As we close out the 3rd quarter of 2012, it’s time to start thinking about your self storage facility’s goals and projections for 2013. How close were your projections in 2012? Were you above or below your projections for income, expenses, and NOI? Was your facility’s move ins, move outs, and net units at an acceptable level? Do you believe your facility provides the best customer service and amenities in the area? Are your facility managers fully trained? All of these items can have a dramatic effect on the financial success of your self storage facility. In our never ending quest to increase NOI we must consistently review our facility’s expenses. Here are 6 expense areas you should review on a regular basis:
Over the last few weeks you have probably heard about the Self-Storage Aggregator issue that has been burning through our industry. First I would like to acknowledge Randy Smith for the solid white paper he wrote on the issue. You can review this white paper at http://www.nostorageaggregators.com. I would also like to say that he isn’t wrong about the threat. Quoting one of my industry colleagues “he’s probably about 3-5 years early”, which is great because as a society we tend to let small problems become larger problems before we address them. I have used a few different aggregators in my self-storage operations and have mixed feelings about them. The aggregator issue is not the cause of our industry’s problem but just a symptom of a larger problem that looms in the self-storage industry.
As a self storage facility manager or owner, you are consistently evaluating your strengths and weaknesses in a given market. Over the last few years self storage markets have become more competitive than ever before. Conditions such as weak real estate market, an excessive supply of self storage in many areas, and a less than predictable economy have left many managers and owners scratching their heads. With these conditions hanging over the head of a number of self storage facilities, the efficient management of your facility has never been more important. Most facility managers and owners have already taken the steps to cut back on unnecessary items that weigh on expenses. As a manager or owner you may make one less trip to the office supply store, maybe you are taking your employees out to lunch less, and maybe you are even cutting your facility’s lawn yourself. Once you have trimmed down most of the items you deem to be an excess, what’s left? Now is the time to creatively manage your facility. In order to become more creative in managing and selling your facility consider focusing on the following items: Have I hired the right staff for my facility? Have I created a marketing plan that is not only creative but economically feasible? What if I have multiple facilities in a given area?
In order to creatively manage your facility you must have a staff willing and able to do this. One of the most important aspects of running any business, but storage in particular is hiring the right manager to manage your facility. When you start the search for someone to handle your facility, start by doing some investigative work. Visit the competition in your market and make notes of the things you liked and disliked about the managers operating these stores. Once you have some candidates review their resumes and invite them for an interview. Does the candidate give off a good feeling? Are they pleasant? Do they have a sense of humor? Do they know the market area? Would you personally rent a unit from this person? All of these are intangibles that raise a consumer’s comfort level, and if the consumer is comfortable, they will be more likely to rent from your facility. Along with intangibles, does the candidate have any skills? As the storage industry evolves, technology becomes a greater part of day-to-day operations. Does the candidate understand how to use a computer? Do they have any problems answering the phone or making delinquency calls? Are they able to handle minor accounting? All of these items are part of the makings of a successful manager and can affect the potential of your investment. You can train someone how to run a computer or clean a vacant unit, what you cannot train is intangibles such as personality, sense of humor, and attitude. Remember you are hiring this person to SELL your facility, not just to sit back and collect payments.
Once you have hired the manager for your facility you can now focus on putting marketing dollars to good use. Creative management is not putting a circus in the front of your facility or always “thinking outside of the box”. The idea is to create and implement creative marketing ideas that not only differentiate you from your competition but which are economically feasible as well. One of the most important marketing tools you have is the people that already rent from you. Now most mangers or owners will say “Well we already have a referral program”. That may be true but how well are you cultivating it. Explaining to your customers about a referral program won’t necessarily have them running into the streets to tell their friends or family. Referrals come down to how well you take care of your customers. Consider handing out bottles of water during the summer months and offering coffee and hot chocolate during the winter months to your customers. This accomplishes two distinct goals. One, it allows you to help keep customers hydrated during the summer or warm during the winter, something they won’t soon forget. Second, it gives you an idea of what the tenant may be storing. Consider sending out welcome and thank you letters to your tenants. How often can you remember getting a welcome or thank you letter from anyone you have done business with? During the holidays consider using a special for people who need to store Christmas gifts. Along with the holiday special designate one storage unit as a “Santa’s Helper Unit”, complete with a table, wrapping paper, scissor’s, and tape. Another idea is to print $5.00 coupons to hand out to your customers during times you deem necessary. If you are on the phone with a potential customer and a current customer walks in to make a payment, instead of putting on hold a potential customer, just hand your current customer a $5.00 coupon. The current customer will be happy you didn’t let them slip into oblivion and hopefully your facility gained a new customer from the time on the phone. In addition, if your facility does not already have a web presence, get one. There are a number of internet companies that will reserve a domain name and give you access to a website builder for under $200.00 per year. Also, consider using a web based self storage lead generator. With a little research you can have your facility listed on a number of different self storage lead websites with a minimal cost to your facility.
