Smaller, Simpler, More Profitable
By Cary F. McGovern
This article discusses why small records-storage clients may be more valuable than large accounts in a self-storage records center. It is possible to yield three to four times per unit of storage compared to the local full-service commercial record centers in your town.
For several years, records-storage providers operating within the walls of self-storage have discovered the amazing yield of the small-business client. In fact, the smaller the client, the greater the yield per unit of storage. How can this be? It is an interesting phenomenon that has escaped the notice of major industry players. As a self-storage operator, you actually have several advantages over the big guys:
- Visibility—You have curb appeal and high visibility in your storage location and Yellow Pages advertisements.
- Walk-In Traffic—You have a steady flow of prospects and clients through your facilities.
- Turn Rate—Your units usually turn over in seven to 12 months, so you service a constant flow of new prospects.
- Business Clients—Depending on your location, you could already be servicing many businesses.
- Sales Opportunity—Your walk-in clients may not be looking for records storage, but nearly every one will be either an employer or employee, both of which are prospects for records management.
- Marketing—Self-storage operators know their markets within the five-mile radius of their operations. Depending on your location, there could be hundreds or even thousands of small businesses in your area. You already have a focus market.
- Target-Market Identification—Since small businesses are strung together in neighborhoods by block, it is possible to market records storage to these groups using “guerilla marketing.”
The Convenience Store
Why do people choose to go to a convenience store instead of a supermarket, especially when they know they’re going to pay more for the things they need? It’s fast and easy to get in and out. I like to compare commercial records centers to supermarkets and self-storage facilities to convenience stores. There are several good analogies at work here:
- Closer to Your Clients—Proximity allows the client to avoid delivery costs. He can easily come to your facility for his records.
- Neighborhood Businesses—Small companies like to do business with their neighbors and form relationships with others in their same “shoes.”
- Flexibility—Use of small-business packages (as described in last month’s column) allows customers to choose a service that fi ts their budget.
- Same Value but Less Hassle—You can offer the same value as full-service records centers but with much less trouble for the customer. His records are out of sight but well-controlled and in a safe place.
The traditional, full-service, commercial records center markets its services to larger businesses because of the relatively high cost of sales. A sales call and client-needs assessment can cost between $100 and $500 or more depending on the size of the business. For this reason, commercial centers cannot waste their time on 50- to 100-box accounts. Remember, prospects do not go to them, and rarely does a small business even know or understand the value of the service.
According to the most recent census data, small business enjoys the largest market share in the American economy. It remains virtually untouched by traditional commercial records centers. It is easy to identify small businesses in your area: Simply go to www.superpages.com, type in the city, and select a business type. The results are your prospect database. Of course, there are many other options for finding prospects to whom to market your services.
Smaller but More profitable
Your records-storage volume could be one-tenth the size of the full-service commercial competitor in your town. You could also earn more profit, make a greater return on your investment and diversify your services. There are several important things to keep in mind:
- Yield is Different than Price—Price is the amount stated on your price list. Yield is the actual amount each storage box generates. A previous column discussed the differences between price and yield. You can read more at www.insideselfstorage.com by entering “price and yield differences” into the keyword search.
- Small-Business Packages—Development of these packages is crucial to improve yield in records storage. You must understand how to present, offer and bring value to your client while maximizing your return.
- Simplify Your Operation—Your operation must be simple and easy for clients and staff to use. It must also minimize your expense and overhead while improving yield.
- Offer Ancillary Services—Build your base revenue and add value by offering services through outsourced resource partners who do the work for you.
- Create Permanent Annuity Revenue—Understand the principles of customer service and follow through so you never lose a client.
- Creep Growth—Creep refers to the annual internal growth rate that normally occurs in the records-storage industry. Creep averages as much as 13 percent to 17 percent a year from existing accounts.
- Minimize Labor-Intensive Service—Labor costs are your primary enemy in the records-storage business. Operating practices must be designed to eliminate or reduce labor costs.
- Minimize Delivery and Fuel Costs—”Will-call” pickup and courier delivery reduces or eliminates the high cost of resource-intensive delivery options.
The most misunderstood area of records storage is the small-business concept. It is a gold mine for those who put this to work in their facilities. If you have multiple store fronts, there is an even higher yield potential.
Regular columnist Cary McGovern, CRM, is the principal of FileMan Records Management, which offers full-service records-management assistance for commercial records storage startups, marketing assistance, and sales training in commercial records-management operations. For assistance in feasibility determination, operational implementation or marketing support, call 877.FILEMAN; e-mail email@example.com; www.fileman.com.