Category: Featured Posts

Tax Resolution Marketing Letter: Why it works

In marketing parlance, your most successful marketing piece, the one that becomes your lead generation workhorse, is called a control.

Over the past couple hundred years, there have been a number of marketing controls that have had incredibly impressive runs. Two of the most famous examples from recent times:

  1. The Wall Street Journal’s “Two Young Men” letter, generated nearly $2 billion dollars in sales for the Journal during it’s 29 year run. It was mailed continuously by the Journal to select household mailing lists from 1974 to 2003. It is considered the single most successful direct mail sales letter in history, and is well worth studying.
  2. Self-help guru Tony Robbins has one infomercial that ran continuously in English speaking countries around the world for 18 years. It was literally broadcast 24 hours per day, always available on at least one basic cable channel or over the air broadcast network. Although at much lower volume, that infomercial still runs today. The infomercial sells his flagship “Unleash The Power Within” program, and to this day sales from that program generate $9 million per year in net profit for him.

ControlLetter-1 The power of a control piece cannot be underestimated. Having a solid control, along with a well-defined target market to send or broadcast it to, is almost like an ATM that prints free money.
In 2012, I wrote what would become my direct mail control piece. I affectionately refer to it as the mug shot letter. This letter was the workhorse of my practice, across multiple niche tax resolution markets and a variety of different offers. It worked well for me in the western US, and it’s worked well for coaching clients from Texas to Florida to Chicago in it’s original form. Other practitioners have created heavily modified derivatives that work very well for them, including a CPA in Maine that created a version that has helped take his tax resolution business from just a few thousand dollars in 2013 to over $250,000 in 2015.

Last year, when my postcard sequence to drive people to a webinar wasn’t delivering the results I wanted, I went back to this letter, and results immediately improved.

The obvious question is: Why does this letter work?

Let’s step through it to see why. Digital Pass / Premium members can download the letter from the bottom of the blog post.

1. It shows a real human being.

The first thing most people notice on the letter isn’t the headline. Instead, it’s the photo of the practitioner. Why does this work? For two reasons:

  1. People do business with people, and financial problems are incredibly personal. By putting a face on the letter, there is an instant human connection. Psychology research clearly shows that humans have a soft side for other humans. This is also why we associate “cuteness” with puppies and anime characters: They have big eyes and round-ish faces like human babies do, so there is a psychological association. Use your humanity to connect with your target market.
  2. Really just a corollary to the first one: The vast majority of tax resolution firms, including every large, national tax resolution marketing company hide behind anonymity. People do business with people they know, like, and trust, and it’s almost impossible to trust somebody that’s hiding behind anonymity. When literally every one of your competitors is doing this, the quickest way to differentiate yourself is to put your name and face front and center. This includes on your web site, by the way. This is the single biggest problem I see with the web sites of nearly ever tax professional I work with. Compare your web site to a large accounting firm — names and faces are prominent.

2. I provide a real phone number to call.

The entire purpose of every offer you make is to generate leads. When I do any form of marketing, my real objective is to insert that lead into the top of a pre-defined sales funnel. I’m directing people to sign up for an offer on a web site, such as a special report or a webinar. In some mailings, such as to high dollar trust fund recovery penalty liens (6672), I’ll direct people to a 24-hour recorded information line (yes, even in modern times).

However… There will always be a part of the population that wants to talk to somebody now.

Thus, provide a real phone number that they can call. Less than 1/3 of my leads would come in this way from this letter, but those are leads that I would have lost without the phone number. I highly suggest using disposable tracking phone numbers for every campaign you mail out, and have those tracking numbers forward to your main number or to an answering service. An answering service is a worthwhile investment, as they can ask short screening questions and set appointments for you directly in your calendar, all for just a few hundred bucks a month. That’s cheaper than a receptionist, and is on call 24/7.

3. It uses a headline that directly addresses their concerns.

The headline is probably the most important part of any marketing message. This is true whether it’s your voicemail message, an Internet landing page, a Google ad, or a letter. In fact, for some marketing media, your space is limited, so your entire ad is simply the headline and call to action.

