How to thrive in a competitive market
Many note brokers and finders are intimidated by mailing note holders. However, unless you have a developer or rehabber
feeding you a constant stream of transactions, you need to inform a large number of note holders, Realtors and attorneys
about your services. Direct mail connects with the largest number of note holders for the least expense. While making a
website might be initially cheaper, you will not receive many inquires unless you spend thousands more dollars to compete
with all of the web based brokers. Many marketing studies show mail will attract more prospects than web based
Note holders are not hit by as many brokers as they imagine.
I currently hold three notes as part of my rehab activities. In the first two months of carrying each note, I was flooded
with post cards and letters from brokers wanting to buy my note. However, after the initial two months, I received less
than one letter or postcard a month. Like 95% of note holders, I might glance at the mailing to see if it was interesting but
tossed it quickly since I did not need the cash they offered. Most of the mailings after the note was seasoned more than
two months were from the same three long time brokers who understand they need to mail their top prospects more than
The fact is websites face much more competition than direct mailers. Note holders with a name and phone
number in front of them will pick up the phone. If they use a search engine to find a broker, the odds of finding
you are far less. Note brokers I speak with relying on high search engine rankings report spending thousands more than
my customers spend on mailing note holders to achieve the same number of inquires. Furthermore, mailing allows you to
target good notes while note sellers using websites often have notes that cannot be purchased.
It is human nature to forget about companies or people until you need them. The brokers mailing the first couple of
months are long forgotten. When the note holder needs cash or solutions to their problem they will only call brokers
whose information is in front of them from a new mailer.
Imagine you had to sell a note. Would you remember a note broker’s mailing from a prior month? Probably not. How
many companies can you name that mailed you more than two weeks ago?
Many note holders will only call the next broker they hear from and the one after that if the first broker blows their
opportunity. Usually, the most brokers a note holder will likely call after the first two month frenzy is three brokers. A few
note holders will keep every card and call everyone but this is the exception, not the rule, and those sellers are the most
difficult to work with anyway.
“30 brokers mailed me in a month?”
From time to time we will hear about a note holder who was contacted by 30 or 40 note brokers in a month. That can
happen the first month they hold a note and to a very small number of note holders unlucky enough to be included on lists
provided by note broker diploma mills for their students to practice on. Several of the “schools” give their students 500 or
so free names to mail and they seem to give every student the same names and postcards.
Two steps to thriving in a competitive market
The first step is to mail after the hoards have finished in the third or fourth month of a note’s existence. Most of your
audience will remain and you now have the upper hand. (See point#3 below). All the first brokers are putting the idea in
your note seller’s head about selling the note but most note holders don’t want to sell their note in the first three months.
All the payments have arrived on time, they are still friendly with their new payors and they have not had to file tax reports
or other filing requirements. You need to give note holders enough months to tire of the duties of holding a note.
The second step is following the points made below and be ready to compete against a few brokers. There is no such
thing as an “exclusive note holder” to market. Our mailing lists reach 95% of all note holders. The 5% that remain are
extremely expensive to locate and you can’t make a living chasing such a small number of notes.
The note industry is no different than other industries in the United States. Competition makes American companies and
our economy stronger and healthier. Fortunately, you only need to broker a small fraction of all of the notes created to
thrive in a competitive environment.
The following points will help you compete to earn your share of the market:
1. Keep your name in front of your best prospects
Even the most well presented offers are forgotten within four months. Generic offers are forgotten in less than a week.
You can still be on the forefront of the prospect’s mind when they sell their note by placing your message in front of them
every three or four months.
Ingrain your name in the note holder’s memory. Most marketing experts agree you are forgotten until your message is
seen at least four times. Be certain to remind the best note holders of your message every two or three months.
The note brokering community atrociously violates this tested principle of marketing. Based on the notes I hold and receive
mail from, only two companies adhere to this rule. Most brokers sent one or two mailers then stop. It is no coincidence
the two companies who continue mailing me every three months are two of the largest in the country. Try to be as
familiar in the note holder’s mind as their favorite store. See point #2 for explanation on why you want to be “that store”.
2. Be the easiest to contact
As a general rule, anyone shopping for a service will not call more than three vendors. Unless they are familiar with a
specific company or person, they will call on the two or three companies whose phone number or website is easiest to
find. If your toll free number or reply envelopes are difficult to locate, they will move on to someone else. Toll free
numbers must stand out with large bold print hopefully in a different color then your script.
On a post card, your number should stand out subtly at the top, and very obvious at bottom of the card. Working it into
the opposite side will also increase responses. If you are sending a letter, your number should be at the top, bottom and in
an area about two-thirds of the page down and one-third over from the left edge.
