More Than Moving Supplies
|Copyright 2014 by Virgo Publishing.|
|By: Amy Campbell|
|Posted on: 04/01/2002|
When a potential customer walks into your facility, are you really offering him all you can? Maybe your operation is clean. The manager is organized and professional. Perhaps you even sell locks or packing supplies. Unfortunately, it's a drive-thru world where customers demand more. Ancillary services that go beyond boxes and bubblewrap are an integral part of new-world success. "Sometimes, when you have a customer who's never used self-storage before, he wants you to help him figure out what he needs," says Dean Nichols, owner of Dean Nichols & Associates, which manages 10 facilities in the state of Washington. The stores offer a variety of ancillary services including truck rental, mailboxes, locks and packing materials. "With having it all in one spot--you don't have to send customers down to the hardware store for a lock. If they need boxes, you've got them there."
Call it one-stop shopping. And it's not a new concept. Retail stores such as Wal-Mart and Kmart now stock groceries as well as toys, clothes and sporting goods. As the pace of life continues to speed up, people are looking for shortcuts. That's where ancillary products come in. Offering packing supplies, mailboxes and truck rental along with storage units gives a self-storage facility a leg-up on the competition, adds money to the bottom line and provides convenience to the customer.
Locks, Boxes and Bubblewrap
Most storage owners already recognize the benefits of stocking locks and packing supplies. "It's becoming increasingly more important with storage facilities," says Kenneth Van Slyke, president of Nationwide Box Inc. The Houston-based company sells everything from packing supplies to security products. "You see a lot of the big guys doing it, like Public Storage and Shurgard. They spend a lot of resources to try and grow this part of their business. They know it's a perfect fit."
Chateau Products Inc. began 11 years ago with locks. Now the Englewood, Fla.-based company has more than 400 products, all aimed at the self-storage market. Increased traffic and the lure of profits have encouraged more self-storage operators to set up shop. "People are realizing it's a natural thing to do," says Nancy Martin, vice president of sales and marketing. "You have this space with a window front. It has curb appeal, and people are driving by it all the time. It's a store, and it should be treated like a store."
Like a store, there's an opportunity to make a fair amount of profit. The majority of retail items can be marked up 100 percent. "You can pretty much double your money. There's a good retail markup on these items, and it's not a huge investment to start," Van Slyke says.
In fact, outfitting an attractive retail area is minimal. "You could set up a real nice looking store for a couple thousand dollars," Martin says. "At our company, we have a policy where if you don't sell it, we'll take it back. If you can work out something like that with your vendor, that's fantastic."
It can also be done on a smaller scale. "You can start off small with just a few box sizes, a few rolls of tape, maybe some packing paper and see what blossoms from there," Van Slyke says.
Almost any size store can have ancillary products, says Ed Hainrihar, vice president of U-Store-It, headquartered in Middleburg Heights, Ohio. "Even if you have to designate a physical unit that's close by, turn that into a display area. Every self-storage operation should have ancillary supplies. The amount of money you spend is minimal and the customer is right there."
Marketing the Merchandise
Just like self-storage, retail items need to be marketed. Too often, these easy-sell items are regulated to a small section of wall space or clutter the sales counter. To ensure the success of such ancillary products, customers must be attracted to them. "Some people can't see putting the extra effort into having the retail area. But if you don't show it, you can't sell it," says Scott Harris, owner of Movin' On Storage Centers and president of Pittsburgh-based Dana Management Group Inc.
Movin' On Storage Centers boasts more than 1,000 square feet of retail space. "As self-storage grows and progresses, we have to realize we are a retail-oriented business, and we have to address it as such," Harris says.
U-Store-It has found so much success with moving and packing supplies the company is overhauling its retail areas. "The greater the store, the greater the income," Hainrihar says. "We know there's an opportunity to offer a greater degree of service to a customer and make more income for the store as well."
The goal is to entice customers into the facility who normally wouldn't visit. Adding the phrase "packing supplies" to your website, window banners, Yellow Pages ad and all company mailings will draw more people to your door. "You can increase your product line to help solve more of your customer's problems. It prevents them from going down the street to another storage facility that may be selling boxes," says Van Slyke.
Self-storage operators can also use ancillaries as promotional items. For example, give every customer who tours the facility a few free boxes. Once the customer comes through the door, the opportunity to sell a storage unit increases. "I have people who come in just for the packing supplies, not realizing we are a storage facility," says Roni Chandler, manager of Movin' On Storage Center in Charleston, W.Va.
Closing the Deal
But how do you determine what will--and won't--sell? "There are certain items that definitely move faster than others," says Van Slyke. While locks remain best sellers, boxes, packing paper and tape are gaining ground. Stocking the three standard sizes of boxes--small, medium and large--is a good bet. "You need to at least carry those," Van Slyke says. "All these boxes require tape, so you need to sell that. Nobody should be leaving with 50 bucks worth of boxes and no tape."
