By Dan Dombrosky
If you'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 I wanted some theoretical mumbo-jumbo, I could read the same books these marketing guys do. Tell me something that applies to me."
If you share this sentiment, I sympathize with you because I feel that way myself. This magazine's marketing columnists and other contributors have done an excellent job focusing on marketing issues and enlightening the readership. And it's true--the basics of marketing theory, concepts and practice cannot be ignored. I am going to do my best to avoid getting theoretical and hopefully 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 does not play a preeminent role in success. However, it is perplexing how few people recognize strategy for what it is. Because of the rapidly expanding growth in the self-storage business, more attention is being paid to competition. But mimicking competitors' pricing is not a strategy, it's a tactic--and a losing one 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 manner that 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 a prospective customer in order to get information. That is demeaning to those of high moral standards and basically a waste of everyone's time. Maintain a positive relationship with your competition to the extent that you can. After all, you have a lot in common. If necessary, rent one of his units to obtain every policy, fee, practice, feature, benefit, strength and weakness you can uncover.
Analysis is the critical starting point of strategic thinking. You must then judge precisely the right moment to attack or withdraw while correctly assessing the limits of compromise. You must remain flexible and be able to come up with realistic responses to changing situations. It doesn't matter whether you are a national or regional corporation or a single-facility owner, strategic business/marketing planning applies to you equally.
A Competitive Advantage
You will increase your probability of success significantly if you apply the basics of marketing to your strategic planning. I once wrote a five-year business and supporting marketing plan for a division of a highly successful corporation. To me, there was always a fuzzy line between the business plan, which included a corporate, customer and competitive strategy, and the marketing plan, which incorporated much of the same.
I said I was going to avoid delving into the theoretical, so suffice it to say that what business strategy is all about--what distinguishes it from all other kinds of business planning--is competitive advantage. Strategy represents a company's attempt to alter its position of strength relative to that of the competition. When that position is compromised it endangers the very existence of the enterprise. It allows the company's profitability to be controlled by its competitors--a situation in which sound management is no longer possible.
In the real world of business, "perfect" strategies are not called for. What counts is a company's performance relative to its competition. A good business strategy is one by which a company can gain significant ground on its competitors at an acceptable cost to itself. The goal is to avoid doing the same thing on the same battleground as the competition.
Pitfalls to be avoided are becoming obsessed with winning and seeing everything in terms of success or failure. Consider moving from a mentality of "success at all costs" to simply avoiding the worst. A lot more choices will begin to open up.
Duking it Out
I was involved in a monumental battle at a first-class, well-managed self-storage site where I was resident manager. The site was state-of- the-art, aesthetically attractive, climate- controlled, and featured the latest security systems, including video surveillance and all the bells and whistles. Our competition was a local owner of a converted storage facility. We were less than an eighth of a mile apart.
One of the first things the established competitor did was install a couple of buildings with amenities identical to ours. He immediately advertised these features and benefits, even though they comprised less than 10 percent of his total square footage. It was a pretty damn good move, I thought. You had to drive by him to get to our facility. He sat up on a hill and was visible for quite a distance, while we were hard to find.
Now here is a sad, but true, anecdote: One morning, we received a call from a woman inquiring about storing her husband's sports car for the winter. We invited her to inspect our site and provided her practiced directions. Two hours later, a call came into our office from her husband. He was trying to reach his wife, who had called him with an insurance question from our competitor's office, where she had ended up by mistake. Both of them thought they were dealing with us, but really ended up leasing from the competitor.
We had been offering a special: rent for one month and receive the second month 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. If a 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 this battle, which included lawsuits and blocked easements and a corporate competitive strategy I was not privy to as a site manager. As an experienced self-storage manager, I was a rookie in this game of competition. As a lifetime marketer, 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 more than 35 facilities. It had an obvious business strategy and the operating end of things well under control. Its occupancy rates were above national averages. After 18 months, we were operating this particular site with between 80 percent and 90 percent occupancy, depending upon the season. The company's other local sites were consistently running at a high 90 percent to full occupancy. These other 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 success in 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 bad practice if it works, and there was a time it probably did work. In the right place, it probably still does. I thought I might get a pat on the back for targeting long-term, steady-paying commercial clients. After a couple of months, I thought maybe late-fee revenue was an objective. Remember: None of this was explained to me, and I was still learning.
We had a lot of pharmaceutical representatives leasing space. They were mostly young, energetic, friendly people. There was plenty I wanted to find out from these pharmaceutical reps. Did they store with us because we were close to their home or apartment, or because we were close to their sales territory? Did they like the security we provided, or the fact that UPS deliveries were made to their units daily? With the information I gathered I could determine if it would be 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 our company had another store.
The Importance of Strategic Selling
Everything is strategic in self-storage--even phone sales. Tactical phone selling is what you do when you relate your site features and the benefits they provide to a caller's storage problems. But there is strategic phone selling as well, and it is imperative that site managers recognize opportunities to use it. "Strategic" calls will vary. It may be that you receive a call from local government agency you have been working with on zoning issues, and it wants to store some files. You might receive a call from a large hospital close by, notorious for needing a lot of storage. A personal visit and a special pricing proposal may be in order. Perhaps a local corporation will call inquiring about vehicle storage. You may want to go down and explain how your 24-hour, computer-controlled gate access could benefit them. Maybe the mall next door, the one you have been waging accessibility lawsuits with, calls to inquire about storage.
This last example is one I dealt with personally. We had a front gate and parking lot off the mall entry drive that we were not allowed to use because of pending legal appeals the mall had brought against us in a lawsuit. Then they called us for prices on storage space. This was a strategic call that required far more than price quotes given over the phone.
To make a long story short, I made a written proposal, which I personally delivered. This contact led to a renewed communication with mall management and their out-of-state owners. We were invited to a meeting of the mall store owners held by the development company. We managed to turn our antagonistic relationship 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 after the sale by targeting specific categories of buyers with the proper message--beats the competition every time. Whether your operation is big or small, the more you know about your clients the better opportunity you have to ask, "Why not? Why can't we fill this niche?" Use your creativity to differentiate your facility from your competitors' instead of doing everything just 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 other clients 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 and enjoy a cigar because his wife doesn't allow him to smoke at home? Is that a niche? Does it fit your strategy? Could you segment that market and afford to go after it? I would rather pursue low-maintenance, long-leasing, well-paying commercial clients and leave that one for the competition.
There is a new business seminar (or is it a book?) being advertised with a slogan along the lines of, "It's not the big that eat the little, but rather the fast that eat the slow." This says a lot. Timing and flexibility are the sine qua non in the competitive environment in which we operate. That is why a self-storage operation needs a business and marketing strategy to differentiate it from competitors, capitalizing on its relative strengths to satisfy customer needs.
Dan Dombrosky has more than 25 years of executive-level experience as director of sales and marketing for divisions of Monsanto's Fisher Controls and Swiss multinational ABB. Responsible for more than $150 million in marketing efforts, he now specializes in consulting on selected projects from start-ups to mid-sized regional. For more information, e-mail DanielDombrosky@compaq.net.