Victoria's (Self-Storage) Secret

Positioning your facility to attract"Victoria," the core of your customer base

By Martin Knuppe

Several years ago, I came to the disturbing realization that despite thesuccess of many of us in the self-storage industry, we too often fly by the seatof our pants. Though we may have made all the right moves, we don't necessarilyunderstand why. In no area is this more crucial than gaining insight into ourcustomers and how to take significant, detailed steps to better address theirneeds.

It reminds me of the typical man stumbling into a Victoria's Secret store. Hecharges into the store on a mission. He knows (or at least he thinks he knows)exactly what he's looking for. After about 10 minutes of wandering around likelost boys at Disneyland, and after waving off sales assistance three times, hereluctantly flags down a clerk. "I could use a little help," heconfesses. The sight of it is sadder than a sinner in the priest's confessional.

The questions begin: "Are you looking for anything in particular?"Thinking "Yes!" he finds himself saying "No." Nice going."And what size is your wife?" Gesturing with his hands, he blurts out,"I'm not really sure." Now he realizes he's in deep trouble. He's in astore full of women being peppered with questions, the answers to which he hasabsolutely no idea. And his favorite weapons of defense--yelling, raising hisvoice and generally acting like a child--would only make matters worse. Like acondemned man, he endures; and one half-hour later he slithers out of the storewith a tiny pink bag in his hand and 124 bucks charged to his VISA. (Author'sdisclaimer: Any resemblance to individuals living or deceased is purelyfictional--and much too painful to contemplate.)

It occurs to me that, like the guy in the store, most of us go about ourbusiness with little idea who exactly comprises the core of our customerbase--the quintessential self-storage customer. More important, we have evenless idea how to go about the crucial business of addressing that client'sneeds, whether in major ways (through project design, for example) or smallenhancements. Toward that end, I offer this perspective.

But first let's look at why. Why expend effort trying to understandand satisfy an elusive customer who, in reality, may not even exist? Why investmoney making upgrades and adding enhancements? One well-rehearsed argument goessomething like this: "I built it cheap 30 years ago and it's still spittingout money. Why should I spend good money fixing what's not broken?" Thenthere's this argument: "Why paint it, maintain it and market it? After all,it's just storage." This is kind of like saying, "Why feed it? It'sjust a golden goose." The bottom line is ... the bottom line! Put simply,the most compelling reason to maintain, enhance and upgrade our facilities isthat we will make more money by doing so. Let me illustrate.

A Tale of Two Owners

Take two owners. Owner A has a 15-year-old facility on the north side oftown. It consists of 30,000 square feet and 300 10-by-10 units, each renting for$60 dollars a month. At 90 percent occupancy, his monthly gross income (withoutprocessing fees and extras) is $16,200.

By wild coincidence, owner B also has a 15-year-old facility, but on thesouth side of town. It, too, is 30,000 square feet and boasts the identicaloccupancy rate in its 300 units. But suppose owner B is able to get 7 percentmore for his units because of facility enhancements. A simple chart makes thebottom-line rationale clear:

Let me make four observations: 1) the enhanced facility (owner B) reaps moremonthly cash flow; 2) owner B becomes steadily wealthier (based on his yearlygross income); owner B pays back his $25,000 maintenance investment quickly; and4) owner B increases his value by more than four times his $25,000 investment.Notice that what we are talking about is not just cash flow--as nice as thatproposition sounds--but more net worth. In other words, by maintaining andenhancing your facility, not only do you bring in more monthly income, but youalso become more steadily wealthy. If you find yourself in need of furtherconvincing, perhaps you should also examine why you're in business.

There's another little bonus owner B derives, which is not readily displayedvia the chart. Not only does he bring in more cash flow and increase his networth at a faster clip, but which owner would you guess attracts the highergrade of customer? In a market with a limited pool of buyers, as you lower yourprice, you increase your potential number of consumers. Sure. But this being thecase, owner A not only makes less money, he becomes the "magnet" forevery late-pay, credit risk in town. By being the "low-cost" leader,he also becomes the Pied Piper for many of the marginal clients in his area.

