Inside Self-Storage Magazine 09/2001: The Competition Litmus Test
|Copyright 2014 by Virgo Publishing.|
|By: Harley Rolfe|
|Posted on: 09/01/2001|
The Competition Litmus Test
By Harley Rolfe
Do you get calls asking about rates for specific unit sizes? That's a heads-up. It means you weren't the caller's first query (who told him what size to request?). It also means he views you as a commodity he can shop. Neither of these conclusions bodes well because what it ultimately means is you are nearly helpless against the onslaught of price competition. Essentially, your rivals are setting your prices. Some of you may think this doesn't matter if you are meeting your goals regarding pricing and occupancy. But if you suspect the day is coming when you can't meet those income goals, you may get more curious about what we marketers do. Unfortunately, many don't like it when they discover what's involved in first-rate marketing.
I hear from owners who think putting up a nice facility in a good location and keeping it clean and staffed with nice folks is enough. They think all the talk about commodity this and marketing that are factors they should be able to ignore. When asked about competition, they say it's a "phase," with the sentiment "this too shall pass." Still, when they feel the bite of price competition, they may come to believe they should give marketing a whirl. That attitude can lead to an ambush. Thinking marketing is a temporary need prompts them to dabble at it. But installing a diluted program may not work and convinces the owner marketing isn't worthwhile. He becomes resigned to using price responses to meet the competition, figuring he has done all he can. That's sad.
Hold On, I Know My Market!
If you've concluding something serious must be done to improve control of your income, the first move is to master the composition of your local market. That means gaining an intimate knowledge of who uses storage and how they benefit. You may be thinking, "Wait a minute, I already know my market. I've been in this business for 10 years!" Perhaps, but I hold that most commodity self-storage operators tend to let the prospect figure out on his own how storage can help him. The prospect walks in, they sign him up. They don't know--or believe they need to know--how each tenant benefits and what problems they are solving. So the owners' role is relatively passive. But that role must change when adjusting your position for more aggressive marketing.
Break It Down
The greatest tool you have to become active in the prospect's decision-making process is to determine what gives rise to his need for storage. The hallmark of any marketing program is the subdivision of the tenant population into meaningful segments. "Knowing your market" means knowing what the segments are, how they solve their problems with storage and how to reach and influence each. You need to break down the sources of your income for the same reason you itemize your expenses: control. That's how you manage anything. Income and expense control starts with knowledge that alerts you to key problems or opportunities.
Here is an example. We know the primary market segments are split between personal and commercial applications. Of the two, we know commercial applications have longer tenancies than personal. The occasions for personal use are often transitory. They are triggered by some change in the prospect's life: he bought a house, got a job in a different city, is going home from school for summer, is moving parents to a nursing home, is getting a divorce, etc. These events are finite. The occasion that spurred them comes and goes. For you, this means considerable turnover or short tenancy periods. However, the need among commercial users is ongoing because it is often an integral part of the operations of a business. The need doesn't stop unless the business goes under or undergoes some other major change. So, we know commercial renters generally stay longer. What we may not know is why.
One reason these segments are different is transportation. In both cases, the prospect must solve the transportation issue, but in one case it may present a problem. Not all residential users have pickup trucks or other large vehicles to transport their goods. So in the case of personal use, transportation is an issue that should be acknowledged by the self-storage operator. That isn't true of commercial applications because most businesses and government entities will have their own transportation.
Once we know the types of things that trigger needs, we can demonstrate our sensitivity to the prospect and know how to fine-tune our pitch. In regard to the transportation issue, for example, you may want to offer your prospect free or discounted use of your rental truck. That might not be how you close the deal with a commercial tenant.
The trick to selling anything to anyone is to know enough about the prospect's needs to offer a solution to his problem. Simple, right? But how many self-storage operators can identify their market segments, cite the amount each contributes to his income, and show tracking progress in attracting them? Very few. I know of one large operation that cannot tell with any precision how its business breaks down between those general categories--personal and commercial uses--let alone the dozens of subdivisions within each. Yet as a business, it does wonderfully. Some facilities have no need for professional marketing. We're addressing those that do.
Marketing is a specific process, a series of steps that form a repeating cycle. Like the Energizer Bunny, it goes on and on and on. Your good ideas will be copied and your not-so-good ones--well, you'll drop those. In either case, you need regular, fresh approaches for each segment. That means having intimate knowledge of the needs and activities of the segments most important to you.
Curiously, most operators think their marketing should begin with the most expensive step: use of media and other advertising. But how do you know what to advertise, how and to whom if you don't identify who is using storage and why? The place to start is identifying your segments. Most self-storage facilities will not benefit from spending money on expensive advertising efforts, anyway. Most of you use the Yellow Pages and know what a dent that makes in your budget. Using select media requires you to target the prospects uncovered by examination of your area and its market segments. The cash outlay for this initial step is minimal.
Watch That Duck
Have you ever watched a duck gliding serenely across a pond? It looks effortless, doesn't it? But if you look below the surface, his feet are paddling like mad. In a similar way, your numbers may look good on the surface, but they don't tell the whole story. Your total income and occupancy are simply the sum of what goes on in all your market segments. But there's something different taking place in each, beneath the surface. Maybe rents resulting from residential moves are dropping, but records storage is increasing. You'd never know that by just looking at the bottom line.
The bedrock for a marketing effort of any consequence is to catalog how and to whom the facility is delivering benefit. The self-storage operator has the advantage of investigating his existing tenant base. Each tenant has already cast a vote in favor of your facility. He will happily tell you his reasons for doing so. Just ask him.
Harley Rolfe is a semi-retired marketing specialist whose career includes executive-level marketing positions with General Electric and AT&T. He also owned lodging and office facilities for more than 20 years. Mr. Rolfe holds a bachelor's degree in economics from Wabash College and a master's degree in business administration from the University of Indiana. He can be reached at his home in Nampa, Idaho, at 208.463.9039. Further information can also be found in Mr. Rolfe's book, Hard-Nosed Marketing for Self-Storage.