Electronic Marketing and Data Tracking: The Aggressive Techniques of Extra Space
In the second presentation, Noah Springer, the director of strategic partnership for Extra Space Storage Inc., gave a glimpse into some of the REIT's most effective strategies. He said the company is enjoying its current momentum from an aggressive online-marketing and customer-tracking strategy. The company spends $25,000 per day on online marketing, everything from pay-per-click advertising, "cookie" tracking (which reveals about what self-storage customers look at online), and manpower invested in social-media outreach.
Extra Space increased same-store revenue by 5.8 percent and net operating income by 9.3 percent from the end of 2010 to the end of 2011. It also acquired 28 facilities and grew its third-party management network to 185 stores, which Springer attributes to the company's unified aggressive approach to attracting new customers and gaining more market share.
For example, he attributes the company's vast network of customer information to a simple survey at the point of sale. All new tenants take a quick electronic survey on a keypad, similar to a credit-card payment processor. The survey asks questions such as, "Have you ever used storage before?" and "How far away from this facility do you live?" In addition to being a method for data collection, this equipment allows tenants to sign their leases electronically and immediately receive a copy via e-mail.
Last, Springer recommended all operators to run their own call centers or partner with an outside call center. In his opinion, onsite managers shouldn't need to make phone sales or worry about bringing customers to the doorstep. They should take over when the customer actually visits the property. Extra Space has reaped the benefits, he said, of having an efficient call-center process.
Financial State of the Industry
Marc Boorstein, principal for self-storage real estate broker MJ Partners Inc., followed Springer, sharing a summary for first-quarter financial results from the REITs: Cubesmart, Extra Space, Public Storage Inc. and Sovran Self Storage Inc. (which operates as Uncle Bob's Self Storage). Most attendees were engaged in hearing which U.S. markets earned "top revenue status." Cities and regions mentioned included Chicago, Dallas, Denver, Detroit (which drew incredulous reactions from the crowd, but Boorstein added that Detroit has been a top performer for Public Storage for two straight quarters) and all of New England. Phoenix was singled out as a low performer by multiple REITs with shrinking revenue in the first quarter.
Boorstein shared the fourth session with Shawn Hill, principal for Chicago-based The BSC Group. Hill gave a presentation of nationwide and regional cap rates and other investment risk assessments, providing scenarios under which it would be smart to acquire and sell properties.