Sales and Marketing Strategy

An absolute for self-storage success

By Dan Dombrosky

Ifyou're a self-storage operator or manager, you may be asking yourself:"What's strategy got to do with it? All I'm trying to do is lease up. If Iwanted some theoretical mumbo-jumbo, I could read the same books these marketingguys do. Tell me something that applies to me."

If you share this sentiment, I sympathize with you because I feel thatway myself. This magazine's marketing columnists and other contributors havedone an excellent job focusing on marketing issues and enlightening thereadership. And it's true--the basics of marketing theory, concepts and practicecannot be ignored. I am going to do my best to avoid getting theoretical andhopefully throw out a few nuggets of practical and immediately applicable gold.

Analyze the Competition

I cannot think of a single competitive business endeavor where strategy doesnot play a preeminent role in success. However, it is perplexing how few peoplerecognize strategy for what it is. Because of the rapidly expanding growth inthe self-storage business, more attention is being paid to competition. Butmimicking competitors' pricing is not a strategy, it's a tactic--and a losingone to boot. All you accomplish is the lowering of both of your profit margins.

If I were advising you, I would tell you to price your product in a mannerthat supports your strategy. To do that, you have to analyze your competition.Now, I do not recommend having your on-site manager call up and pose as aprospective customer in order to get information. That is demeaning to those ofhigh moral standards and basically a waste of everyone's time. Maintain apositive relationship with your competition to the extent that you can. Afterall, you have a lot in common. If necessary, rent one of his units to obtainevery policy, fee, practice, feature, benefit, strength and weakness you canuncover.

Analysis is the critical starting point of strategic thinking. You must thenjudge precisely the right moment to attack or withdraw while correctly assessingthe limits of compromise. You must remain flexible and be able to come up withrealistic responses to changing situations. It doesn't matter whether you are anational or regional corporation or a single-facility owner, strategicbusiness/marketing planning applies to you equally.

A Competitive Advantage

You will increase your probability of success significantly if you apply thebasics of marketing to your strategic planning. I once wrote a five-yearbusiness and supporting marketing plan for a division of a highly successfulcorporation. To me, there was always a fuzzy line between the business plan,which included a corporate, customer and competitive strategy, and the marketingplan, which incorporated much of the same.

I said I was going to avoid delving into the theoretical, so suffice it tosay that what business strategy is all about--what distinguishes it from allother kinds of business planning--is competitive advantage. Strategy representsa company's attempt to alter its position of strength relative to that of thecompetition. When that position is compromised it endangers the very existenceof the enterprise. It allows the company's profitability to be controlled by itscompetitors--a situation in which sound management is no longer possible.

In the real world of business, "perfect" strategies are not calledfor. What counts is a company's performance relative to its competition. A goodbusiness strategy is one by which a company can gain significant ground on itscompetitors at an acceptable cost to itself. The goal is to avoid doing the samething on the same battleground as the competition.

Pitfalls to be avoided are becoming obsessed with winning and seeingeverything in terms of success or failure. Consider moving from a mentality of"success at all costs" to simply avoiding the worst. A lot morechoices will begin to open up.

Duking it Out

I was involved in a monumental battle at a first-class, well-managedself-storage site where I was resident manager. The site was state-of- the-art,aesthetically attractive, climate- controlled, and featured the latest securitysystems, including video surveillance and all the bells and whistles. Ourcompetition was a local owner of a converted storage facility. We were less thanan eighth of a mile apart.

One of the first things the established competitor did was install a coupleof buildings with amenities identical to ours. He immediately advertised thesefeatures and benefits, even though they comprised less than 10 percent of histotal square footage. It was a pretty damn good move, I thought. You had todrive by him to get to our facility. He sat up on a hill and was visible forquite a distance, while we were hard to find.

Now here is a sad, but true, anecdote: One morning, we received a call from awoman inquiring about storing her husband's sports car for the winter. Weinvited her to inspect our site and provided her practiced directions. Two hourslater, a call came into our office from her husband. He was trying to reach hiswife, who had called him with an insurance question from our competitor'soffice, where she had ended up by mistake. Both of them thought they weredealing with us, but really ended up leasing from the competitor.

We had been offering a special: rent for one month and receive the secondmonth free. Our competitor responded with: rent for a month, get a month free;rent for two months, get two free; and rent for three months, get three free. Ifa friend had asked for my advice, I would have recommended he take that deal.