This post is not meant … Continue reading

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IRS Releases 2015 Collections Data

Today brings one of my absolute favorite days of the year: The release of the annual IRS Data Book for the preceding fiscal year.

As always, I jump directly to the most precious tidbit in the entire data book: Table 16. If you’re not familiar, this is the table that summarizes IRS Collections enforcement activities for the year.

This year’s table illustrates two key things that are important for you to know from a tax resolution marketing standpoint.

First, the number of open Collections cases continues to increase. FY15 saw a net increase of 961,000 open Collections cases in inventory. As of the end of the fiscal year in September, there were 13.3 million active Collections cases. That means increased tax resolution opportunities for you.

Second, the number of new tax lien filings continues to decrease, a trend we’ve seen continuously for a number of years. In FY15, the IRS filed over 30,000 *fewer* new NTFLs than in FY14. This trend has progressively made tax lien marketing more difficult, in terms of the “low hanging fruit” and decreasing response rates. This means that, while tax lien marketing is getting progressively more difficult every year, you should be getting higher quality clients from the tax lien marketing you are doing. Be more selective, as the IRS obviously is when it comes to filing the liens. Also, you really should be shifting more of your marketing budget to digital marketing.

It should also be noted that levy activity dropped by about a quarter, despite the fact that monies collected actually went up by about $1.3 billion.

Another thing that’s obvious from this year’s report is that the IRS crackdown on unfiled returns is paying off. FY15 ended with almost half a million fewer open delinquent return investigations than in ’14, and the number of new investigations was also substantially lower. I think this tells us that the IRS is relying more on computerized data matching to help close out delinquent return investigations, and those systems are working.

The Offer in Compromise program never has been and never will be your primary tax resolution tool, but practitioners are inevitably curious about it, so I’ll make a brief mention about it here. The number of offers received and accepted didn’t really change (it hardly ever does year to year). However, the amount of revenue collected by the government through the OIC program went up about 14%.

If you’re a curious goose like I am, you can read through the data book here.

With the number of open Collections cases going up and up and up, it makes more and more sense for you to add tax resolution to your practice if you haven’t already. To get a leg up on the business and marketing aspects of this lucrative service, check out the A to Z Tax Resolution Business Blueprint.

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Making a million bucks, by the numbers

One of the tasks I’ll be embarking on after settling down in Washington state next month is the updating, revision, expansion, and editing of all of my published books. Before the end of the year, I’ll have new editions of each book done.

The first of these to get the update treatment will be my book about building a million dollar taxpayer representation firm. A lot has changed in the 18 months or so since I last revised that particular work, and I need to update it to reflect the ever changing realities of doing tax resolution marketing.

One of those realities is that the cost of client acquisition has gone up a little bit. The primary reason for this has to do with the efficacy of small, cheap postcards. For years, these regular sized postcards were the workhorse of my direct mail lead generation efforts. Today, those same postcards just don’t yield the results they used to.

In general, we’re seeing about 1/4 of the response rate from SIMPLE direct mail compared to what we used to get. By “simple” direct mail, I’m referring to basic postcards and machine addressed letters with postage permits. What’s the reason?

Direct mail is still a great way to generate clients. In fact, since fewer companies use direct mail, there is less clutter in the mailbox to compete against. However, what I think is happening (and this is purely conjecture, by the way) is that mail recipients are more discerning when it comes to sorting there mail — in other words, they are more quick to discard anything that looks like “junk mail”.

My rationale behind this assumption is that dimensional mail and heavily personalized mail are working great. Most readers know by now that I heavily advocate sending 3-letter sequences in sync with the IRS notice cycle following a lien filing, and that these letters should be hand addressed and use real stamps.

Hand addressed? Real stamps? Geesh, that sounds like WORK! And yes…yes it is.

So with that said, what’s it going to take to hit the seven figure mark now?

One of the nice things is that, while marketing costs have increased, so have average fees. In fact, average tax resolution fees nationwide are up nearly $1,000 since I last wrote about this topic here on the blog over two years ago.

Assuming an average fee of $3,500 per client, we need 286 clients per year to hit the magic million dollar revenue number.

