Jon or anyone: telemarketing question - Posted by Thomas Brown

Posted by David Butler on March 13, 2001 at 13:28:53:

Hello Thomas,

Telemarketing can be a powerful weapon, particularly if a fellow is good on the phones. However, pure cold calling statistics are not generally very strong, and I don’t believe there is enough of a measurable database in the private real estate note industry to work from reliably. Too many variables, and too limited of a marketplace.

The closely related mortgage industry, however, does offer some realistic comparables. In the mortgage industry, most of these calls are better if initiated by a professional telemarketing company, assuming the company is high quality in their lead generation. With a warm prequalified lead list initiated by the telemarketing company, a good loan officer can generally average about 1 out of 8-10 closings across the board. With highly targeted lists obtained from title companies and various sources, and the leads related to very specific product lines (matching up with perceived borrowers’ needs), cold-calling hit rates made directly by the loan officers themselves can range from about 1 out of 20 to 1 out of 40 (interest rate changes can make a dramatic difference on success rates).

With mortgages, you generally can expect a higher closing ratio, because you can run into people needing new loans, in addition to refinancing existing loans (and refinancing attracts people wanting to lower their interest rates, consolidate debt, pull out more cash, do home improvements, or all four); and if you carry the products, you have an opportunity to write 2nd mortgages too.

Private notes are much more limited. The universe of note holders is smaller, and their benefit is pretty much restricted to one thing - converting a stream of future payments, into a lump sum of cash today.

As bad as the public’s understanding of lending markets (evidenced by the first words that always come out of a borrower’s mouth… “What’s your interest rate?”), you can imagine that most noteholders are very uneducated about the principles of “investment value”, the “time value of money”, “risk analysis”, and the “cost of capital” that goes into the pricing structure when purchasing notes.

Subsequently, most noteholders usually have unrealistic expectations, and are usually shocked that they must take a discount to sell their notes - in fact, a great many think their note is worth MORE than the principal balance, due to the interest bearing feature of their notes. (we call this an “acute case of ‘pride of ownership’” ;-)))

So, while it is important to be a good “salesman”, a knowledgeable “salesman”, and a good negotiator to be successful in the note business - even with a “one-pronged” attack as powerful as telemarketing can be (in the hands of a master) - timing is everything!

If the noteholder doesn’t have a need when you call, you are going to generally have a zero response rate for that individual (because you don’t have a variety of needs to possibly fill, like you might with various mortgage products).

For note brokers, a hybrid form of marketing campaign, utilizing both “point of sale” and “institutional” approaches, encompassed in an effective and efficient “multi-pronged” marketing effort… offers the best, and most probable chances of success. To get a little better feel for that, you might want to take a look at our FREE reports, BANG THE DRUM SLOWLY, at:
http://notenetwork.com/at.cgi?a=118510&e=Reports/Bang.The.Drum.Slowly.php3

and, FOLLOW UP OR DIE, at:
http://notenetwork.com/at.cgi?a=118510&e=Reports/Follow.Up.Or.Die.html

Incorporated in such a campaign, telemarketing can be, and is indeed (in the hands of a good closer) - a very powerful part of the overall program. In fact, you can see reference to a very effective way to use telemarketing, in several chapters of GROWING YOUR FOOD CHAIN… at: http://notenetwork.com/at.cgi?a=118510&e=Products/Food.Chain.php3

Hope this helps, and good luck Growing Your Food Chain :wink:

David P. Butler

Jon or anyone: telemarketing question - Posted by Thomas Brown

Posted by Thomas Brown on February 26, 2001 at 23:36:10:

Jon: I read your article here about finding notes by buying lists and calling mortgage holders. Do you have any ballpark figures about success rates if you have a good presentation? Say I start with a list of 1000 names and call them all. About how many leads, converting into about how many sales?

Tom