Design and Appearance

What does a married, 34-year-old mother of two children (high school age oryounger) have to do with this? Statistically speaking, she is the customer thestorage industry strives to please--at least in the residential market. As closeas we can identify, on a nationwide basis, she is "the face" of theaverage rental customer. Call her "Victoria"--because she has a secret(actually two).

The first secret is that it's Victoria who decides to clean up the attic,garage, spare bedroom, etc. She is the one who, having driven by a localself-storage facility, now goes to her phone directory and shops prices forstorage units much in the manner of comparing retail ads. She then visits thefacility of her choice. Finally, she is the one who makes the decision to buy ornot to buy. Her husband is relegated to giving the yea or nay, and wrestling thestuff out of the garage, room, closet, etc., and into the unit.

The message: Remember Victoria when making important decisions about thefeatures of your facility or you're dead where you stand.

Whether enhancing an existing facility or designing new, there are two thingswe had best keep in mind about Victoria: She likes her surroundings to be clean,and she insists upon feeling safe. Violate either of these laws, even on anoccasional basis, and she won't return. What's the big deal about losingVictoria? Well, there are thousands of other potential customers just like her.Lose her and you risk losing them all. That's Victoria's second secret. Inreality, Victoria and her "friends" are closer to being Ghengis Khanand his Mongol horde. Mistreat them and they'll wreak havoc over yourcountryside--and they all ride together.

Cleanliness is a high priority for the Victorias in our markets. They'reenvironmentally aware, notice their surroundings and want them to be presentableand orderly. Victoria wants the places where she buys groceries, purchases herclothes and stores her belongings to make sense. If you observe the other placeswhere she does business, odds are they exhibit a sense of order and cleanliness.Look closely and you will observe this even in the frenzied success of largemerchandisers such as Home Depot and Wal-Mart. That is one reason they continueto be successful.

Victoria also insists upon feeling safe. If there is any key to understandingVictoria, it is this insistence upon security at all times. And note that it isnot so much being safe and secure, but feeling such. This canprove to be a difficult and expensive distinction to understand. It's not enoughto place a couple of signs in the driveway that read "Surveillance Camerasin Use," or to tell a white lie, "We've never had any problems."She has to feel safe. In reality, your facility can have a flawless crimerecord and yet fail the "feel safe" test. One well-placed, highlyvisible camera can do wonders in this regard.

Another aspect related to feeling safe is that Victoria doesn't like feelinglost. She doesn't like wandering down poorly lit halls trying to find her unit.When she gets lost or disoriented, she doesn't feel secure, and that's a majorviolation in her book. Understanding of this fact should inform our entiredesign process, with wider, simpler hallways, etc. (More on this point later.)

In terms of new facility construction, pleasing Victoria has been anunexpected bonus. As local communities have heightened their approval standards,we are all familiar with the related unpleasantries. Our preference fordeveloping in high-end communities has witnessed our construction costs goingfrom the mid-$20 range per square foot (excluding land cost) to more than $40per square foot. At the same time, locales have become more architecturallydemanding.

Upon completion of our newest facilities, my company noticed an unexpectedlypleasant side effect. Victoria and her Mongol horde flocked to them--and nowonder. The extra dollars we were "encouraged" to spend by localdesign standards steered us toward extremely Victoria-friendly facilities. Inorder to gain design and community approvals, we also inadvertently designed thetypes of clean, secure environments she likes to frequent. I call it the"Victoria Effect." The next time you go to design a new project orupgrade an existing facility, look more to the shopping centers where Victoriasshop rather than to your competitor down the street.

The "Victoria Effect" is also the best explanation for why,whenever a new facility is opened in a market, it is always able to draw awaynew customers from the competition--even with higher prices. A newer facility,regardless of unit-size availability and higher rates, is almost always cleanerand brighter and, therefore, feels safer. Victoria loves this atmosphere and,when convinced of its value, will pay top dollar for it.

