The Competition Litmus Test

By Harley Rolfe

Do you get calls asking about rates for specific unit sizes? That's a heads-up. Itmeans you weren't the caller's first query (who told him what size to request?). It alsomeans he views you as a commodity he can shop. Neither of these conclusions bodes wellbecause what it ultimately means is you are nearly helpless against the onslaught of pricecompetition. Essentially, your rivals are setting your prices. Some of you may think thisdoesn't matter if you are meeting your goals regarding pricing and occupancy. But if yoususpect the day is coming when you can't meet those income goals, you may get more curiousabout what we marketers do. Unfortunately, many don't like it when they discover what'sinvolved in first-rate marketing.

I hear from owners who think putting up a nice facility in a good location and keepingit clean and staffed with nice folks is enough. They think all the talk about commoditythis and marketing that are factors they should be able to ignore. When asked aboutcompetition, they say it's a "phase," with the sentiment "this too shallpass." Still, when they feel the bite of price competition, they may come to believethey should give marketing a whirl. That attitude can lead to an ambush. Thinkingmarketing is a temporary need prompts them to dabble at it. But installing a dilutedprogram may not work and convinces the owner marketing isn't worthwhile. He becomesresigned to using price responses to meet the competition, figuring he has done all hecan. That's sad.

Hold On, I Know My Market!

If you've concluding something serious must be done to improve control of your income,the first move is to master the composition of your local market. That means gaining anintimate knowledge of who uses storage and how they benefit. You may be thinking,"Wait a minute, I already know my market. I've been in this business for 10years!" Perhaps, but I hold that most commodity self-storage operators tend to letthe prospect figure out on his own how storage can help him. The prospect walks in, theysign him up. They don't know--or believe they need to know--how each tenant benefits andwhat problems they are solving. So the owners' role is relatively passive. But that rolemust change when adjusting your position for more aggressive marketing.

Break It Down

The greatest tool you have to become active in the prospect's decision-making processis to determine what gives rise to his need for storage. The hallmark of any marketingprogram is the subdivision of the tenant population into meaningful segments."Knowing your market" means knowing what the segments are, how they solve theirproblems with storage and how to reach and influence each. You need to break down thesources of your income for the same reason you itemize your expenses: control. That's howyou manage anything. Income and expense control starts with knowledge that alerts you tokey problems or opportunities.

Here is an example. We know the primary market segments are split between personal andcommercial applications. Of the two, we know commercial applications have longer tenanciesthan personal. The occasions for personal use are often transitory. They are triggered bysome change in the prospect's life: he bought a house, got a job in a different city, isgoing home from school for summer, is moving parents to a nursing home, is getting adivorce, etc. These events are finite. The occasion that spurred them comes and goes. Foryou, this means considerable turnover or short tenancy periods. However, the need amongcommercial users is ongoing because it is often an integral part of the operations of abusiness. The need doesn't stop unless the business goes under or undergoes some othermajor change. So, we know commercial renters generally stay longer. What we may not knowis why.

One reason these segments are different is transportation. In both cases, the prospectmust solve the transportation issue, but in one case it may present a problem. Not allresidential users have pickup trucks or other large vehicles to transport their goods. Soin the case of personal use, transportation is an issue that should be acknowledged by theself-storage operator. That isn't true of commercial applications because most businessesand government entities will have their own transportation.

Once we know the types of things that trigger needs, we can demonstrate our sensitivityto the prospect and know how to fine-tune our pitch. In regard to the transportationissue, for example, you may want to offer your prospect free or discounted use of yourrental truck. That might not be how you close the deal with a commercial tenant.

Selling Anything

The trick to selling anything to anyone is to know enough about the prospect's needs tooffer a solution to his problem. Simple, right? But how many self-storage operators canidentify their market segments, cite the amount each contributes to his income, and showtracking progress in attracting them? Very few. I know of one large operation that cannottell with any precision how its business breaks down between those generalcategories--personal and commercial uses--let alone the dozens of subdivisions withineach. Yet as a business, it does wonderfully. Some facilities have no need forprofessional marketing. We're addressing those that do.

Marketing is a specific process, a series of steps that form a repeating cycle. Likethe Energizer Bunny, it goes on and on and on. Your good ideas will be copied and yournot-so-good ones--well, you'll drop those. In either case, you need regular, freshapproaches for each segment. That means having intimate knowledge of the needs andactivities of the segments most important to you.

Curiously, most operators think their marketing should begin with the most expensivestep: use of media and other advertising. But how do you know what to advertise, how andto whom if you don't identify who is using storage and why? The place to start isidentifying your segments. Most self-storage facilities will not benefit from spendingmoney on expensive advertising efforts, anyway. Most of you use the Yellow Pages and knowwhat a dent that makes in your budget. Using select media requires you to target theprospects uncovered by examination of your area and its market segments. The cash outlayfor this initial step is minimal.

Watch That Duck

Have you ever watched a duck gliding serenely across a pond? It looks effortless,doesn't it? But if you look below the surface, his feet are paddling like mad. In asimilar way, your numbers may look good on the surface, but they don't tell the wholestory. Your total income and occupancy are simply the sum of what goes on in all yourmarket segments. But there's something different taking place in each, beneath thesurface. Maybe rents resulting from residential moves are dropping, but records storage isincreasing. You'd never know that by just looking at the bottom line.

The bedrock for a marketing effort of any consequence is to catalog how and to whom thefacility is delivering benefit. The self-storage operator has the advantage ofinvestigating his existing tenant base. Each tenant has already cast a vote in favor ofyour facility. He will happily tell you his reasons for doing so. Just ask him.

Harley Rolfe is a semi-retired marketing specialist whose career includesexecutive-level marketing positions with General Electric and AT&T. He also ownedlodging and office facilities for more than 20 years. Mr. Rolfe holds a bachelor's degreein economics from Wabash College and a master's degree in business administration from theUniversity of Indiana. He can be reached at his home in Nampa, Idaho, at 208.463.9039.Further information can also be found in Mr. Rolfe's book, Hard-Nosed Marketing forSelf-Storage.