Why I Stopped Using Yellow Letters

I know dozens of NR [New Rich] who don’t accept Western Union or checks as payment.  Some would respond to this with, ‘You’re giving up 10-15% of your sales!’ The NR, in turn, would say, ‘I am, but I’m also avoiding the 10-15% of the customers who create 40% of the expenses and eat 40% of my time.’ It’s classic 80/20.
– Tim Ferris, The Four Hour Workweek

When I started marketing in 2010, I heard a lot of buzz about the yellow letter.  You know – The Yellow Letter.  That keyword alone gets 4400 hits a month in the US on Google.  Lots of investors use them and have great success, and when I started marketing again at the beginning of this year, I started with yellow letters too.

The yellow letter is a great way to grab the attention of a homeowner.  You usually send it to owners of vacant properties, or at least absentee owners.  It’s got a vague, bare bones message with a bold call to action.

They tend to get great response rates.  With the one and only yellow letter campaign I’ve sent this year, I got 15.2% of homeowners to call me back.  That’s Uh-Mazing.  Typical response rates for direct mail are in the 1-3% range.

The Yellow Letter is short, mysterious and bold.

But guess what?  All were tire-kickers.  They just wanted to know what they could get for the house; they didn’t need to sell.  And that makes sense, doesn’t it?  They were calling to figure out who I was, what I do, and why I wanted to buy their house.  Because I didn’t tell them.  They were NOT calling because they necessarily wanted to sell their house.  They were calling because they were curious.

On the one hand, having a compelling call to action is great for marketing.  You want that clincher, right?  You want something that pushes them over the edge to give you that call or to go to your website.

But if they’re not calling because they want your product, then you’re wasting your time (at least, that’s been my experience).  And how can they want your product if they don’t KNOW what your product is?

After talking to hundreds of homeowners this year so far, I’ve decided that weeding out those who are not motivated and/or only want full market value is essential to me running a successful business that makes money and serves others.

Using a professional or white letter helps me do that.  I use the professional letter (or postcard) to explain exactly who I am (an investor), what I do (buy houses as-is), and why they should sell me their house (close quickly, no repairs to make, can offer cash).

With the professional letter, most people who call me know who they’re dealing with and are serious about their intention to sell.  My response rate is much lower (5-10%), but still very good.  Giving up a higher response rate is worth less time answering phone calls and filtering out bad leads.

For me, using professional letters/postcards is the equivalent to putting out a sign in front of your store front. It needs to be easy-to-read and clearly convey what kind of business you have.  You want to spend your time serving customers, not explaining your business to passers-by who are simply curious about your shop.

Right now I’m in the process of converting many of my letters to postcards, which seems like a GREAT idea since I can almost completely outsource the entire process.  (Tim Ferriss would be so proud!)  Down the road, I’ll get back to you on how the postcards compare with the professional letters.



Filed under Absentee Owners, Marketing, Planning

8 responses to “Why I Stopped Using Yellow Letters

  1. Pingback: Yellow Letter vs. Professional Letter vs. Postcards | Flipping Oklahoma

  2. Eddie Tucker

    Hi Kelly,

    I’m interested in whether or not you track close rate. Basically this is the number of deals you do in proportion to the number of responses you get. This would be a very good indicator of tire-kickers and of how targeted your letters/campaigns are, and I’d be interested to see if this rate went up with the pro letters, even though the response rate went down.

    – Eddie

    • Hey Eddie,

      Thanks for commenting. Yes, I’ve heard it called the conversion rate, and that’s something I track as well. The tough part is that hardly any real estate investors track it. That’s the issue I had with yellow letters: yes, you’ll get a great response rate, but the number of those responses that convert to a close seems to be lower than the responses from professional letters. I tend to think that you have higher quality leads from professional letters.

      That being said, I don’t know this positively. I haven’t done enough yellow letter campaigns to have the stats to back this up; and like I said, most investors don’t either. They just have hunches and feelings and impressions from their own campaigns. I’d rather focus on a higher quality lead myself, but I can’t say with certainty that yellow letters only have a higher response rate because it draws in the tire-kickers.

      Down the road I would like to do a really large test campaign with yellow letters to have some data on it. What about you? Do you track it? What has your experience been?

      • Eddie Tucker

        Thanks for the insight! I realized it was called conversion rate right after I posted, lol. Anyway, I haven’t been tracking it either but I pretty much hate writing letters and I’ve noticed that there are a lot of tire kickers as well. I was curious because I work with a partner and I’d need a pretty strong business case to change our marketing strategy because the yellow letters do have such a high response rate. We aren’t too far into our latest campaign, maybe I can work in some conversion tracking and see how it goes. I’ll let you know!

  3. So you’re doing yellow letters now? That would be perfect, if so! We can collaborate on those stats. I’m sending out professional letters right now. Keep me updated!

    • Eddie Tucker

      I am, and I will! I’m using your letter, as a matter of fact, lol! We also got the addresses from driving for dollars. That would be perfect, we can use your stats from the pro letters and my stats from the yellow letters and figure out what actually gets the most bang for the buck!

    • Eddie Tucker

      I put together a spreadsheet for tracking it, but I’m curious if you’d be open to sharing yours with me?

  4. Sure. Send me your email address and I’ll send it to you. It may be a few days (we’re at the end of a remodel and moving back into our house this weekend), but I’ll send it. 🙂

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