Every Self-Storage Operator Rents Units! What Else Can You Sell to Eclipse Competitors and Stimulate Income?
Guess what? Every single one of your self-storage competitors rents storage units. If you want to differentiate yourself in a busy market and generate more income, consider offering alternative products and services. The benefits can be many, though you must choose carefully to find what will work in your market. Following is an overview.
February 24, 2024
From retail to vehicle storage to ancillary offerings you haven’t even dreamed up yet, add-on profit centers can have a positive impact on your self-storage operation’s revenue, reputation and more. Every single one of your competitors offers unit rentals. If you want to differentiate yourself in a busy market and kick up your income, it’s smart to consider your ancillary options.
You may be thinking, “I don’t have the time or energy to do more. Besides, if it ain’t broke, why fix it?” Perhaps you already have a portfolio of reliable properties. You’re satisfied with your rental and occupancy rates. You have a great team in place. So, why change?
News flash: If you aren’t generating optimum revenue from your self-storage asset, it is broken.
This industry is incredibly competitive but not immune to disruption. Your market might not be crowded now, but that could change. You may currently have tenants who pay on time and employees who can be counted upon, but what if that changes? When profit stagnates—or worse, declines—add-on products and services can make a positive difference to your bottom line and peace of mind.
If you’re interested or even ready to take the first step, this article covers ancillary options that can work in a self-storage environment. You’ll get guidance on choosing the right offerings for your market and what you need to succeed.
Research the Possibilities
The add-on products and services that have been explored by self-storage operators over the years range from common options such as retail merchandise, truck rentals and boat/RV storage to much more original offerings such as fine-art storage, propane-tank rentals, pack-and-ship services and boutique sales. Their success hinges largely on your specific location and customer base as well as the way you present them to tenants and the public.
After conducting a market analysis, West Coast Self-Storage (WCSS) found that wine storage would be the perfect fit for some of its facilities. The decision involved weighing the cost of the required conditions against profit potential. While this product isn’t without its challenges, in the end, this gamble paid off for the Pacific Northwest company.
“The great thing about wine-storage customers is they often are also self-storage customers,” says Derek Hines, marketing specialist with WCSS. “They also typically stay much longer than the average self-storage customer.” Customer retention can be more cost-effective than acquisition, which is exactly what makes this a smart choice.
Third-party management firm Storage Asset Management (SAM) also relies on market analysis to make its ancillary decisions. “Down South, offering propane makes sense because we have a lot of local market areas where propane is incredibly popular in terms of heating your house,” says Lee Kunkel, director of operations. “In other markets where propane isn’t common, it wouldn’t make sense.”
SAM has also experimented with Amazon Hub lockers to draw traffic to its managed facilities. The company first tried it in 2015 and was pleased with the simplicity of implementation and outcome. “We had the space, the infrastructure, electricity, clearance and parking to meet Amazon’s specifications,” Kunkel says. “The Amazon locker didn’t pull the staff from the facility, but it did drive people to our facility and helped us sell additional merchandise.”
Location can also play a pivotal role in your choice. “Some of our locations have excellent visibility with opportunities for cell towers and billboard leases,” says Kurt Kleindienst, senior vice president of marketing for Safeguard Self Storage, which operates more than 80 locations nationwide. “These can provide additional revenue to the property but must be evaluated on an individual basis.”
Carol Mixon, owner of industry management and training company Skilcheck Services Inc., was able to leverage the location of a Hawaii facility she operated. “We had some people who wanted to store surfboards. I didn’t really have storage for small things, so I came up with a chain-link fencing area and gave them a lock,” she says. “They put their surfboards in there. It was about $15 a month. We put quite a few in the area and we rented them out in maybe a month and a half. We were right across the beach, so it was easy to do.”
Contents coverage for self-storage renters in the form of a tenant-insurance or property-protection program is a reliable revenue stream that can work for any facility, anywhere. “We require proof of customer storage insurance at the time of rental,” says Charlie Fritts, president of third-party management firm Storage Investment Management Inc. “Customers can satisfy this requirement by providing a copy of their homeowner’s or renter’s insurance policy or purchasing insurance [through us] and paying with their rent. This is a great add-on income source, as it serves many purposes.”
It's also a great customer-relations tool if a problem ever arises. “We provide them with the insurance-claims info rather than shrugging our shoulders and saying, ‘We are not responsible for your stored property,’” Fritts says. “We collect the insurance premium with the rent, the insurance company in return pays us a percentage of the premium as an admin fee for collecting their money.”
Assess the Requirements
Whether you’re adding something as simple as a soda machine or a service as complex as wine storage to your facility, you need to consider the resources required to turn your plan into reality.
Space. Do you have enough of it? For example, a retail store requires room for product displays but also for the storage of inventory. If you’d like to add truck rentals, you’ll need a place for parking and ample room to maneuver trucks around the property. Boat and RV storage will require significant room for open, canopy or covered rental spaces, not to mention the appropriate drive aisles and turning radii to accommodate large vehicles.
Staffing and training. Do you have enough staff to support the new profit center once it’s up and running, and how much training will your team need? The answer to both questions will depend on the specific product or service. For example, partnering with a truck-rental vendor will require employees to learn new software. If you sell retail products, learning to design the displays and track inventory is imperative.