Self-storage owners and managers are rapidly realizing the financial boon e-commerce offers their businesses. It is no longer just a matter of e-mail correspondence or web advertising--online technology is a direct cash pipeline.
Why Have an Online System?
Online point-of-sale management technology is a direct, real-time portal to a facility for the customer, owner and manager. Customers seeking self-storage units can use the Internet to find facilities anywhere, and make reservations and payments online. And the hassle of remembering when their monthly payment is due can be eliminated when they set up an automatic monthly payment schedule. This reduces the problem of loss of goods because of nonpayment and subsequent lien sale.
At the other end of the pipeline, owners and operators can access their records from any Internet location at any time. "Online technology allows customers to search, locate, reserve and pay for storage units from the convenience of their home or office, 24 hours a day, seven days a week," says Rick McGee, president of Online Self Storage in Oro Valley, Ariz. "For owners and operators, this technology can be embedded onto any existing website, allowing them to easily post available inventory, highlight the amenities and features of their property, and advertise pricing, specials and promotions."
"An online centralized-data system should provide up-to-the-minute analysis of site performance and key statistics that can be accessed remotely via the Internet," adds Bill Hoban, president and CEO of Centershift. "Data should be available at all sites and offices from any location, any time." The Salt Lake City-based company is a third-party provider of self-storage management- software applications. Instead of installing software directly on a company's computers, software and data is stored at Centershift's central location, which the owner and manager can access via the Internet.
E.J. "Joe" Shoen, chairman and CEO of Phoenix-based Amerco, the parent company of U-Haul International Inc., points out a more subtle benefit of having an online system--it's a psychological bonus. "Having a web-based reservation, payment and management system says 'I'm in the 21st century' to your customers." Nearly a year ago, U-Haul launched Webselfstorage.com, a real-time online point-of-sale and management-software system for its 3,000 affiliates. Eventually, the system will be made available to nonaffiliated facilities. "An owner can look at his facility records at any time, anywhere--the Philippines for instance--as long as he can access the Internet. He can see his transactions in real time," Shoen says.
Find a System That's Right for You
Developing an online point-of-sale and management-software system requires resources many facility owners do not have. Big companies--Shurgard, Storage USA, Public Storage and U-Haul, for example--have developed their own online systems. But small companies and independents do not have the resources to develop their own software. This has created a niche for third-party application providers.
However, whether the software is used for one facility or an entire chain, it must offer several basic components to be an effective tool. "Before selecting a system or service, owners need to have a basic understanding of how the technology really works and what capabilities the proposed system offers vs. those capabilities that it cannot offer," Hoban says.
Owners also need to know how the software will interact with their inventory, adds McGee. "You need to know how it interfaces with your management software to allow ease of changes and modifications." Also, if the corporate entity moves toward the use of online reservations or the use of a call center to capture customers, it is important the system operates in real time. If it is important to an operator that the potential customer actually is assigned a unit at the time of reservation, real-time capability is needed, McGee states.
The online system must integrate with management software. The application should also:
- Provide remote administration of common activities
- Automate space reservations
- Automate rent payment
- Provide the customer with the ability to set up recurring billing
- Centralize data
- Generate reports
- Provide management of data backups
- Provide audit and security capabilities
- Provide direct deposit of payments
But getting reservations is only half the fight. Self-storage management must be able to collect payments. "A payment service should increase your collectibles, as well as decrease the number of excuses as to why your customers don't pay you," says Brent S. Hoffmannn, marketing and sales manager for Payment Service Network Inc. (PSN). PSN, headquartered in Madison, Wis., is a financial- services firm providing online funds transfer. The online service links consumers with private businesses and government agencies including self-storage property owners and managers.
"The system should be very easy to use so customers are not confused when they go to the site," Hoffmann says. "You want a company that offers as many payment options as possible, including checking and saving accounts, money-market accounts, money orders, and credit and check cards."
Is technical support important? "Technical support is always important, whether you utilize an online technology or not," says Hoban. "But with an online technology, the client in many cases has no control over the physical environment of the servers that house the data and software. It is, therefore, imperative that online technology vendors supply extensive, easy accessible technical support."
McGee disagrees. "This is the beauty of an Internet system. For customers, all they have to know is how to use the browser. For the client, once the set up is done, it is not usually too support-intensive--although support is there if the owner needs it."
Yes, But Is the Money Safe?
