You probably have long-term visions. Building your dream for the next 20 years. Exploring the world while living off of your properties. Giving your kids what you never had.
But in times like these, you need to get a result now. In this episode, you’ll get a strategy you can execute now to burn less money in your marketing.
If you operate this way, you can spend less money on more leads. Ready to leave the tire kickers to other investors? Listen now!
Show highlights include:
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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 and deals online, outsmart your competition, and live a freer, more awesome life. And, now, your host, Dan Barrett. [00:33.5]
Dan: Alright, hello and welcome to this week's episode of the “REI Marketing Nerds” podcast. As always, this is Daniel Barrett here from AdWordsnerds.com where all we do all day is help real estate investors get more motivated seller leads. By the way, if you are listening to this and you want to work with our team or you're curious, you just want to see what we have to say, you want to talk about your market, what we're seeing other investors doing right now that's working in this weird weird time that we are in; go ahead and go to AdWordsnerds.com and request a free strategy session. It's free, I said that in the beginning and it's a high value call I'm not going to lie and we spent a lot of time on them. So if you are looking to get some help, that's the way to do it. [01:24.6]
This week I wanted to talk about a very specific kind of marketing tactic, right. This is a thing you can go out and do right now inside your online advertising that is going to get you cheaper leads and potentially get you more leads. So it's a very kind of tangible, sort of practical, pragmatic tactic, but it's also a mental model that you can use kind of across the board to improve all sorts of things. And that's my favorite thing right, My…one of my favorite things is when you find something that works kind of in a specific instance and you realize the underlying concept has all these applications you never really thought it. So let's dig into this. And I'm going to start with the mental model. And the mental model is raising the floor. Now, I didn't make up raising the floor by any means and in fact that terminology, I'm pretty sure it came to me from my friend Nick Peterson. So what's up Nick Peterson [02:22.3]
Raising the floor? So let's think about this, right? Typically whenever you have something you are trying to improve, right? So let's say it's the per the, the, the output of a system or it's, you know, any particular outcome you're trying to get. So you're trying to lose weight, you're trying to make more money, you know, whatever it is. What most people do is they focus on improving their bests, right? So like I go to the gym and I'm trying to say like, you know, is my one rep maximum, like the amount of weight I can lift in a single rep, is that going up? Are my best lifts going up? Is my best-selling product, how can I make it sell more? You know, my, my best performing marketing channel, how can I make it better? This is kind of like the classic kind of 80 20 sort of principle where you say, Hey, you know, I've got one thing that's kind of the best that's producing the most. I'm going to improve that and that's going to give me the most results. And in many cases that's true, right? So that's kind of improving the best. [03:22.9]
You kind of think of this as like raising the roof, raising the ceiling on your performance. You're bumping up against the ceiling, how can you get rid of it? And that's very kind of reasonable way to think about it, but part of the problem with that approach is that there are typically diminishing returns when you're working on something you are already good at, right? So if you think about weightlifting, right? If you've been weightlifting for years and years and years and years and you're, you're really muscular and you're really strong, it is actually hard to continue to add muscle and get stronger because you're kind of reaching, you know, you're not, you're not at your peak necessarily, but you are getting close to your physical limitations. And conversely, if you are new to weight lifting and you just go to the gym for the first time and you spend a couple months there, you tend to have what they call beginner gains, right? You gain a lot of muscle really quickly. [04:14.4]
And likewise, right? It's, it's in many cases, if you are max out on your business, let's say you're, you're trying to improve your Facebook ads because your Facebook ads are your single biggest marketing channel, your most profitable marketing channel, it's very possible you're getting close to maxing that out and so eking every single individual percentile increase out of it gets harder and harder and harder, the better and better you get. So there's a sense of diminishing returns at, to raising the ceiling, right, improving your best performance marker. Now conversely, we can think about raising the floor, by which I mean improving your worst, the absolute lowest point, right? Because if you think about that for one, you're not going to have diminishing returns, typically on your lowest point, your worst lift, your weakest lifts, something like that. In effect, it's going to be relatively easy to improve it; but here's the thing, if you look at the average output of the system, you get the same bar improvement, if not more improvement. By improving your low point, than you do to improve in your high point. [05:17.5]