Next to locks, boxes are the easiest products to sell. "It used to be you could only find boxes at the back of grocery stores and liquor stores. They don't necessarily give out boxes anymore," Martin points out. "Boxes are still the No. 1 thing people need when they move. It's very important from a liability and service standpoint for a storage operator to make sure he has something to offer the customer to protect his goods while they're being stored."
Location can be a huge factor in determining which items will fly off the shelves. "Look at who your customers are and the surrounding area, and look to see what's already available," Martin says. "If there's a college nearby, you're going to have a lot of students moving out for the summer and putting their things in storage. They'll need boxes for computer equipment. If you're in an upscale area, you'll need dish boxes, things to protect dishes and glassware. The basic items like sofa covers, newsprint and tape will always sell. If you rent trucks, make sure you have a lock that will fit on the rental truck."
While choosing what to stock seems like commonsense, many facility owners make the wrong decision simply because they don't evaluate their customer base. "You want to make sure you're focusing on what your customers will need," Hainrihar says. "The reason the lock is such a big seller is because everyone needs one. You want to pick items every customer can use."
Keeping the shelves and pegs full is another key to maintaining an active retail area. "The more people see, the more they tend to buy," says Van Slyke. "Fill up your racks. Never let people see an empty hook. Customers want to see everything full and dust-free."
Managers should keep track of which products sell best. "There's some great software available now where you can actually keep the inventory in the computer and watch for the bestsellers," Martin says.
Next to locks and packing supplies, truck rental is the most popular ancillary item. Not only is it a huge customer convenience, it can also add a few more coins to your coffer. "Everyone is moving into and out of self-storage in a truck," says Kirk Nash, president and CEO of On The Move Inc. in Boerne, Texas. "The question is, is it a Ryder, U-Haul, Penske or Cousin Bill's pickup? They're looking for a pickup when they come to get space. If a customer can go to a self-storage facility that has trucks or one that doesn't, they'll probably go to the one that has them."
There are a few ways self-storage operators can jump into truck rental: leasing or buying a truck from a dealer, or becoming a dealer for a truck leasing company. Each has its advantages and disadvantages. Leasing or purchasing a truck allows the self-storage operator to have total autonomy when it comes to who rents it and at what cost. However, leasing a truck requires a hefty monthly payment, whereas becoming a dealer involves little or no financial obligation. Yet, self-storage operators who become truck-rental dealers are subject to the rental company's policies, including pricing and limitations on truck availability.
On The Move currently leases 3,000 trucks, 80 percent of which belong to self-storage operators. The total cost to lease a truck is about $850 a month. The four-year lease includes liability and comp and collision insurance. All trucks also come with 12 furniture pads, a hand truck, rental forms and truck-condition reports. "We put it all together. You can get a truck anywhere--getting the truck is not tricky. The tricky part is getting the insurance so you can hand the keys to any licensed driver 21 and older. By providing the insurance, rental forms and backup material, we put operators in the local truck-rental market," says Nash.
On The Move also offers unlimited mileage and guarantees its leases. "Anytime during the first year, if doesn't work for them for any reason, they can turn the truck back in and we tear up the lease. They don't have to even give me a reason," Nash says.
The amount of profit a self-storage operator makes is directly correlated to how much effort is expended in renting the trucks. "We have self-storage operators out there with numerous trucks that are netting $1,500 a month per truck. Then there are other folks who are just breaking even on the vehicle," Nash says.
Nichols has found leasing trucks to be quite profitable. "It's almost a surefire hook when someone calls and we tell him we can offer the use of our truck for free," he says. The trucks are always used during a new lease-up. "As a facility becomes more mature, what we do is give the truck away less and rent it more. And it brings us at least one tenant a month we wouldn't otherwise get. If it brings us five tenants we wouldn't otherwise get, it certainly pays for itself," he adds.
A truck also serves as a moving billboard. "We use it as a marketing tool as much as a revenue source," Nichols says. "When it's out in the neighborhoods, it serves as an advertisement. People see the truck and we get some name familiarity."
Self-storage operators not interested in signing a lease agreement can still offer their customers truck rentals by becoming a dealer with a national truck-leasing company. The biggest advantage is there are no out-of-pocket expenses. Self-storage operators only need to provide the space to store the trucks and a dedicated phone line to take reservations. "We take care of the expenses for everything," says Jennifer Sullivan, director of public relations for Budget Car & Truck Rental. The Lisle, Ill., company acquired Ryder TRS in 1998. "We take care of the cost of the truck, truck maintenance and insurance. We supply all the equipment--tow dollies, hand trucks, blankets. We supply the contract and computer system. We'll also deliver reservations to them and give them a free Yellow Pages listing."
In turn, self-storage operators make a commission on every truck rented. "It has been a great source of ancillary income," says Harris, who offers Ryder, U-Haul and Penske truck rentals at three facilities. While some of the facilities only net a few hundred dollars each month, Harris does have one site that garnered $150,000 in its first year. "It helps edge out the competition and it helps bring clients to your facility. When they rent the truck, that's one more customer to whom you can market."