A number of self storage facility owners have more than one location in a given area. One way to creatively manage these facilities would be to use smaller facilities as satellite locations. If you have a smaller facility in a given area which is within an acceptable distance to a larger, better staffed facility, consider using the smaller facility as a satellite location. The managers of the larger location should be able to integrate the operations of the smaller location into the operations of the larger location. While the integration of two facilities sounds difficult, most self storage management software has options to run multiple facility databases. If you have more than one large location, cross train your assistant managers so that they can manage multiple facilities. This handles two distinct issues, one it is usually easier to higher people for more hours and your assistants are already trained in the company’s policy and procedures.
Creative management is about being efficient and effective with a facility’s resources. Often trying a few new ideas may be more useful then waiving an administration fee or giving away a free lock to a new customer. Consider focusing on items which can make a direct impact on your facility’s profitability such as hiring, marketing, and logistics. Remember it only takes one good idea to make a campaign successful. Don’t be afraid to try different things and to make adjustments along the way. Sometimes focusing on a few items can make the difference between an average year and a blatantly successful one.
Matthew Van Horn is Vice President of Cutting Edge Self Storage Management. Cutting Edge Self Storage Management is a full service management company specializing in Management, Feasibility Studies, Consulting, and Joint Ventures within the self storage industry. For more information, contact Stephan Ross or Tammy Ross at 866.970.EDGE or visit our website at www.cuttingedgeselfstorage.com
One of the most interesting aspects of being a self storage owner/investor, regional/district manager, and facility manager is how to market your product in 2011. A few years ago your facility was 1 of probably 3-4 facilities in a 5-mile radius. Unfortunately, now your facility is probably 1 out of 7 facilities in a 3-mile radius. The development of so much square footage from 2003-2009, along with advancements in technology has altered self storage marketing forever. The days of “Build It and They Will Come” are over. You now have to hustle more than ever because the easy fruit has already been picked in your market. As you read this article and others like it, take a look at your marketing budget for 2011. You are most likely staring at a figure that is larger than it was in 2010 and significantly larger than it was in 2008-2009. In order for your facility to combat the increased in square footage, poor economy, and the insane amount of discounting being promoted, you must have a comprehensive marketing plan that covers area such as Print, Web, and Promotional Materials.
Print marketing is still a method to reach potential self storage customers; it’s just not as cost effective as it used to be. Yellow Pages are the most common type of print marketing used in our industry. Yellow pages are not dead, as I have heard many times over the last year, but they are getting close. The problem with yellow pages is the overall cost compared to a well planned internet campaign. The other issue is that potential self storage customers are moving away from responding to this type of advertising platform. With the internet, smart phones, and social media most people are using the computer for information on products they need. If your market demands a yellow page advertisement, consider the following. If you have multiple properties consider using a yellow page company to negotiate the advertisement for your facility. Consider placing multiple properties in one advertisement. In addition have an outside marketing company design the advertisement for your facility to make the advertisement more “customer” and “sales” friendly. More often than not self storage operators allow the yellow page company to design their advertisement, which is not necessarily the most effective advertisement for potential customers. Direct mail is another type of print marketing that is often used in self storage operations. The cost effectiveness of direct mail coincides directly with the response rate. A typical direct mail campaign of 5000 pieces can cost up to $3000.00, which includes design, print, mailing list, and postage. Along with the costs the response rates will usually vary from .5% to 2%. The ability of your facility manager to close potential customers will decide the cost effectiveness of the campaign. In addition consider specific newspaper campaigns, church and apartment newsletters, and smaller “hometown” publications.
