Increasing Self-Storage Efficiency and Profit Through Third-Party Services
Copyright 2014 by Virgo Publishing.
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Posted on: 08/13/2013



 

By Rachel Adams

As the self-storage industry evolves and competition increases, operators are forced to pay closer attention to all the details that keep a facility running smoothly to attract and keep tenants. With managers and operators already wearing multiple hats as customer-service experts, maintenance wizards and marketing aficionados, it can be challenging to stay up-to-date with the changing demands of the business.

In some cases, operators can benefit from outsourcing some or all of these hats to third-party companies. These helpers can jump in and lend expertise in arenas like marketing, payment processing, maintenance and general management to keep a storage facility up to speed with competitors, and free up time to pursue other priorities or interests.

From Yellow Pages to Google: Keeping Up With Marketing

Like every other industry, self-storage has undergone a huge transition as the Internet has become increasingly popular, making it possible for consumers to search and study facilities and prices from a computer or even a smartphone. The addition of GoogleAds and search engine optimization (SEO) have transformed marketing into an Internet-based, evolving operation. Therefore, based on the size of the company and the resources available, some self-storage operators find it beneficial to outsource marketing to the professionals.

Online marketing services can include custom Web development, graphic and logo design, search engine marketing, Website hosting, and online payment and reservations applications. According to Christopher Baird, CEO of Automatit Inc., a full-service website-development firm that specializes in self-storage, a marketing company uses these services and its expertise in Internet marketing to work toward customer reach as its sole purpose, whereas an operator has to allocate his time to the other needs of the facility. "A small company could not realistically dedicate the same recourse for this purpose," he says.

To decide whether to hire an agency, an operator needs to consider two factors: the time he and his staff have to allocate to marketing, and the staff's level of skill. "If you have a team that's really fluent in online marketing and understands the drivers and best practices, you can certainly manage it in house," says David Wolf, managing partner for Linkmedia 360, a marketing agency that offers vertically integrated solutions including online and offline marketing, branding and website development. "I think where it makes a lot of sense to use an agency is when you can't allocate the time or you don't have the expertise to do it."

Call centers can also provide marketing services by generating leads, and providing a centralized sales and support center and integrated Web marketing. "These solutions are designed to assist the independent operators to compete with strategies deployed by the largest chains in self-storage at a fraction of the cost," says Mike Roberts, senior vice president of business development for XPS Solutions, which provides digitally recorded calls, lead tracking, Web-chat support, SEO strategies, Web hosting and data analysis.

To get the most out of a third-party marketing company, operators must effectively communicate their goals and objectives and be open to new ideas, says Shari Sutton, president of Sutton Watkins Advertising & Marketing, a consulting firm with a focus on online strategies for the self-storage industry. "You know your business better than an outside team, so internal resources are vital to this process," she says.

Payment Processors: Find the Best for Less

Payment processing is another service third-party companies can handle to help businesses save time and provide additional features such as online-payment processing. While self-storage operators can choose to use payment-processing services through a bank, this usually requires an additional third-party service to make sure the processor is compatible with the operating software. If the service is not compatible, it can limit the storage business' ability to use more advanced features such as online-payment options.

"Operators should be aware of whether or not the processor is integrated with [their] operating software," says Jason Marsh, marketing manager for SBOA Merchant Services, which provides debit and credit card as well as check and ACH-processing services for self-storage. "If they are not integrated, chances are you will need a third-party integrator to make your software and your processor communicate, adding extra steps and additional costs." 

Rates and additional fees are an important consideration when choosing a payment-processing company, which can end up being a large expense if not explored beforehand. Tony Maskell, account executive for StorageRentPayment, an online payment solution that offers credit card and e-check acceptance for property-management companies, says the rate should be flat and fixed to reduce additional surprise costs. "The bottom line is always the rate," he says.

While the rate is important, it's also critical to work with a company that provides a detailed financial analysis. "Request a complete, transparent analysis of your merchant statement that includes any fees involved, and if you have to pay extra for services," says Jennifer Nguyen, director of partner growth for PayPros, a payment-technology company that offers payment solutions to the self-storage industry. "You may think you are getting the best rates, but when you do the math, you may actually be paying more."

Self-storage management company Universal Storage Group outsources its payment-processing services for the 50 facilities it manages to better keep track of fees and save time, according to Allan Dixon, the company’s director of information technology. The company Universal employs is part of a virtual terminal that allows it to accept payments online and offers speedy returns.

"I would stick with a virtual terminal, a resonated credit card processing platform, so that even if you're not interested in doing online payments at this particular time, in the future, you'll already be on a platform that's ready to go," Dixon says.

