Overcoming Ancillary Angst: Adding Services to Self-Storage
|Copyright 2014 by Virgo Publishing.|
|By: Mel Holsinger|
|Posted on: 10/05/2008|
Most managers first come to self-storage thinking, How hard is it to rent an empty space to people? But all who land the job discover rapidly that renting storage units is only one of many responsibilities they will face daily.
How many of you quickly learned that your owner/management company expects you to rent space and be a retail store clerk, a rental-truck and trailer dealer, post office and packaging expert, an RV-storage attendant, document shredder, junk remover, carwash operator, etc.? It seems that where there’s a will to make money, self-storage entrepreneurs are always struggling to find a way. Ancillaries are the answer.
At first glance, all the jobs listed above seem to correlate to self-storage. The argument by many managers, though, is they can’t be topping the charts for unit sales at the same time they’re weighing and shipping boxes. Let’s explore this further and figure out how to make it all possible.
The Retail Front
Many offices have limited space, and any attempt to display a variety of products in this area often ends up as a clustered mishmash that looks more like a par course than an organized work station. Maybe your site is the exception with ample space and a retail center like a small Staples. Regardless, the idea is to get the customer to purchase products along with signing a rental agreement—beefing up the bottom line. Your goal: persuading them to buy from you rather than go to another retailer. How do you do it?
Believe it or not, this process should be relatively easy if you follow a script. “Mr. Jones, we have a variety of products readily available to help you in your move. We are competitively priced with (name the closest retailer that sells moving and storage supplies), but we can save you the time of having to hunt for them elsewhere and stand in line to pay for them. Can I show you our package deal for your (5–by-10, 10-by-10, etc.) unit and other products you may need? By the way, our high-security lock is an asset to help you maintain control of your possessions, and it is important that only you and your designated representatives have the key/combination. Would you like to purchase a lock for your unit?”
Many people refer to this process as up-selling. It’s a service we can provide to the benefit of the renter; moreover, it pads a facility’s profit and helps maintain operational standards.
The only problem is most managers lack the training and confidence to follow through with this process. Ancillary and up-selling can seem more like the nemesis than an opportunity. Why is it so many managers can quote the proper space size for the customer, point out the convenience and security features of a facility, yet fail to sell packing and storing supplies to someone who will likely need them? Is it because these items are considered “ancillary” instead of necessary? Could it be managers are so driven to obtain signed rental agreements that they forget products can be a highly profitable part of the business? Or is it the employer’s lack of emphasis on this part of the business?
When we go to purchase a new car, how easy is it for salespeople to get us to buy an extended warranty? How likely is it for them to convince buyers to spend a few more for custom wheels? How many of us have purchased floor mats or other accessories because, once we were made of aware of it, the convenience was so easily exploited? I think it is safe to say most of us have succumbed to these offers at least once in our lives. We’ve even been grateful to accept an offer and save ourselves from going elsewhere to make the same purchase.
Why All the Fuss?
Let’s look at a financial model to understand the reason behind the angst. Assume a manager rents 25 units per month, each for $100, and each customer stays for six months. Revenue generated from this is $15,000.
Now let’s assume the manager can sell 75 percent (19) of those customers a box, lock, bubble package and marker for $50. Sales have now generated $950, approximately 6 percent of the rental-space income. If the margin of profit is 50 percent, the site will pull in $475 of profit for the month in addition to the space rental. Multiply that by 12 months ($5,700), using an 8 percent cap rate, and you have just increased the property value $71,250 from this process alone.
If you take a look at any services/products mentioned in the beginning of this article, you should now understand better why your employer has set you up to become a “multi-task” manager, and why it’s important that you treat this part of the business with the same enthusiasm you do in renting storage units. After all, the objective is to make more money and the property more valuable. By achieving success in ancillary sales, we help self-storage owners and customers in one swoop.
Take a look around your office and facility and question if you are doing everything possible to make ancillary products/services more desirable to customers. Look at the displays: Can you do a better job of presenting items? Look at how you park your trucks/trailers: Are they neatly lined up, clean and ready to go? How about that packaging area: Is it organized and tidy with plenty of supplies on hand to do a quick shipping order? Is the counter area organized and ready to go for the next customer, or is it just another cluttered shelf without a purpose?
Bottom line is this: Ancillary angst is an unnecessary stress. While we may not have originally signed on for all these extra jobs when we accepted a position as a self-storage manager, we should embrace the challenge.
You were hired for your good attitude and willingness to pitch in, work hard and enjoy the reward of knowing you’re helping customers while providing services—plural. It’s not just about a rental unit. It’s about renting units and selling those ancillaries. It needs to have nothing to do with angst, but it has everything in the world to do with income.
Mel Holsinger is the president of Tucson, Ariz.-based Professional Self Storage Management, which offers self-storage facility management, consulting and development services. He is also a frequent speaker at industry conferences and a regular contributor to Inside Self-Storage. For more information, call 520.319.2164; visit www.proselfstorage.com.