Numbers, Signage and Directionals

Once we understand the core of our market--Victoria and her thousands ofclose, personal friends just like her--it begins to reorient our entire way ofthinking. For example, the simple observation that this customer prefers aclean, orderly and safe environment revolutionized my company's entire approachto numbers and signs throughout our facilities. It also gave birth to one of ourside businesses.

We used to think numbers were for conveying information, i.e., this is unit#234. I thought signs were for telling ignorant or recalcitrant customers whatnot to do: Don't park here. Nothing could have been farther from the truth.After much "coaching" by the Victorias of the world, we realized themost important function of unit numbers is that they ought to facilitate leadingthe customer to his unit. We now spend much more time and effort numbering ourfacilities in consistent, simple patterns. Rational numbering schemes areespecially important for facilities that operate as part of a larger chain wherea tenant may use more than one location. It's all part of avoiding that"getting lost" feeling.

Another step the new or existing owner can take to please Victoria--and makemore money--is to color-code his buildings. As mentioned above, unit numbers arenot just informational or stand-alone placards. A majority of us already assigna number or letter to each of our facility buildings. But this falls far shortand, in reality, is often ignored by tenants and management. Just listen to howyour managers direct customers to their building. For us, it used to be with agrunt, "Over there," while pointing in the general direction. Now eachbuilding is color-coded and marked with a large, colored, acrylic sign (oftenwith an image and building letter or number). All hallways and stairways arealso color-coordinated. All courtesy spaces, whether code-mandated handicapzones, or convenience parking for senior citizens or "moms with youngkids," are clearly marked.

You should also be using directional signage in your facilities. Bearing inmind that customers don't like to feel lost, you want to provide signagedirecting them to their units, particularly when it involves internal hallways.Our construction guidelines call for a directional sign at any juncture where adecision of where to turn needs to be made. For first-time renters, we have astandard practice of escorting them to their unit. The need for explicit signagealso applies to exit signs within the buildings (lighted signs are best) and inthe driveways.

Banish the Paint Can

Another "Victoria observation" leads us into one of my personalobsessions: banishing the paint can. Several years ago, a customer mentioned inpassing that the paint drips and splatters on our driveways looked horrible. Andshe was right. It wasn't so much from repainting the building exteriors--thatwas done infrequently and by professionals. Rather it was the constant touch-upof building-corner bollards, crimped downspouts, etc.

That simple comment set in motion a new priority in our management. It can dothe same for you as you seek to enhance the appearance of your property. Weexplored ways to reduce ongoing maintenance in our facilities, especially thepaint-related kind. Rather than continuously painting building bollards wheneverthey are hit, we now use colored bollard caps. Made of 1/4-inch plastic andcustom-colored to our facilities, these caps can take a tremendous hit and belittle the worse for wear.

Downspouts crimped from customers backing into them were another of ourperennial problems. Once they were straightened, out came the paint can. Now, wecut off our downspouts at 3 feet above the drive and use a plastic extender toconvey the water. If the extender is hit, it has a certain amount of flex and isinexpensive and quick to replace. We are currently experimenting with concretestain in lieu of painting our slab floors. Floors--particularly well-traveledhallways--are in need of some protective coating. Yet most paint products bubbleup over time, unless applied under ideal circumstances. Concrete stain seals thepours of the concrete and prevents spilled oils, etc., from penetrating thefloor surface.

Victoria may be a demanding customer, but she is loyal to the end. Providingyou acknowledge her basic requirements--cleanliness, orderliness and a sense ofsecurity--she and her thousands of friends will have no need to look for a more"respectful" place to do business.

Martin Knuppe has been in the self-storage business for 20 years. He isfounder and president of The CastWater Corp., which owns, develops and consultsin the self-storage industry. The MiniSource, a CastWater company, sellscomplete finish packages (numbers, signs, protective products) to"Victoria-friendly" self-storage facilities nationwide. Mr. Knuppe isalso a frequent contributor to industry publications and seminars. For moreinformation, call 925.462.4029.