Hand Over the Tool Bag

A huge portion of facility operations is dedicated to maintenance and property upkeep. In today's competitive market, having a clean and well-kept facility can be the differentiating factor between you and the operator down the street. When time is limited, necessary tasks may not get the attention they deserve and could put a facility at risk of losing tenants and encountering safety concerns. For these reasons, sometimes the best option is to hire a company to take care of the nitty-gritty and important maintenance tasks.

Self-storage maintenance companies can perform a variety of jobs, from small, routine tasks such as spring repair for self-storage doors to large-scale renovations. While many routine chores could be handled by facility staff, it's important to make sure they’re completed safely and correctly. "Many times there is troubleshooting involved in determining what is actually wrong, so you want a qualified person doing that troubleshooting," says James Fawcett, president of Accent Building Restoration Inc. (ABR), which offers property and building services including cosmetic construction, painting and maintenance.

When shopping for a company to perform maintenance work, make sure the business is licensed by the state, bonded and has liability insurance, Fawcett advises.  Also, pay attention to pricing and look for companies who can provide those numbers upfront. "Ask for references, and call those references—you would be surprised at what people are willing to share," Fawcett says.

Management Services: Letting Go of Daily Operation

For owners and operators who are not interested in handling day-to-day facility operation, a third-party management company could be the solution. The majority of self-storage management companies offers a full range of services including staffing and training, marketing, maintenance and payment processing, and some even offer have call-center services.

John O'Donnell, co-owner of six self-storage facilities with wife Jeaneen O'Donnell, uses third-party management to keep his portfolio running smoothly. "They take care of all the most difficult and important tasks, like marketing, to keep the place full; employment and training of staff; compliance and keeping the property up," he says. "I believe a complete third-party management company can do that better than I can."

Many management companies take over all facility functions, so the owner no longer has a concrete connection to the operation of the facility. "For the hands-on owner, it can be both difficult and emotional to step away from daily operations," says Dale Payne, a sales/client relations manager for Uncle Bob's Management LLC, a provider of self-storage management services. "This is one reason it is so important for an owner to have a strong level of trust in the management company's ability."

While turning a business over to a third-party management company may mean the owner has less control, it doesn’t mean he has no control at all. "I think it's important to remember the old saying—you can only expect what you inspect," O'Donnell says. "It's up to the owner to review the reports regularly, make sure the trends are in the right direction, communicate with the regional or district manager, and visit the property periodically to make sure it's being maintained the way you want it."

One of the primary reasons owners turn properties over to a third-party management firm is lack of resources for necessary components such as marketing and maintenance. "Owners should consider partnering with a management company when they are struggling to compete with Internet marketing and offering online options for customers, when day-to-day operations and  maintenance become a burden or, overall, when a property is not operating at its potential due to lack of resources," says Carol Shipley, vice president of third-party management for CubeSmart, an owner/operator, third-party manager and acquirer of self-storage facilities.

It's also up to the owner to do a lot of research before choosing a company to oversee his business. "Hiring a company to run a property is a big step," says Maurice Pogoda, president of Pogoda Cos., which offers self-storage management, brokerage and consulting services in Illinois, Indiana, Michigan and Ohio. "There are some specific questions that should be asked before someone trusts his valued asset to a third-party management company." He advises owners ask about the number of years the company has been in the industry, proof of the company's ability to meet goals, references provided by the company, and other telling information.

When it comes down to choosing a third-party management company, there are many factors to consider, but revenue is ultimately the goal. "While there are many qualitative factors that make a third-party management company attractive, owners need to make their decision on quantitative results and who has the ability to manage their site best," says Clint Halverson, vice president for Extra Space Storage Inc., self-storage owner and operator that also offers third-party management services. "As a whole, year over year, managed properties have experienced both double-digit revenue growth, increased net operating income, occupancy and rate per square foot.”

At the end of the day, outsourcing any aspect of your business to a third-party company isn't about whether you and your management team are capable of handling these business components in house. The deciding factor lies in whether allowing experts who have more resources and possibly as much experience in the self-storage industry to handle marketing, maintenance, payments or operation will be more beneficial and generate more revenue for a your facility.

"When you look at the scope [of work] and how much time it would take our team, it doesn't make sense to do it all ourselves," says Anne Ballard, president of marketing, training and developmental services for Universal Storage Group. "These third-party companies are specialists at what they do—software, call centers, Web development, retail items, etc. Why would we try to recreate the wheel?"

Rachel Adams graduated from the Walter Cronkite School of Journalism and Mass Communication at Arizona State University with a bachelor's degree in journalism and a minor in Spanish. Her passion for writing and culture propelled her journey through college and has continued to inspire her endeavors with VIRGO Publishing, where she contributes to "Inside Self-Storage" and "Professional Door Dealer." Contact her with questions, comments or ideas at radams@vpico.com.