Add-On Product Sales

Turning mega-profits from your self-storage office

By Fred Gleeck

Whenever I conduct an on-site marketing audit of a self-storage facility, oneof the first places I check for unrealized profits is the office. It is one ofthe most neglected areas of potential revenue at any facility. Researchindicates the average facility generates approximately 2 percent of its grossincome from sales of "add-on" products. For a facility that grosses$25,000 a month, that would mean $500 a month in the sale of boxes, locks andother ancillary items.

I have one client who generates nearly 15 percent of his monthly gross incomein the sale of add-on products. This is almost eight times as much as theaverage self-storage facility. Amazing, isn't it? Absolutely. But before Ireveal exactly what he does to achieve these results, let's look at the numbers.

Let's assume you use some of the following suggestions and double your add-onproduct sales from 2 percent to 4 percent of your total gross revenue.Continuing the example given above, your sales would increase from $500 to$1,000 a month. If you receive a 100 percent markup, you would make anadditional $250 a month. Over the course of a year, this means an additional$3,000 in net profits. Chances are, you'll make much more.

What Products Should You Carry?

The answer to that question is simply this: whatever your customers will buy!One of my clients rents carpet cleaners. I wouldn't have thought about this one,but he kept hearing customers ask about them, so he went out and bought acouple. In less than a month and a half, they had paid for themselves.

I don't know if carpet cleaners will work in your particular area, but it'sthe concept you need to understand. You should carry any products your customersask for and are willing to spend money on. If you've established a relationshipwith your customers, why not sell them everything they are willing to buy? Ifyou don't, another vendor will.

Most of what you carry will be standard items: boxes, locks, packing tape,markers, pallettes and other expected ancillaries. Start with the usualsuspects, then listen to what your customers ask for. Test additional items tosee what works.

Buying Right

Make sure you price shop before you buy anything to sell out of your office.Get at least three price quotes for any item. To maximize your profits, you haveto buy right.

Check the Internet to find products and compare pricing. I use a searchengine called Dogpile at www.dogpile.com, which is basically a search engine ofsearch engines. At the site, enter a term like "cardboard boxes" andhit your return key. You'll find a lot of vendors who sell the products you'relooking for. Go to their sites and check their prices. Call or e-mail them toget your questions answered.

Your Physical Layout

Every storage office has two areas: the area in front of the counter wherethe customers "belong," and the area behind the counter where themanager has his space. Most facilities devote at least 50 percent of the officespace to the manager's area, and at many facilities it's a lot more. This makesno sense. All a manager needs to do his job correctly is a computer, phone, faxmachine and a few critical files. Anything else doesn't need to be in theoffice--it can be put somewhere else nearby. This way you'll ensure the majorityof your office space is devoted to generating revenue.

When I'm able to help clients design an office before it's built, I devoteanywhere from 70 percent to 80 percent of the space to the sales area (where thecustomers are). This leaves the manager with 20 percent to 30 percent of thespace. This is more than enough.

What if you're already set up the "wrong" way? Change your layout.Move your counter and create more space that can be devoted to selling theproducts customers need and want.

Think Convenience Store

To get a feel for how your storage office should look and feel, go visit yourlocal 7-Eleven franchise. There's a company that understands how to merchandiseproducts. Follow its lead.

Create aisles with storage-related products in attractive displays. Hangitems nicely on the walls. Don't allow customers to walk into the office andstraight to the counter. Make them walk through the aisles, tempting them to buysomething. Make your office a retail store for storage-related materials.

You should also designate a "discount bin." Throw anything peoplemay want to buy into this bin--work gloves, for example. People naturallygravitate toward the discount items. If you can buy them right, you'll still beable to get a 100 percent markup on them. Take the retail price and mark throughit with a thick red marker and replace it with the discounted price.

Many people will search through this discount bin to buy things, unaware thatyour margins on these items are as high as on anything else in the store. Sinceit's the "discount" bin, they'll think the prices are great. Whenpeople find out you have great products at great prices in your bin, they'llcome back every time they're at the facility. Your chances for selling themsomething will be dramatically increased.

A Sign Over the Manager's Head

When customers walk into your office and see items for sale, they areimmediately suspicious. They're a captive audience. They have no way to compareprices. What is their immediate assumption? That your prices are inflated.

Whether or not you like it, this is what people are thinking. Rather thanignore this fact, you should attack the issue head on. Put a sign on the wallbehind the manager that reads, "Our prices on packing and shipping suppliesare lower than anyone's in town, including Wal-Mart." If Wal-Mart isn't anappropriate example to cite in your area, put the name of the retailer peoplewould think of for low prices on these kinds of items.

The sign immediately answers the hidden objection most people have. But afteryou make this statement, you have to make sure your prices are indeed lower. Goto your competitors, compare prices for the various items, and undercut them bya penny or two. Even at those price points, you'll still be able to make $1 forevery $2 sale you make.

Bundling: Your Key to Increased Sales

To significantly increase your sales of add-on products, you need tounderstand the concept of bundling. Unless a customer really twists your arm,don't sell him an individual item. Instead, offer him a price list of bundleditems, showing the significant price advantage of buying a "set" ofboxes or other products.

Create a minimum of three bundles. Price one at $19.95, another at $39.95 andanother at $79.95. (I have seen managers create bundles that are priced evenhigher. You'll need to test these in your own market.) Each of these packagesshould provide a number of items most people would use together. The $19.95offer might have a few boxes, two rolls of tape and a marker, for example. Pricethese packages so that people will realize a discount. The bigger bundles shouldoffer bigger discounts.

After you create these packages, list them on a single sheet of paper andlaminate it. When people sign a rental agreement, put the laminated price listof "bundles" in front of them and say, "Which one of thesepackages do you think would work for you?"

Conclusion

Following the above suggestions can generate a lot of additional money fromyour storage office. If the only purpose of your office is to give your managera warm place to stay during office hours, then buy him a tent! If you're lookingto make every inch of your facility as profitable as possible, utilize yourspace to sell add-on products and bring in extra revenue.

Fred Gleeck is a self-storage profit-maximization consultant. He helpsstorage owners before and after they get into the business. He is the author ofSecrets of Self Storage Marketing Success--Revealed! and numerous othertraining items for self-storage operators. To get regular tips on self-storage,send him an e-mail at [email protected];call 800.345.3325.