If you want virtually no competition on about 25% of the note holders, send a letter with a reply coupon and postage paid
Business Reply Envelope (BRE). A quarter of the population prefers to inquire by mail instead of talk with a stranger over
the phone according to the Direct Marketing Association. Brokers sending post cards will never hear from these prospects.
Directing prospects to your web site will enhance your communication with this 25% as well. The downside is, they must
take additional time and effort to find your website assuming they have access to the internet. Also, once your prospect
goes on-line, they may discover someone else’s website they like better.
3. Let your Competition set the table boosting the desire to sell a note
You are better off receiving a smaller slice of a larger pie. When note holders, Realtors, builders and other prospects are
marketed by your competitors, they are more likely to feel selling a note is a viable option and will become more willing to
explore their options.
We found when we were marketing to our database of note holders, all else being equal; our highest response rate came
from counties four or five other brokers were also mailing. Counties we were fairly certain less than three brokers were
mailing usually had the same or lower response rates than counties easily available to all brokers.
The same principle applies to most retailers. Why do car dealerships, grocery stores and other stores often cluster in the
same area? Part of the reason is their presence together creates a greater since of value for potential customers. Since the
customers feel they can shop for the best deal, many more customers are created. Each store ends up with increased sales
because the “pie” is so much bigger.
Second, more advertising creates more demand. When Circuit City entered my local market and flooded us with
commercials and advertisements, they created enough consumer awareness and hype, sales at competing electronic
retailers increased by 10%. Dick’s Sporting Goods did the same thing for their competitors when they moved into my
area. The note industry like most retail stores benefit by the additional demand created by their competitors marketing.
4. Follow up on all hot prospects
Follow up on all prospects who request a quote from you. When they are contemplating your offer, ask them what you
can do to get them to yes. If they need more time ask permission to call on them in as short of time as you feel
comfortable. If they say no to your offer send a special letter two weeks later or call them with a new twist on your offer
that more closely meets their needs. When you are outbid, follow up with a call two or three weeks later and check if your
competition stumbled and you can close the deal for them.
5. Standout Creatively
When we were a licensed mortgage broker, we received two or three solicitations daily from mortgage lenders with their
wholesale rate sheets. All were generic and forgettable except one. This lender sent us a special package with a box of Red
Hots candy with the message “Red Hot rates for you!” I still remember it after five or six years have passed.
You need to be careful and test your this type of creative offer. Gimmicks often fail when marketing financial products.
The point is that sending bulky or odd shaped marketing material will get you noticed and remembered if done correctly.
6. When possible, stress the unique benefits you will give the note holder
Tell the note holders/creators what special benefit you can legitimately provide. Brokers often tell note holders they offer
the highest price, close the quickest and will “convert their note to: cash, a nice vacation, buying a RV, funding an
education...” Many also throw in they will allow the seller to “avoid late payments or other problems with holding a note”
Since we are constantly bombarded with advertisements, many consumers today equate “best price” with low value, poor
service, or a possibly deceptive offer. “Fast service” is viewed as impersonal service with a poor price. Stating you offer
best price and fast service is viewed with skepticism. How many companies do you know that provide consumers with
the best price and services in their market?
Most consumers want the best value which will be a combination of satisfying emotional or required physical needs. Most
brokers fail to make an emotional connection with the note holder.
Some consumers will shop only for the best price or quickest closing but these are poor customers to pursue. When
consumers are only concerned with obtaining the best price, they tend to shop every competitor and then go with the
vendor who cuts their profit margin so low, they can not survive in the long run.
Having cash, taking a vacation, avoiding problems or other attributes of selling a note are good to mention but first inform
the prospect what true benefits they receive from these items? Convey to the note holder the bottom line emotional
benefits you will deliver and how you will be uniquely able to provide them.
7. Focus on the 20% prospects that will bring in 80% of your business
Review your closed files and evaluate the identifiable traits your customers have in common. Chances are you can identify
many personality and demographic traits your marketing and sales personality connect with most strongly.
An old sales axiom is your marketing message and the sales person’s personality will strongly resonate with 20% of your
prospects. They will stick with you when your less compatible competitors make a superior offer. Take advantage of your
strengths and focus on those who will respond the strongest to your marketing and sales presentations.
A caveat, this 20% will approach 0% if any of your staff appears inexperienced with brokering or buying notes. If you are
a small company, an experienced note processor can assist you in this regard.
Up to another 60% of your prospects may be persuaded to use your company if you have a talented copywriter to grab
their attention and/or sales people who can understand the prospect’s motivations and identify when to act on the
prospect’s buying signals.
8. Do not try to take market share you can not obtain
You should also accept 10% of your prospects will not like you no matter how hard you try. Either your marketing piece
or your sales/first contact person hit a raw nerve with the prospect. If you can identify these low to no probability
prospects, eliminate them from your prospect list and spend your marketing dollars pursuing the other 90%.
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