It got to be a battle out of control. There were a lot of fronts in thisbattle, which included lawsuits and blocked easements and a corporatecompetitive strategy I was not privy to as a site manager. As an experiencedself-storage manager, I was a rookie in this game of competition. As a lifetimemarketer, I was determined to fight the good fight.

Learning the Hard Way

The company I worked for was--and is--a highly successful player with morethan 35 facilities. It had an obvious business strategy and the operating end ofthings well under control. Its occupancy rates were above national averages.After 18 months, we were operating this particular site with between 80 percentand 90 percent occupancy, depending upon the season. The company's other localsites were consistently running at a high 90 percent to full occupancy. Theseother sites were far enough away to not be a part of this competitive battle,though they, too, were beginning to experience increased competition.

Being new to the business, I was looking to learn the key factors for successin the self-storage arena. To me, a strategic plan was not revealed or obvious.It seemed we targeted whomever called and came in to rent. This is not a badpractice if it works, and there was a time it probably did work. In the rightplace, it probably still does. I thought I might get a pat on the back fortargeting long-term, steady-paying commercial clients. After a couple of months,I thought maybe late-fee revenue was an objective. Remember: None of this wasexplained to me, and I was still learning.

We had a lot of pharmaceutical representatives leasing space. They weremostly young, energetic, friendly people. There was plenty I wanted to find outfrom these pharmaceutical reps. Did they store with us because we were close totheir home or apartment, or because we were close to their sales territory? Didthey like the security we provided, or the fact that UPS deliveries were made totheir units daily? With the information I gathered I could determine if it wouldbe possible to attract more of them to our site and away from our competitors.For example, maybe they had a counterpart on the other side of town where ourcompany had another store.

The Importance of Strategic Selling

Everything is strategic in self-storage--even phone sales. Tactical phoneselling is what you do when you relate your site features and the benefits theyprovide to a caller's storage problems. But there is strategic phone selling aswell, and it is imperative that site managers recognize opportunities to use it."Strategic" calls will vary. It may be that you receive a call fromlocal government agency you have been working with on zoning issues, and itwants to store some files. You might receive a call from a large hospital closeby, notorious for needing a lot of storage. A personal visit and a specialpricing proposal may be in order. Perhaps a local corporation will callinquiring about vehicle storage. You may want to go down and explain how your24-hour, computer-controlled gate access could benefit them. Maybe the mall nextdoor, the one you have been waging accessibility lawsuits with, calls to inquireabout storage.

This last example is one I dealt with personally. We had a front gate andparking lot off the mall entry drive that we were not allowed to use because ofpending legal appeals the mall had brought against us in a lawsuit. Then theycalled us for prices on storage space. This was a strategic call that requiredfar more than price quotes given over the phone.

To make a long story short, I made a written proposal, which I personallydelivered. This contact led to a renewed communication with mall management andtheir out-of-state owners. We were invited to a meeting of the mall store ownersheld by the development company. We managed to turn our antagonisticrelationship into a positive one as a result of that strategic phone call.

The point is not all calls are the same. Strategic selling--when you go afterthe sale by targeting specific categories of buyers with the propermessage--beats the competition every time. Whether your operation is big orsmall, the more you know about your clients the better opportunity you have toask, "Why not? Why can't we fill this niche?" Use your creativity todifferentiate your facility from your competitors' instead of doing everythingjust like them.

We had a client who rented a unit in which he could sit and play his drums.Is that a niche? Yes. One you want to pursue? Probably not--some of your otherclients might not appreciate it, especially if you have a state-of-the-art,high-security site. What about the guy who rents a unit in which to sit andenjoy a cigar because his wife doesn't allow him to smoke at home? Is that aniche? Does it fit your strategy? Could you segment that market and afford to goafter it? I would rather pursue low-maintenance, long-leasing, well-payingcommercial clients and leave that one for the competition.

There is a new business seminar (or is it a book?) being advertised with aslogan along the lines of, "It's not the big that eat the little, butrather the fast that eat the slow." This says a lot. Timing and flexibilityare the sine qua non in the competitive environment in which we operate. That iswhy a self-storage operation needs a business and marketing strategy todifferentiate it from competitors, capitalizing on its relative strengths tosatisfy customer needs.

Dan Dombrosky has more than 25 years of executive-level experience asdirector of sales and marketing for divisions of Monsanto's Fisher Controls andSwiss multinational ABB. Responsible for more than $150 million in marketingefforts, he now specializes in consulting on selected projects from start-ups tomid-sized regional. For more information, e-mail [email protected].