In fact, U-Haul's research shows 23 percent of all customers who rent a truck from a self-storage will also rent a unit. "There's a synergy between moving and storage," says Dennis O'Connor, director of storage operations for U-Haul International Inc. in Phoenix.
You've Got Mail
Mailboxes are another ancillary product popping up in self-storage. Some owners are already experimenting with the concept and finding great results. "It's a good service to offer our customers," says Nichols, who has mailboxes at several facilities.
Salsbury Industries, a Los Angeles company that manufactures mailboxes, is fielding more requests from self-storage operators, says Ricardo Alva, the company's outside-sales manager. "The great thing about getting these boxes is it's a one-time charge," Alva says. Mailboxes run about $500 for a bank of 30 and roughly $400 for a bank of 10 larger compartments. "If they have a bank of 30 boxes and rent them for $15 each, that's $450 profit per month," Alva says. "If the cost of the unit was about $500, in a little more than a month, it will have made back the cost of that unit. From there on out, it's just profit."
Pricing the service will depend on the facility's location and what the competition may be charging. However, not every location can be considered a good one for mailboxes. "Most storage facilities would not lend themselves well to private postal boxes because they're too off the beaten path," Harris says. "If you're in an urban environment where you have a lot of drive-by traffic, people would notice the service and might have a tendency to use it more. Most of my boxes are being used by current tenants."
In addition to small business owners, facilities near marinas and colleges are ideal for mailbox services. Although it's too new a venture for Harris to declare it a success, he says the minimal start-up cost makes it worth the gamble. "They'll pay for themselves a lot sooner than the storage facility will."
Salsbury publishes a manual for business owners interested in providing mailbox services. "Owning and Operating a Successful Private Postal Center" includes information on start-up costs, marketing, sample rental rates, configurations and contracts. The manual also has the actual form business owners need to submit to the post office. "That's really the first start for anyone considering doing this type of business," Alva says. The manual costs $25 and can be obtained via www.mailboxes.com or 800.725.7287.
One reason many self-storage owners have shied away from ancillary products is the fear they will take up too much of the manager's time. "Unless you're overwhelmed with customers, I don't know how ancillary products would be too much for one manager," says Chandler of Movin' On Storage.
And as the industry continues to evolve, managers are expected to be more than just a facility caretaker. "It is now more of a sales aspect. With the focus more on ancillary sales, you're going to have to ask your manager to sell. We look for people like that, and we also tell them this is part of the job," Hainrihar says.
It's also important to make selling ancillary products as simple as possible, says Chateau's Martin. That includes ordering, stocking and pricing items. Clear price tags and product descriptions will cut down on the number of questions customers ask. An easy reorder system is also a must. Use a reorder tag with the product number on the back of the hook. "That way, all the manager has to do is pull the reorder tag off the hook and pick up the phone to order," Martin says.
Mailboxes require even less of the manager's time. "It's a pretty self-sufficient service. All they're doing is receiving mail, sorting it out and putting it in the box. There's not too much maintenance involved," Alva says. In fact, the entire process should take less than 30 minutes a day.
While packing supplies sell themselves and mailboxes need little upkeep, truck rental does require more time and energy from a manager. Movin' On Storage Centers averages a ratio of 7-to-1 calls a day for truck rentals vs. storage units. "You're tracking a much heavier call volume for truck rentals," Harris says. Generally, a single manager can handle a truck-rental operation generating up to $125,000 to $150,000 in annual revenue, Harris says. "Anything over that, you really need to consider bringing on more people."
Although truck rental requires more of the manager's time, every truck-rental call is an opportunity to sell storage. "That's what the owners have to realize. Yes, managers are taking time to answer the phone, but that's a call coming into the facility," Harris says. "Granted their first reason for calling was for truck rental, but everybody who needs a truck is probably going to need boxes. And people doing self moves may also need storage."
The key to having any kind of successful ancillary product is getting the manager on board. "If not, they're not going to answer the phone and they're not going to go the extra mile," Harris says. "Some people will work hard if they know they're going to have X number of dollars at the end of the week. Other people are going to ask, 'What's in it for me?' Those are the people you have a hard time with when bringing in the truck rentals and other ancillaries. If you're bringing in more boxes or truck rentals into an existing facility, you do need to compensate that manager for additional work."
Compensation could come in the form of a higher salary, bonuses or other incentives. "If you compensate your managers, they don't think of it as extra work. But they need to view it as the total-pay package," Harris says.
Juggling mailboxes, packing supplies and truck rentals with renting units and keeping a facility running smoothly is by no means an easy task. However, the extra effort could lead to big payoffs in the long run. Ancillary products add profit, create customer convenience and help your facility stand out from the competitors. "It's a matter of helping the customer as much as you can," Van Slyke says. "If you offer everything they need under one roof, that's going to build a valuable trust."