As always, let me start with the SIM (Standard Industry Model), on which the fly-by-night tax resolution operates. The average telemarketer (“opener”) must dial 60 tax liens in order to find one interested person, who is transferred to an unlicensed sales closer in most boiler room operations. This closer will close, on average, 9% of these prospects. So, in order to get ONE new client, a company has to churn through 660 tax lien filings, at a typical cost of 35 cents per record to purchase. So, that’s $231 just in lead costs.

Now, the opener also typically gets a 10% commission at most companies, and the closers receive, on average, 20% to 30%. Lets’s again be conservative, and together give the sales guys 30%. Note here that we are also ignoring minimum wage laws and other costs for this sales staff, which most firms do ignore, believe it or not. So our $3500 new client also costs us $1050 in commissions, for a total of $1,281 that we have to spend in order to get one new client.

To hit 286 clients, that’s an annual hard cost of $366,366 in order to generate $1 million in revenue. All else being equal, that’s actually quite an acceptable number, which is why this model works so well within the “tax resolution” standard business model.

Note that under the SIM, all those purchased leads are literally trashed within a week or two, with no effort made at long term follow up.

Replace this instead with the business model I advocate in the book and everywhere else: Highly concentrated, long-term follow up marketing to a selective group of target prospects.

The entire approach, using 3-letter sequences in sync with the IRS notice cycle, hand addressed, live stamps, is going to cost some money. Letters typically cost 70 cents to send, including paper, toner, etc. Add in the manual labor component, and that goes up. If you have a $10 per hour assistant addressing envelopes (plus employee expenses, and he can do 50 per hour (let’s assume he also answers the phone), we can call it 25 cents to address an envelope and stick on a stamp. For the sake of ease, let’s round the whole thing up to $1 per letter.

For a 3-letter sequence, that becomes $3 per lien to mail these letters out.

Now, of course, prospects we generate are going to go into a long-term prospect follow up system. A long-term marketing effort to these prospects, consisting of a 12 month cycle, can cost anywhere from $5 per prospect to hundreds of dollars per prospect. For lead generation purposes using tax lien mailing lists, we’re going to be on the cheap end of that spectrum (to include email and social media touches), so let’s just call it $10 per year, per prospect.

What kind of response rate can we achieve with this list? It’s possible to regularly maintain response … Continue reading

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Comparing costs of client acquisition

Today I want to wax eloquent about one of the most important marketing metrics you should be tracking: Your cost of client acquisition.

Before I get into that, however, I just want to give you a quick reminder about the offer on the Tax Resolution Systems manual going on until tomorrow. Get your copy here.

Your cost of client acquisition is one of many metrics that you should be actively tracking in your business. It is one way to make apples to apples comparisons between marketing media and messages. Knowing the direct cost of acquiring a client from, say, direct mail versus your yellow pages ad, is a simple way to help you make smart marketing decisions.

Let’s take an in depth look at the cost of client acquisition across several marketing channels for tax resolution in particular. We’ll also examine improving closing ratios with a dedicated prospect follow up system, thus dropping the cost of client acquisition.

Straight Outbound Telemarketing

Let’s start with the straight cold calling approach utilized by the big, national tax resolution firms. For the sake of conversation, we’ll set aside the legal issues relevant to this approach. Let’s start with some ratios. A great sales telemarketer will call 30 liens, and get 1 prospect. An average telemarketer will call 70 or 80 liens and get 1 prospect. A typical unlicensed closer will close 1 in 11 prospects, good ones close 1:9. When running numbers I usually cut the difference, and call it 60 liens to 1 prospect for the telemarketer, and 10 prospects to 1 client for the closer.

A licensed tax professional will generally have a much higher closing ratio (usually about one in six), but will have longer consultations (30 to 45 minutes, versus 10 or 15 minute straight sales pitches).

Based on these assumptions, we have 60 liens, 1 prospect. 10 prospects, 1 new client. That’s 600 tax liens to get 1 client, at an average fee of $2750. Typically, a 10% commission is paid to the telemarketer, and 20% to closer, for a total of $825 in commission. Plus add about $200 in lien costs, and $3/hr for an autodialer for about 5 hours. All told, that’s $1040 (heh, that’s funny…) for one client.

