By Harley Rolfe
Convenience trumps economy. That's how most customers see it; but many suppliers seem to miss this fact.
The instinctive reaction of many self-storage owners when they see they're earning less than their desired income is to drop prices. They do so either in response to competition or because they are assuming the demand for self-storage is price elastic. In either case, it happens for defensive reasons. I'm going to try and dispel that inclination and show other responses are more lucrative.
Recently in my column, I've been discussing the invisible aspects of your self-storage offering: choice and change. This time I'll examine convenience--the mother of all features. It is the most important of the invisible offering components--so much so that it should be regarded as a separate product. Properly offered, it adds multiple levels of value (read price) to the product or service it accompanies, and fortifies against competition.
So, what is product convenience? Simple: The prospect assesses his problem and the product, and immediately concludes that life just became easier. Self-storage is loaded with convenience--creating opportunities--especially in personal (non-business) applications. The use of a storage unit is often a necessary evil, involving grubby work and an extra move. Generally, it's something the user wishes he could have avoided. He rented a unit because he couldn't figure a way out of it. That's fertile ground for the benefits of convenience.
Consider a Cake Mix...
Is there any ingredient of a cake mix that isn't generally found in the average kitchen? Even so, Mrs. America happily trots down to the local supermarket and buys a cake mix for about $1.75--even though all the ingredients are readily available to her at home for about a quarter. Is it any wonder that General Mills would rather sell you flour in the guise of a Betty Crocker cake mix rather than a bag of Gold Medal? Amazingly, the same company can offer these two products side by side.
Compare the stock of an old general store with that of the modern supermarket. The produce and deli sections are much the same. The difference lies in the huge array of convenience foods, all of which are aimed at making food preparation goof-proof, saving users time, etc. Supermarket shelves are filled up to 80 percent with convenience offerings. This sort of trend is similar to the common supplier responses in any competitive marketplace. Those same changes can apply to self-storage as well.
What You Sell Is Not What the Buyer Buys
So what's holding us back? One problem is the way self-storage operators define their business. They tend to think they are selling storage spaces. That depends. We may be billing for storage, but looking at it from the prospect's point of view, he is buying one necessary step in the purchase of a new house. To some that is double-talk. Yet, it is the crucial distinction between what we do as self-storage operators and what the tenant is doing. When engaged in a move, the prospect is instantly confronted with the chores of packing (and unpacking), transporting, buying insurance and finding storage (we hope). These are all unavoidable elements he must deal with in order to achieve his end. Self-storage is but one component of the means. If you want total prospect attention, deal with the problem as your tenant sees it. When a marketer talks about thinking like the customer, this is what he's talking about. The instant the prospect closes escrow, his thoughts turn to getting into his new home. What do you think the rewards would be to the guy who recognizes and provides the total package of ingredients necessary to accomplish this? That's the "cake-mix" approach.
Why do you think Home Depot outsells separate suppliers of lumber, roofing, appliances, etc.? Convenience, gang. One-stop shopping. Betty Crocker pioneered the way in the supermarkets. How much more expensive is ready-mix concrete than that you have to mix yourself? Even if you mix your own, you will likely use Sacrete mix rather than the commodity ingredients (sand, gravel, cement, etc.). The success of converting commodities is all around us. Why not in self-storage?
Come and Get It!
One reason operators have shied away from this one-stop-shopping approach is that it involves more hassle. One of the appeals of investing in self-storage is the relative ease of management. And that is true as long as the owner can achieve his ends operating as a commodity. It amounts to a "come and get it" marketing approach and works as long as people show up at the door ordering units without a lot of urging. Another reason is that examples of packaged services and how they work are apparent in the world around you, but not necessarily the self-storage world. The techniques have been developed and proven in thousands of markets with a history of competitive conditions, but they're new to owners in markets just now being tested by such pressures.
My concern is that many owners find themselves distraught over the need for the marketing techniques I espouse. Not having operated in an aggressive marketing climate, they are faced with a uneasy market situation on one side and, on the other, possible solutions that are foreign and they may not trust.
Still--look around and notice the thousands of businesses that simply combined some commodities and created an assembly perceived as easier or more convenient for the user--and worth much more than the constituent parts. That's the kind of synergy we're after. Would you rather grow corn and hope the erratic commodity markets bless your toil? Or would you rather be Kellogg, insulated from the vicissitudes of commodity pricing by creating so much convenience that the raw cost of the corn in cornflakes doesn't make much difference? What is notable is that such organizations as Kellogg or Post were not originally agriculturists who wanted out of damaging commodity-price contests. They were run by business people who understood how to mix commodities and convenience to create new and lucrative products, which, today, are household names.
Let's hope the self-storage industry doesn't evolve into the next phase of operation the same way. Will it take outsiders to see that by combining various elements with self-storage units, far more valuable offerings can be created? Step one for current owners is to realize their current offering is a commodity. Step two is to realize that, sooner or later, severe price competition will befall many facilities as the supply of units starts to exceed the demand. To prevent step two, remove your facility from market consideration as a commodity. One of the most fruitful ways of doing that is by adding convenience as an ingredient to your offering. Make it distinctive and more valuable.
These things are not true because I say so. I'm only the reporter. Look around and check the manifest presence of convenience being used to create differentiation. Differentiation is the only potent escape from commodity competition. It's where marketers spend most of their time. Next month, I'll offer a recipe for brewing some self-storage convenience.
Missed some previous issues? Check the web at www.hardnosed.com.
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. Harley's book, Hard-Nosed Marketing for Self-Storage.