And in many cases it's significantly easier to improve your low point than it is to improve your high point. So another way of looking at this, let's say you're trying to lose weight and you're trying to control your diet and you follow your diet plan 80% of the time and 20% of the time you're kind of off base right. Now we could try to, you know, really, really tweak what we do on the days that we nail it. But it's actually a lot easier to just say, how about I just work on the days where I'm not nailing it, where I'm missing that 20% where I'm not performing and let's just make that a little bit worse. So instead of when I go off my diet plan, you know, I'd go to Taco Bell and I eat 5,000 calories of garbage food instead of just saying like, Hey, you know, I go off my diet plan, but I eat only 2000 calories of garbage food. I just literally shaved off 5, 3000 calories off that, that weekly kind of input, right? It's, it's a significant improvement. And so just as a mental model, we think, okay, yes, I can improve the best, but what about if I just make my worst day less bad? The overall impact on the system is going to be pretty much the same. That's the concept of raising the floor rather than raising the ceiling. [06:28.7]
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Now how do we apply this directly as a tactical right? Practical, apply this directly to our online advertising for motivated seller leads. Well, in let's say Google, I'm going to talk about Google, but you can do this in Facebook and do this in Bing, you pretty much do this in any online advertising system. I'm going to talk about Google because that's what I've got kind of right at the tip of my tongue there. [07:20.8]
When you're in Google, you can do something called segmentation, which is basically just looking at the data of your account sliced into different groups. Okay. So let's say you have your account is generating let's say $150 leads and it's generating 10 leads a month or I don’t know, whatever it is. I'm making these numbers up, but let's say that those are your numbers. Well, you can split it up and say, if I segment my account by device, how many of those leads came from mobile devices and what did it cost? [07:54.6]
How many of those leads came from desktops, right? And what did it cost? How many of those leads came from tablets? And what did that cost? And what you'll end up finding is that that overall average performance, when you divide it up, it looks very different. It could be that nine of your leads came from mobile and the cost per lead was $80 and then one of those leads came from desktop and the cost per lead was $500. Now that all adds up. And again, I don't know if the math works out, I'm just making these numbers up, but that all adds up to the account average of saying, Hey, 10 leads at 150 bucks. But if I tell you, Hey, 90% of your leads came from mobile devices and the cost was significantly lower, almost 50% of what your account average is. Well that really changes the picture, right? Same thing. You can segment by hour of the day, day of the week, you can segment by is this person, you know, what's their income level? You can segment this person by do they own homes? So you can segment these people based on their ages, right? You can segment people based on their locations, their zip codes, all sorts of things. [08:57.6]
And so the way segmentation works to improve your leaf low and lower your lead costs is we go in, we segment the, we segment the account and we raise the floor. We simply just cut out the lowest performing segments. We make our worst performers, not as bad. In this case, we could just get rid of them altogether. We could, for example, bids, you know, some kind of percentage less when someone's in that group. There's a variety of ways of doing it, but the overall idea is just that we look to see which segments of the account are performing the worst and we get rid of them and by getting rid of our worst performers, we automatically improve the overall performance of the system. [09:41.6]
Our average lead cost goes down and what do we do with that extra money? What do we do with the money that we save by not spending it on our lowest performers? We spend it on our best performers. We increase our bids for when people are in our highest performing performing segments and that is what gets us more leads for less. Now look, this is kind of like a technical discussion in the sense of like we're talking about like actual things that are going on inside a Google ads account, right? Maybe Pat podcasting is in the best possible, the format for that kind of talk, but the thing I want you to take away from this is the pure mental model of this, right? Inside any system, when you are looking at average performance, there are multiple segments that are adding up to that average performance. And yes, we can improve by taking our best segments and focusing on those, but we can also have massive improvements. And by the way, fast improvements, almost immediate improvements by taking our worst performing segments and making them less bad. [10:46.7]
And that is the lesson behind raising the floor. And you can apply this to direct mail. You can apply this to anything you do, your health, your relationships, your business, all of your marketing. It's an incredibly powerful mental model. Now, do you apply it every single time? Of course not. Mental models are tools in the tool box. You want to have them and be able to use them when it's the right time, right? But next time you need to improve the performance of a system think about, am I going to be best served by raising the ceiling or could I get faster results by raising the floor? [11:23.6]
If you liked this episode, I got to tell you, I do trainings like this pretty much every single week inside the REI marketing nerds Facebook group. You can get there by going to AdWords nerds.com/group that's AdWords nerds.com/group we would love to have you, it's free, request to join. We'll get you in there every single day. I'm posting content, trainings, updates on what's working now, especially now with like this weird world that we live in. I'm going live in that group all the time, sharing what we're learning in the agency as we work with real estate investors to find more motivated seller leads. So that sounds useful to you, get in the group @ AdWords nerds.com/group or just go on Facebook and type in REI Marketing Nerds, you will find us. This is Daniel Barrett signing off. I hope you have an awesome rest of your week and I'll be talking to you very soon. [12:12.8]
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