For the best case scenario, it looks like this: 30 liens, 1 prospect; 6 prospects per client… 180 liens to get a client. Same fee and commission, a reduced lien cost ($60), and call it two hours on the auto-dialer ($6), for a total of $891 per client.

If you squint really hard, $891 and $1040 are not that different. So, even with very different ratios, the actual cost of client acquisition doesn’t decrease all that much. This is how the majority of tax resolution firms operate, by the way. The problem with this approach, of course, is that using unlicensed people to directly solicit licensed representation services is illegal (not that they care).

Most solo practitioners or small firms will operate such that the actual tax practitioner is closing their own sales, and thus you would think you need to take that 20% commission out of the equation. This structure gets closer to legal, especially if the telemarketer you hire is offering seats to a seminar or webinar instead of directly soliciting services. In this case, the cost to acquire a client would seem to decrease, but requires the trade off of the practitioner’s time. If you still pay 10% commission to your telemarketer, and it takes three hours to close one sale, and you bill out at $175/hr (typical for tax resolution), then the cost of client acquisition is $866.

In other words, even though you’re not paying a closing commission, the cost of client acquisition is actually the same once you account for the value of your own time (or even more).

Buying Inbound Leads From TV/Radio Commercials

There are a number of companies out there that run TV and radio commercials to solicit taxpayer representation. You’ve probably seen or heard them. These calls come into a call center, where the person is asked a few quick questions to qualify them, and then forwarded to several practitioners. Some companies allow you to pay extra per incoming call for exclusivity.

I have in hand a pricing sheet that’s about a year old from one such company that does this. The price is/was $85 per inbound call they transfer to you, with a 100 transfer minimum order ($8500 minimum purchase).

Since these are inbound calls, we can make an assumption that the closing ratio should be slightly higher. However, the sales rep for the company I got this price sheet from told me that their clients see about a 1 in 10 closing ratio, which is the same average as for outbound telemarketing. I’m presuming these companies are using unlicensed closers. With that ratio, it costs $850 for leads, plus $550 for the 20% commision to the closer, for a total of $1400 to acquire a client. This is the highest cost per client example we’ll see in our comparisons.

As shown above, at $175/hr the time cost for a licensed person to close sales is about the same. However, the closing ratio should be significantly higher. At an assumed 6:1 closing ratio, then the cost of client acquisition falls to $1035.

Direct Mail

When I’m crunching numbers for direct mail, or making projections for a direct mail campaign, I still … Continue reading

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The quarterly direct mail primer reminder

Every few months, I start seeing a sudden increase in the number of questions I get pertaining to direct mail. The fundamentals of direct mail tend to get lost in the overall tax practice marketing conversation these days, since that conversation is dominated by social media and mobile.

The fact of the matter is that direct mail remains one of the most successful methods for marketing a professional practice in any industry these days. Direct mail should be one of your top three or four “go to” methods for new lead generation, prospect follow up, and client retention. It ranks right up there with the telephone, Internet, and word of mouth as a primary marketing communication medium.

While there are many lengthier articles on this blog regarding this subject, I figured that some readers could use a quick primer on the subject. I actually posted the following seven points back in January, but they continue to remain relevant, and even I need the occasional bop on the head on this subject to remind me to use it more.

Direct Mail Primer
I consider the following seven elements to be the most salient points to always remember about direct mail:

  1. The purpose of a lead generation direct mail piece is to generate a response for additional follow up marketing — not to sell your services in the letter.
  2. Following up with phone calls the day of or the day after your prospect should have received your direct mail piece is pivotal to seeing drastically higher response rates.
  3. Letters with handwritten addresses are opened about 3x more often than printed labels. Real stamps drastically increase letter open rates, also.
  4. A compelling headline in your letter is the single greatest key to response AFTER getting them to open it. It is worth researching the internet for “direct marketing headline banks” to get examples of successful headlines from other people, and modify them to your needs.
  5. If you hit a 2% response rate from a direct mail campaign, you’ve hit a grand slam. Anything over one half of one percent is still good, especially in any business with a large transaction size (such as tax resolution).
  6. Sending a one-time mailer is usually a waste of money. Direct mail works best with “multi-hit” campaigns. E.g., send a first letter, then a couple weeks later send another one to people that didn’t respond. Response rates are additive, and in most cases, the longer the mailing sequence, the better. Side note: Make sure you’re sending the right sequence to the right mailing list (“market to message match”).
  7. Make a limited time offer in your letter. Offer them a report, a book, a seminar, something of value — and always assign a deadline.