So, the customer has selected his unit, placed his order and paid for it. The facility manager sees this transaction, either in real time or on a report. And the money is out there on the ethernet. But customers or facility managers may ask, "Is my money safe?" The heart of any funds-transfer system is its security protocols. With hacking honed to a fine science, any system must offer protection.
The National Fraud Information Center, a project of the National Consumers League, reported $4.4 million in losses from Internet fraud during the first 10 months of 2001, up from $3.9 million in 2000. "Managing risk and preventing fraud are both major concerns to organizations doing business on the Internet," says David L. Merritt, chairman of the National Automated Clearing House Association's (NACHA) Internet council and vice president and product design manager for Mellon Global Cash Management.
NACHA is developing two industry publications designed to provide financial institutions and merchants with educational resources on managing risk and preventing fraud associated with Internet-initiated payments. The first identifies and catalogs the various types of Internet-payment fraud such as transaction-level fraud, identity theft, invalid accounts and nonsufficient funds. The second project focuses on the risks of Internet-initiated payment types such as automated clearing house (ACH), credit card, online debit card, off-line debit card and person-to-person payments. The projects are scheduled for completion by mid-June. "Through these projects, the Internet Council will assist organizations in identifying the types of risk and fraud that pose threats to their businesses, and in adopting methods to mitigate them," Merritt says.
Many of these methods are already in place in systems used for online self-storage. For transaction security, Centershift uses SSL 128-bit encryption certificates in the central facility plus firewalls, passwords and robust virus software. PSN has proprietary encryption software. Online Self Storage has a web server certified by VeriSign, an encryption system, plus several layers of user security. Employees can only access the section they have been cleared to use.
By reducing time, paperwork and workforce, a facility owner can be optimistic about increasing cash flow. By using online technology, operators can decrease the need to send e-mail and fax reports, which cuts down on paperwork and frees up employees for sales and service. Data within a central database can be consolidated for more effective reporting. If much of the auditing process is accomplished prior to a facility visit, a regional manager can spend quality time at the facility instead of wasting time printing various reports.
How fast a facility gets funds into its account is the bottom-line concern of operators. Electronic interbank clearing of electronic payments means an operator knows much sooner if funds are available than with conventional paper processing. If a customer pays with a credit card or direct checking, there is no problem. The facility operator knows immediately if the funds are available. But what about nonsufficient funds? "Our online system allows one to two days NSF notification," says Hoffmann. "We call the property manager when we have problems with a payment, and either the client can contact the customer or we will." This decreases the time funds are being processed from the standard 14 to 21 days to three to five business days.
Resisting the 'Cloud'
With so many benefits, why would self-storage owners/managers resist implementing an online payment and reservation system? "The Internet is often referred to--even in technical publications--as the 'cloud,'" says Hoban. "This portrayal does nothing to aid in understanding of what the Internet is or does. We need to explain the basic concepts of the proposed technology and draw real-life analogies to how the technology is currently being used by major companies such as Amazon.com, Dell.com, MSN, CNN, ESPN, etc."
"With the recent failure of some Internet companies, people are shy of using an online system," says McGee. "We point out the benefits to their customers--the ease of being able to make rental payments say at 10 o'clock at night, the fact the owner's facility can be online 24-7. This expands their hours of operation without increasing staff. We know there is a lot of training involved, but being online means an owner can be accessible to the 10 percent to 15 percent of customers who want to use the Internet."
Just as it is affecting nearly every facet of modern business, online technological changes in the coming years will contribute to the effectiveness of the self-storage industry. "Perhaps the single biggest impact could be the current legislation on broadband access," says Hoban. "If the roadblock to generalize broadband availability is cleared, I see far more people going online to perform their business operations."
Hoban also thinks wireless technology is on the verge of a breakout if the standards committees can agree on the specifics of delivering the technology. Businesses will be far less constrained in their accessibility to a network than by the traditional communications service provided by wire and fiber infrastructure.
"What we're seeing now is most operators are going out and finding some sort of third-party software that will either be compatible with their property- management software or allow them to take reservations and or payments," McGee says. Currently, facility operators either have to develop an application on their own that would be like an e-commerce capability application but that becomes fairly complicated. However, McGee sees more software integrated onto the online server and greater versatility of integrated technology in the future. Also, although his company is only the third one in the United States selling customer-controlled, web-based payment technology, he sees this becoming a trend.
U-Haul's software does more than bring the company's affiliates into the 21st century. The system links them with a community of self-storage owners and managers and opens up a whole new world of information and support. "People need to grasp the advantages of online networking," Shoen says. "This is the way the future has to go."