I’m going to open this article with a bold statement: The self-storage industry, as you’ve known it, is dead.

What used to be an industry with little to no competition is now full of fierce rivalry in most major markets. What used to be an industry with a “build it and they will come” philosophy for acquiring new tenants now must use aggressive marketing programs just to maintain occupancy.

In 2008, your focus will shift from operations, financing and management to facility marketing. Not that those first things will be any less important, but the rules of the game have changed. Owner/operators who are able to attract and keep new tenants for the lowest possible cost will win.

Small Fish, Big Pond

My introduction to self-storage took place in the office of Jim Knuppe, owner of RAS Management in Castro Valley, Calif. Jim is a wise man. In one sentence, he summed up the state of the industry for me: “Competition follows profits, and the self-storage industry has been highly profitable.”

You see, Jim and his team had gone from being the only self-storage provider in their market to being one of hundreds. They went from being a sharp needle on an empty desktop to being a needle in a haystack. Most of you have experienced something similar.

In this article, I’ll share secrets to winning in these competitive times. I won’t be writing about how to improve your curb appeal?you’ve heard enough of that. I won’t tell you to take doughnuts to local apartment complexes either. Your competition is already doing that, and the apartment manager has caught on to the trick. The answer is much deeper than that anyway.

But before I proceed, we need to understand the challenge we face with great clarity. And it starts with supply and demand, a basic business principle.

The Balance of S&D

In the past, there was much more demand for storage than the industry was able to supply. When a consumer needed space, he didn’t have many choices. In fact, many prospects were put on waiting lists because the facility of their choice was 100 percent occupied. Naturally, another facility popped up around the corner and took off some of the heat. And demand was strong enough that the new site didn’t have a problem finding tenants.

Before long, supply caught up with demand. To adjust, owners simply placed a bigger Yellow Pages ad than their competition and were able to pick up more business.

After looking at the latest Self Storage Association Demand Study, it’s apparent that demand for storage hasn’t gone down, but supply has dramatically increased. And it will continue to the point that building and maintaining the occupancy necessary to be profitable will be much more difficult. Understanding this balance of supply and demand is part of the solution.

In the past, a consumer might have had one or two facilities competing for his business. Now he opens up his Yellow Pages or does a search on the Internet and finds 10 to 30 facilities close to his home or office. Knowing that your next customer will see 20 to 30 Yellow Pages ads under the “Storage” header is important. Knowing that he might receive a direct mailer from your competition is also important. Knowing that he now has a choice and is aware of that choice is crucial.

You must get better at differentiating your facility from competitors, and you must communicate better than you ever have before. There are a few methods I recommend to do this, and I’ll get to them a little later. First, I want to talk about your mindset.

Get Your Head in the Game

Your mindset about competition and marketing is much more important than anything else. If you deny that this industry requires marketing, you’re going to struggle. Of all the owner/operators I know, those who understand the situation and aren’t afraid of aggressive marketing consistently enjoy the highest profit and occupancy.

In other words, are you playing to win, or are you just playing not to lose? If you’re playing not to lose, you’ll always be one step behind your competition. But if you’re playing to win, you’ll approach your sales and marketing challenges with confidence, conviction and passion. You’ll be willing to spend extra money and energy on these efforts. When operating income starts to decline, you’ll realize your marketing budget is the last thing to cut, and that you must out-innovate and out-market your competition to gain the profit you deserve.

I’ve had the honor of talking with some of the most profitable self-storage operators in the world. When we approach the subject of marketing, the conversation doesn’t get magical or involve overly complex strategies. Sure, there are advanced marketing capabilities every operator should be using; but what separates the winners from the losers is the mindset of those running the show.

The winners realize that a finite number of consumers are in need or want of storage, and the facility with superior force at the point of contact will ultimately win the business a majority of the time. So, rule No. 1 for winning in competitive times is to have a “play to win” mindset. You must out-innovate, out-communicate and out-serve your competition. If you do that, your future will be bright.