Put these seven very brief tips into practice in your direct mail, and you’ll begin seeing substantially better results for your marketing dollars.

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How I get inbound tax resolution leads with no marketing

In a typical week, I get at least one, and sometimes as many as three or four, people contacting me completely out of the blue that are telling me that they think I’m the best person to help them with their tax problem and wanting to hire me.

These are folks that I’ve never talked to before, never marketed to before, never had any one on one contact with at all. But they’re reaching out to me, with their checkbook open.

How is this possible?

It’s actually quite simple: I took the time to establish myself as an expert.

Never forget that people do business with other people that they know, like, and trust. This is the single most important thing you can ever learn about running a service business. Period.

Establishing yourself as an expert, as the go-to person in your area or specialization, you automatically build credibility. Providing ways for people to get to know you, even if you never actually speak to them, builds on this. Over time, people that know you will get to like you and trust you (assuming you’re likable and trustworthy, of course).

People get to know you via the content that you produce. On my tax firm web sites, I provide a ton of free or extremely low-cost information for people, including how to negotiate their own Installment Agreements and how to draft their penalty abatement applications. I also provide pointers to appropriate IRS resources and other information that can help them.

This material costs me nothing but time in order to create. After the initial creation of a few backlinks to those sites via press releases, articles, or videos I post elsewhere ,I do no further active promotion of those sites, I just let Google and Bing find them on their own and determine whether they are worth including in search results or not. I don’t try to “game” the search engines, and I update the sites far less frequently than the so-called SEO “experts” say that I should.

It also helps that a little over a year ago, I took the time to write a short book and self-publish it on Amazon. That book is now one of the best selling books on Amazon on the subject of settling tax debts. The end of every chapter includes a call to action referring back to my primary practice web site, which offers additional resources. Many people that visit the web site for those additional resources end up joining my email newsletter on that site, which means they receive a series of automated messages from me, even though I’ve still never spoken to them.

Think you can’t write a book? Neither did I. I’d been wanting to write that book for over two years, but just never “got around to it”. So how did I do it? I literally locked myself in a room with three days worth of junk food and Red Bull and just did it.

Yes, I wrote that book over a 3-day holiday weekend. Christmas 2011, as a matter of fact. To some people, that might sound like a horrible way to spend Christmas, but the truth was that I was snowed in at the office anyway due to a major blizzard, and my flight to Portland was cancelled because of the snow. I didn’t have any family in the area where I was at, and I was recovering from injuries sustained when I got hit by a car while riding my motorcycle a few weeks earlier. So, I literally had nothing better to do. In retrospect, it was my best Christmas ever, because I’m still profiting from it to this day.

Between the book published a year ago, and three small web sites that were all created in 2010 and 2011, I generate a tiny trickle of highly qualified tax resolution leads that already like me and trust me enough to want to hire me. When I want to bring on ONE new client, I can just wait and sift through those inbound leads to find the one I want to work with, and refer out the rest. The only time I need to turn on my 72-Hour Blitzkrieg Marketing Plan is when I want a very specific type of client, or when I want to quickly fill more than one empty client spot on my case roster.

The bottom line is that, because of work that I literally did a year ago, even three years ago, I get enough inbound leads to support myself as a solo practitioner. That lead volume obviously won’t support a larger practice, by itself, but it can definitely be part of an overall strategy.

If you run a small tax practice, you can do small things that result in big differences because of your size. Some things to consider:

  1. Host regular local monthly financial seminars, and invite everybody you meet to them.
  2. Have an email newsletter, and prominently display the signup box on your web site.
  3. Write and self-publish a book on a subject of interest to your ideal clients.
  4. Record yourself giving tax or accounting tips and post them on YouTube.
  5. Write epic, informative “how to” blog posts and make sure Google knows about them.
  6. Broadcast your content out to social media networks.

None of these things are difficult. In fact, other than writing a book, all of the above items take one … Continue reading

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