Choosing a Third-Party Program
Third-party reservation services come in a few models. The first we’ll look at is based on a monthly fee. The vendor charges the operator a flat fee per facility per month. This model works if you’re extremely diligent about tracking the source of every new rental. At the end of each month, calculate how many rentals were generated by the vendor—not calls, quotes or clicks, but actual new rentals. Then divide that number into the total amount you’re paying. This will tell you how much you’re paying per rental to be listed on that particular website.
For example, if you list five properties and the vendor charges $69 per month per facility, you’re paying $345 a month. If two rentals are generated in a given month, you’ve paid $172.50 per rental, which is high in many markets. However, if 10 rentals were generated, your cost per rental would be only $34.50, which is a fantastic deal. My point is you have to track results from any vendor that charges you a monthly fee with vigilance because blindly paying every month could cost you thousands of dollars.
Another model in the reservation-services category is pay-per-rental, which allows you to pay only when a rental is generated. These providers generally charge at least $75 per rental, but charge you nothing if no rentals are generated. You don’t need to watch these services quite so carefully because if they’re not performing, you don’t pay anything.
There are a few other benefits to this model including aligned incentives. This means you benefit from any initiatives the vendor invests in to grow its own revenue, and the vendor doesn’t make any money unless you do. A good example is a company that invests significant time and money to convert more of its reservations to rentals. Storage operators benefit from the investment since more rentals means more money.
Ultimately, the savvy storage operator should advertise with every single website that generates tenants at a cost per rental with positive ROI. If you don’t get yourself in front of those tenants, your competition will!
Chuck Gordon is founder and CEO of SpareFoot.com, a pay-for-performance reservation-services provider for the self-storage industry, with thousands of new tenants generated for its clients each month. For more information, call 512.561.0946; e-mail firstname.lastname@example.org .