It’s amazing how many people “try” direct mail, and then proclaim that it doesn’t work.
Unfortunately, most people’s idea of “trying” direct mail is to send a few hundred letters using peel-and-stick printed labels with an indicia mark (the pre-paid post mail permit mark used in place of stamps).
When following this approach, you come into the first and biggest barrier of direct mail. When most people sort their mail, they do so by sorting it into “A” pile mail and “B” pile mail.
- “A” pile mail is stuff that looks interesting, is of a personal nature, or is important, like bills and paychecks.
- “B” pile mail goes straight into the trash can.
When you send direct mail that looks like junk mail, guess which pile it’s going into?
Over the past decade, I’ve been heavily involved in the use of direct mail for several different types of projects. It has always fascinated me that different groups of people respond differently to different types of mail, and even respond differently based on how it is sent and what it looks like.
For most of those years, postcards were my workhorse. The theory behind postcards is that they are cheap (about half the cost of sending a letter), and you don’t have to do anything in order to get them to open your marketing piece – it’s already open!
Getting a good response from postcards requires sending more than one. It has not been uncommon for me to send sequences of 8, 12, or even more postcards to the same cold mailing list.
For tax preparation, it is cost effective to send weekly postcards to a target neighborhood surrounding your tax practice for the entire duration of tax season. From early January through the filing deadline in April, sending 16 offers once per week via postcard to 1,000 homes immediately surrounding your office will cost about $6,200, but only needs to bring in 25 to 40 tax return clients (depending on your fees) in order to recoup that cost.
A 4% response rate might sound like an impossible number to hit, but a 16-week mailing program with a strong offer to your prospects (such as discounts, refer-a-friend bonuses, etc.) should bring in closer to a double-digit response rate. You’re making an offer for a valuable service that most people are going to use anyway, during the time of year that they are looking for it. It’s about as no-lose of a proposition as you can get.
Tax resolution direct mail marketing is a very different beast, unfortunately. Finding an effective direct mail marketing mechanism for tax resolution is a much more difficult task. When you have the budget to spend five figures each month on direct mail, it’s much easier to send a large quantity of test pieces and eventually dial in on the strongest sequence of mailers to use.
Keep in mind that when sending direct mail to tax liens, you are competing with a number of other firms that are doing the same thing. Many of these firms are sending extremely generic letters on letterhead to just introduce their firm, and don’t really do an effective job of selling. Many other firms send what is meant to look like some sort of official notice from the IRS, including a “case number” and layed out in a format that looks like an official notice.
These types of letters are actually quite effective when sent in large quantities, but using them may subject you to unwanted scrutiny from the FTC if somebody complains, as sending this type of advertising is usually viewed as a deceptive advertising practice by the FTC, and has been the source of massive fines and even prison time.
How then, do you distinguish yourself from the competition and actually obtain decent response rates to your tax resolution direct mail?
One tactic is to use a sequence of postcards or letters, as indicated for tax preparation marketing. These sequences need to be at least 4 weeks in length, preferably 8 or 12. By being consistent with these mailing sequences, you will make your money back and then some in the long haul. By long haul I mean the course of 6 to 12 months.
Most people do not have the patience for such a prolonged time period of spending money on marketing and seeing zero response.
Remember this: In all of my direct mail testing, it costs between $350 and $1200 to generate a single tax resolution client from direct mail nationwide. Local and regional response rates may be significantly lower, increasing costs.
The Phoenix, AZ area, one of the 10 largest metropolitan cities in America, has the dubious distinction of being what I consider the most competitive tax resolution market in the country. Due to this particular location’s online public records system, obtaining lists of raw tax liens filings here is incredibly simple – and free.
Because of this, cracking this particular market requires an incredibly compelling marketing piece, with an irresistible offer that is simply better than everything else out there. The ease of obtaining tax lien lists here means that tax debtors here are likely to receive mail pieces from somewhere around 30 tax firms when the lien is filed, and receive telemarketing calls from another 70+ firms.
The solution to this over-competition problem, if you are interested in knowing, is simply to wait to mail these people until about 4 to 8 weeks after the lien is filed. By then, the tidal wave has died down, and they’re probably receiving a Letter 1058 in the mail, which is a trigger event for hiring representation. So, wait until 8 weeks after the lien filing date, then start your sequence, and you will see higher response.
As part of doing market research for offering a “Done For You” direct mail program, I recently spoke with two other companies that offer this service. Both companies only offer a one-time mailing option, and require a minimum mailing of 5,000 tax liens. When I asked why their minimum was so high, they both gave me the same answer: In order to see sufficient results, you have to mail that many.
What they were really saying is that they want you to mail enough so that you’ll almost be guaranteed to get a client and make your money back, so that they don’t look bad. (Doing a 5,000 piece mailing one time will cost you about $3,500.)
What if you are on a small marketing budget, and simply can’t afford to spend $3,500 to generate a few inbound phone calls?
Here’s what you do. It requires a lot of manual labor, but it is the most effective direct mail approach being used by my coaching clients today. Instead of mass producing your mail pieces, each one of them is essentially a one-off. Using Word or a similar program, you mail merge your marketing piece to personalize it, which engages readers. Then, you mail it in a hand-addressed envelope, with a real stamp, and a goofy return address label (I like to use SpongeBob Squarepants address labels).
A hand-addressed envelope with a real stamp and interesting return address label doesn’t look like junk mail. Instead, it looks like a personal letter. Even more so if you mail it using a greeting-card sized envelope, rather than a #10 business envelope. This type of letter automatically goes into the “A” mail pile, and is nearly guaranteed to get read. By getting opened, it crosses the single biggest hurdle to direct mail success.
Why might this technique be more successful than postcards?
My working theory right now is that once somebody opens this type of letter, they feel almost compelled to read it, since they bothered to take the time to rip it open and pull it out of the envelope. I could be way wrong on this theory, but this type of letter tends to work pretty well.
This has been a long article, with a lot of information. So, to recap, here are the methods for doubling or tripling your direct mail response rates:
- Mail out lengthy sequences of postcards or letters to the same list.
- In highly competitive markets, adjust the timing of your mailings from the lien filing date to avoid the tsunami of competition.
- Start using alternative types of mailers, such as self-addressed envelopes with real stamps or jumbo, full-color postcards.
As mentioned earlier, direct mail is a constantly changing and fickle beast. However, direct mail is still highly effective – has been for a hundred years, and probably will be for 100 more. The cost of customer acquisition is on par with telemarketing when you include commissions paid to salespeople, and can be ramped up or down on your whim.
Even if you do small volumes of direct mail, it’s still better than doing none. Just be sure to mail each person on your list more than once. In addition to that, make sure you have a prospect follow up system in place to maintain contact with people that call you, but don’t buy. If you don’t follow up, then you’re basically pissing away your marketing money.
Jassen Bowman, EA, CTR practices exclusively in IRS Collections representation as an Enrolled Agent, and spent three years operating a completely remote, cloud-based practice while traveling the world full time. He has presented over 300 live seminars and webinars to CPAs, EAs, and attorneys on the subjects of IRS Collections representation, practice management, and growing a tax firm. He is the author of several books, including “Tax Resolution Secrets” for consumers and “Tax Resolution Systems”, a checklist manual for practitioners. He is the founder of TaxMarketingHQ.com, a training and consulting firm specializing in helping solo practitioners and small firms to build better tax practices.