Enough Pep Talk

Let’s get to brass tacks and discuss a few strategies to start you on the right foot for 2008. Now that the market is highly competitive, some operators are spending more money on advertising, hoping to find a silver bullet that brings them their desired number of new tenants. For example, some spend an extraordinary amount on radio advertising, hoping it will help them reach the goal of 20 new tenants they have set for a given month.

Rather than looking for one way to get all of your new tenants, however, I suggest you create a well-rounded marketing plan that brings consistent, inexpensive results. This usually involves around 10 strategies that each bring in two to five new tenants per month. The result is the same, but the budget is usually lower, and the outcome becomes much more reliable.

Having a single medium bringing in all of your traffic is like putting all of your eggs in one basket, which usually spells trouble. Take a look at what happened to the Yellow Pages industry over the years. Prices have gone up and effectiveness has gone down. Those operators with all of their eggs in the Yellow Pages basket are now paying the price in a big way, even though the concept of backing out of the directory scares them to death.

So let me give you two areas of focus to help you diversify your marketing budget, get more results, and spend less money doing it all.

Winner’s Focus #1: The Internet

You’ve heard a lot about Internet marketing over the past year or two, and guess what? Most of what you’ve heard is true. The print Yellow Pages are dying, and the Internet is taking over. Here are a few statistics to bolster my point:

The Internet is a big deal for storage providers. It has local impact. Just because the Web has the amazing ability to connect people from all over the globe, this doesn’t mean a consumer in Ogden, Utah, isn’t using it to search for and buy storage in his very own town.

If you don’t have a website, for heaven’s sake, get one. If you do have a website, hire a professional to review it for effectiveness. Make sure you’re touching on consumer hot buttons and converting visitors into paying tenants.

Once you’ve established that your website is effective, make sure you’re well placed on the search engines. When consumers look for something online, they start with a search engine such as Google or Yahoo. If you’re not on the first page of results on all search engines, you’re losing business to the competition that has made the effort to get on the first page.

One more note: Due to the way consumers search online and other intricacies, you should make every justifiable effort to dominate the first page of search results. Consider using storage directories as well as pay-per-click and organic search-engine-optimization campaigns. Internet marketing is usually inexpensive enough that you can run multiple campaigns effectively.

Winner’s Focus #2: Guerilla Marketing

Guerilla warfare is a very effective strategy for undermining competition. From that line of thinking comes guerilla marketing. Unconventional, unexpected and usually inexpensive marketing tactics work very well. (Forget about spending big dollars on mediums used by companies like Coca-Cola and General Motors. You’re not them, and you don’t have their budget.)

To begin creating your guerilla-marketing strategy, you must determine your target market. To do this, apply the 1 percent factor, which says that 1 percent of your target market equals your total number of units (100 percent occupancy). For example, if you have 449 units, your target market is no more than 44,900 households. Don’t spend money marketing to more than that number, or you’ll be wasting your budget. When you analyze advertising this way, you’re able to easily eliminate many options.

Continuing with this example, you need to identify every option for communicating your innovative message to those 44,900 households. This usually includes making offers to local businesses and apartments, hosting community events, and sending press releases to local media?anything that will reach your 1 percent.

Do everything you can to innovate beyond the standard storage options, too. Extend gate access hours to those who qualify. Offer discounted packing supplies. Offer package acceptance, wireless- Internet access, conference-room access and whatever else you can to differentiate yourself from competition.

Then offer a risk-free way for consumers and businesses to use you for storage. The more attractive you make your facility, the more tenants you’ll draw. Like a magnet to steel, you’ll pull in everybody who needs or wants storage to your facility over your competition. You’ll find yourself winning in these ultra-competitive times.

Commit to playing to win. Even if you only have one facility and you’re up against larger operators, you can thrive in these times if you have something good to say (innovate), say it well (create excellent marketing messages) and say it often (be consistent). 

Derek M. Naylor is the president of Storage Marketing Solutions (SMS), a full-service marketing and advertising agency dedicated to the self-storage industry. For a free subscription to his e-newsletter, call 800.941.4805 or visit www.storagemarketingsolutions.com.