWords it's called quality score, now these systems basically say, "Hey, if you create a really awesome ad, it's really well targeted, the ad is really cool, people like to click on it, and when they click on it they're happy, I'm going to lower your costs. I'm going to give you a break on the market price." And this is because this is when Facebook and Google get paid. They only get paid with these systems when someone clicks on an ad.

If you run terrible ads that no one clicks, Facebook and Google don't get paid, and if you run terrible ads that make people really upset that they clicked on them, people are going to stop clicking on ads in general. And so long term, even though Google and Facebook, they're giving you discounts on the market price, it works out in their favor long term. So over time as an investor, like when you get started in a pay per click marketing channel, you're generally paying the market price, like whatever the competition dictates. If it's an expensive market, it's expensive, if it's in a cheap market, it's cheaper. Over time you can manipulate those systems of relevancy core, quality score or whatever it is in the channel that you're competing in, and do things like split test your ads, cut low performing keywords or audiences. You can test new landing pages, you basically actively manage and work on your account, and over time your costs will come down. You'll start to get cheaper leads than your competitors, which is awesome. It's one of the things that makes this kind of marketing so much fun and can make it really, really profitable. All that is amazing, but the thing to remember is that you are bringing down the costs, you're getting those discounts off the market price. So even if you have the best marketing in the world, if your market price is significantly higher than your friend that you're talking to online, you're still going to have a higher cost per lead than your friend.

Sometimes I explain this like if you think about, you take the world's best negotiator, like hostage negotiator, I'm picturing like someone with like aviator glasses that are reflective, he's got like a gruff voice and he says, "We've got to get those hostages out of there." Like that kind of person. Maybe that's more of like a Rambo kind of charge there and kill everyone sort of dude. You're picturing what I mean, world's best hostage negotiator. He's going to negotiate a price to release those hostages. Now if you put him into situations, one in which the hostage taker starts the negotiation by saying, "We will release the hostages if you give us $100." Okay? And then in another situation where the hostage taker says, "We will release the hostages if you give us a million dollars." So two very different scenarios. One guy's demanding $100, one guy's demanding a million dollars, but you have the best hostage negotiator in the world. No matter how good they are at negotiating, those processes are going to end up in very different places. I think we can all probably guess, but the people demanding a million dollars are generally going to get more in the end than $100 people. Maybe not, but that's usually the case. If you walk into a store and you're in a haggle with someone over buying like a pair of shoes or a rug and the pair shoes is $50 or $5000, you'd be the world's best haggler, but again you're going to pay more for those shoes that started at $5000. No matter how good you are marketing, your market prices affect how low you can really get your lead cost. Even if you have the best online marketing people doing it for you. Whoever you get working for you it's going to be tough to get like rock bottom price if you're in a really expensive market.

Not to belabor the point if you get this, market prices dictate a lot of what's possible in everybody's market, and that's cool. Now part of dealing with high market prices, part of dealing with the fact that you hate... I'm in a market right now it's super competitive, super hot, people are spending a ton of money on ads, how do you deal with that? Part of it is making sure you make as much money as possible when you do get a lead. Because if you can afford to pay more for leads, because you make more from those leads then your competitors, or you can monetize a higher percentage of those leads, well that puts you in an excellent, excellent position to dominate a market. If someone can consistently pay more to get the same leads and make the same amount of money or more, they are going to eat that market over time. It is practically inevitable.

Are you an investor who wants to dominate your local market? Do you want more leads and deals online? Then download your copy of the Motivated Seller Blueprint absolutely free at www.AdWordsNerd.com/get. What are you waiting for? Go to www.AdWordsNerd.com/get right now to get your copy of the Motivated Seller Blueprint

Dan: So making more money on the back end is absolutely critically important, and the question becomes how do you do that? How do you monetize the highest percentage of the motivated seller leads you generate? How do you make the most on the back end? And this is where the multiple close model comes in. I would say the folks that we've worked with that have consistently had the highest success rates, I'm talking about, this real world data based on the work that we do with investors, working with real investors in the real world. This is not theory. The people that have the highest success rates with online leads tend to work some variation of the multiple close model, meaning they have multiple ways to close a deal, This could mean that they are doing different types of deals, it could mean that they have different financing structures or whatever it is, but they have multiple ways of closing. They're not looking for a very narrow band of all people that are going to be the only deal that they can do, they've got a wide kind of top of that funnel where a lot of deals can come in.

This means that a higher percentage of all the leads that they generate fit into this "deals I can close category". Let's kind of make this specific, what does this actually mean? What does this actually look like? I think the most common variation of this is an investor who can flip houses when they want, they can wholesale deals when they want, and they can work with a realtor, or they have some way of making money off of leads that just want retail price. So they have the ability to flip when there's a lot of profit to be made, they have the ability to wholesale when maybe there's profit to be made but they don't necessarily want to do the work, and they have the ability to work with leads that want retail price on their home.

Now the retail price thing is the thing that's probably the least common among investors, but it's a huge deal because when you go into the online space, whether you're doing organic or whether you're doing paid, any of the online channels, you're going to generate fair amount of people that want retail price. This is just a fact of these channels because you can't really target people based on the amount of equity they have, and the guy that's so motivated that he needs to sell his house tomorrow at a penny on the dollar, and the person that wants to sell their house ten years from now and it's just idly curious, they both just type "sell my house" on the internet. Very few people are typing in "I need to sell my house at 70 cents on the dollar". If they were I would target them, but they're not generally typing that in. Right? So you're going to get leads that want retail price, that's just the way that it is, and if you have a way of profiting from those leads, you can offer cover your entire advertising budget flat out. You just take care of all your advertising you spend just off these retail price leads, even if you're not generating a lot of them, and that leaves you a lot more room to go big, go aggressive on the leads that you really want.