The web or internet is where the most advances in self storage marketing are taking place. The internet has revolutionized how we communicate and shop for products. For the self storage industry, the internet has provided a place to promote your facility, attract potential customers, and acquire these customers in a very cost effective manner. A self storage marketing plan should include a section dedicated to internet marketing. At a minimum every self storage facility, if financially feasible, should have a Search Engine Optimized (SEO) website. This is a website that is optimized for the major search engines such as Google, Yahoo, and Bing. Typically this service will cost on average $300-$500 per month along with design costs. Along with an SEO website, there are many types of self storage management software that will coordinate with the internet and your facility’s website to offer real time reservations, payments, and facility information. These are the online amenities our potential customers have been conditioned to use. After you have your facility’s website in place consider adding a Pay Per Click campaign to your marketing plan. Pay per click is a separate charge by Google that allows you to buy “clicks” or advertising under different key words. These advertisements line the far right hand side of Google as you complete a search request. You may budget as much as you would like for this service, but typically $75 to $125 per month will be adequate for most markets. In addition, consider using online self storage listing websites. These are websites that list self storage facilities on an online database. These websites are typically optimized to be found on the major search engines. Each work in different ways, but all are valuable additions to your web program. Finally consider leveraging social media in your internet marketing plan. Social media is the newest player in internet marketing. Facebook, Twitter, and Linkedin, are all easy ways to reach potential customers. You can set up pages for each of your facilities, typically with no cost. One specific marketing tactic using social media is to have your existing customers advertise for you. Offer existing tenants an incentive to place a post on their social media page advertising your facility. Once the customer sends you a link or a screen shot of their post, reward them with the incentive. Most people have a Facebook page with at least 50-100 friends. With one small incentive you have not only just marketed your facility to 50-100 potential customers, but that advertisement is in a place that most of those potential customers will likely see the advertisement and respond to it.
Finally consider using promotional materials. When planning for promotional materials, use materials that will actually drive potential customers to your door. Free pens and calendars are nice, but are they actually providing you a constant stream of potential customers? Two proven strategies are referral programs and alliance programs. First, consider implementing a referral program. A typical self storage facility may receive anywhere from 15% to 25% of new business from referrals. If you do not have a referral program, this is one idea that you should implement immediately. Second, implement an alliance program with existing businesses in your area. Working with other businesses in your area is extremely important. Examples of these types of businesses are: Apartment Complexes, Office Complexes, Real Estate Agents, Restaurants, Doctor’s Offices, Dental Offices, Lawyers, etc. Make sure you have a well planned out program and that the facility manager knows how to sell it correctly to other businesses. In addition, compose a reward program for the businesses that send you rentals.
Creating a Comprehensive marketing campaign for self storage is not difficult. The most important aspect of any marketing campaign is tracking that campaign for effectiveness. A facility manager should be gathering all of the information they can from potential and current customers. Consider using tracking numbers on your different marketing campaigns. Tracking numbers start at $9.99 per month to an unlimited package for $100 per month. Along with tracking which marketing pieces are driving potential customers, the system will typically record the calls. The recorded calls are often available through an online portal which allows playback and archiving of the calls. Tracking numbers are an invaluable tool for owners, regional managers, and facility managers.
Matthew Van Horn is Vice President of Cutting Edge Self Storage Management and well known for finding hidden profit centers in self storage operations. For a complimentary “Hidden Profit Discovery Session” please send an email to firstname.lastname@example.org. Cutting Edge Self Storage Management is a full service management company specializing in Management, Feasibility Studies, Consulting, and Joint Ventures within the self storage industry. For more information, contact our main office at 866.970.EDGE or visit our website at www.cuttingedgeselfstorage.com. Follow us on Twitter at Cuttingedgemgt and on Facebook at Cutting Edge Self Storage Management.