You don't have to do it this way, I'm not saying this at all, you do not have to do a bunch of different things. If you're just a flipper, you're just a wholesaler, whatever it is, you do not have to do this multiple close model to be successful, and in fact, we work with lots of people right now who're just wholesaling or just doing flips, but the multiple close model is the most flexible model there is, and it makes things a lot easier on you. Makes it a lot easier to generate cash flow, a lot easier to generate positive momentum, it's just a really good way of doing it if you have the ability to do it. But that's not all there is to do in terms of maximizing your return on the back end.

Another way to maximize your return on your online leads is to make sure you are relentlessly following up. I say relentlessly, I don't mean you are harassing people, I don't mean if someone says "Stop calling me." you just call them more, that's what I'm saying. You need to be following up with your leads regularly over long periods of time, and this is the key even if they do not seem motivated. Because anybody that contacted you via email, via phone whatever, no matter what they say, no matter what they say in that moment, they are capable of making the decision of selling you their home, or letting you put their home under contract. They would not be in the situation where they were at all motivated to fill out your lead generation form if that wasn't at least a distant possibility. And because you pay to generate that lead, anything you do after the fact to make that lead into a deal is going to massively change your return on investment that you're getting. It's incumbent on you to do, and that's a $10 word, right, "incumbent". It's something you've got to do. It's just something you've got to do.

So one of the best ways we found a follow up with people long term is to actually spread your follow ups across different channels. You use email, you use phone, you use text, you use Facebook Messenger, you use direct mail, whatever it is. And it's very common for investors to, someone will fill out the form and they'll follow up via email, they'll follow up via phone, they don't get a response, and they kind of get demoralizing, they get dejected. They're like, "Hey, this isn't working." and they leave that person alone, but I'm telling you that, look, people get busy. You can imagine someone in this situation where they are actually really motivated to sell, they're in a situation where you could really help them. You could really make their life better and they go online to search for "sell my house fast" and they fill out your form, and then the second they hit "send" the dog starts barking, the kid wakes up from the nap, the kid is sick, kid is crying, they got to make dinner, they got a clean house, their boss is jumping down their throat. I mean you can imagine the tons and tons of things that can make you forget that you even filled this form out in the first place. They may have been sitting on the couch watching Game of Thrones or whatever is popular on the date this podcast necessarily, but whatever is possible whatever's popular. They're sitting on their playing with their phone and they fill it out and then they get distracted because dragons kind of breathe fire on everybody and they just forget about it.

If you don't follow up with that person you don't give them the opportunity to remember what they did and to get back in touch with. If you're doing emails and they're not responding, maybe they just don't get your emails. Maybe your emails went to junk, maybe they do the thing that I constantly do, which is open an email, read it, think that I'm going to respond to it, and then close it and forget about it. It's almost a little too real. That's a lot of real talk, but this is a real thing. I'll like open the mail and I'll read it, I'll be like, "Wow, I really need to respond to this, I'm definitely going to respond to it." and then I'll close it and I'll forget it ever existed. So following up over different channels, doing an email, then the next week maybe following up on phone and then if the next week following up via text, next week friending them on Facebook, next week sending them direct mail and then going back and doing phone and email. Doing all these things allows you to find the channel that connects with them. The one they are most likely to respond to. I'm very likely to respond to texts. I'm very likely respond to Facebook messages, but I'm much less likely respond to emails. It's just the way I operate. So by going to different channels and following up consistently over time, you really have the chance to blow up the amount of money you are making from the exact same amount of leads, the exact same amount of money you're spending, but you're getting a lot more on the back end. Throw out there a lot, and I really want you to think about it. More than a third of the deals that are done from online leads happen six months after the person initially filled out the lead form or contacted you. I mean six months went by from the time they filled out your form or were your website to the time that you actually are able to close that deal. If you're not following up over a long period of time, you're leaving a ton of potential money on the table. A lot of people are going to ask like, "Well how long would you follow up?" I will tell you follow up forever. Follow up forever.

You can use systems like Investor Views, is a really good one, but there are a lot of a customer relationship management tools, CRMs, out there that will allow you to automate a lot of your email follow up, automate your text follow up, etc. If someone has filled out a lead form for you and they have not directly told you to leave them alone, I would just follow up with them forever. Because the incremental cost to you is essentially nothing. The cost is all to acquire the lead. Anything you can do to maximize the amount of deals you're getting off the back end is something that's going to make things so much easier for you, and is going to allow you to compete incredibly well in very, very competitive markets. I can almost guarantee you if you are in a competitive market right now and you listen to this, the top investors in your market, they're paying pretty much the same thing that you are to get leads, but they are making more money from those leads. And as they say, it's a more marketing cliché, but it's as true now as it is ever been, the fortune is in the follow up.

So think about that guys, think about these two things that are really going to allow you to maximize the amount of money you make online. This is the multiple close model, being able to close multiple types of deals have more than one way you can make money from a lead and having really relentless follow up. Following up on multiple channels over a long period of time, giving people the chance, the opportunity to come back and work with you, despite the nonstop about of nonsense that life throws at everybody.

I hope that was helpful for you guys. Just like every episode, you can go to AdWordsNerds.com/podcast to check out show notes for this show, as well get a whole bunch of other cool stuff. And if you like this show, we do free trainings in our Facebook group every single week. It's the REI Marketing Nerds Facebook group, go on Facebook type it in, you can find us, or you can go to AdWordsNerds.com/group. The group is all amazing; it is filled with really awesome investors sharing strategies, tips, tricks, data about what's working for them, there are no sales pitches in there. It's an awesome place to hang out. I hope that was useful for you guys, let me know if you have any questions. Hit me up and I will talk to you guys very soon.