When a storage unit goes unrented, another substantial sum is lost forever—the potential revenue generated by the paying tenant. Amazingly, most self-storage managers have no idea what the average rental is worth. How can marketing investments and other decisions be confidently made without first knowing the value of your product? Whether it's $750 or $2,500, understanding the average value of every rental helps to instill a higher sense of urgency when it comes to working every lead and renting more space. Failing to rent space is just too expensive because you lose out on the income.
Other Lost Income
Another revenue stream that's lost when a unit goes rented is ancillary income. A person who doesn't rent a storage space also will not buy tenant insurance or boxes, or pay late fees, and probably will not rent a truck. Most self-storage owners factor ancillary income into their budgets, but it won't materialize if units aren't rented. Again, failing to rent storage space is an expensive proposition because the lost income is lost forever.
A referral program is also a great source of rentals. Who better to generate more business than existing tenants? Of course, if you don’t rent the space, then you probably won’t get the referral.
Another expensive side effect that results from unrented units is the loss of asset value. Self-storage facility value is based on net income, and the loss of even $1 can be a costly mistake. Every dollar collected can equal approximately $12 in asset value, so empty space can represent a significant loss. A manager’s lack of urgency toward renting units will have long-term, negative consequences for the facility he’s managing.
Since we all now clearly understand how expensive it is to not rent a storage unit, what can owners and managers do to increase their closing percentages on potential leads?
- Drop whatever you’re doing and answer the phone, or stand up when a customer walks in the door. There really is nothing more important to do at a facility than rent space.
- Make every effort to gather names and contact numbers for every potential rental lead. Customers love to hear their name used a couple of times during the conversation, and professional salespeople know you cannot have an adult conversation without sharing names.
- Use the gathered contact information to follow up with customers who don’t immediately rent a space. Why bother getting names and numbers if you never plan to use them? Potential customers are much more offended by salespeople who never check in with them than those who call too often.
- When talking to potential customers, take notes, including name, number, why they need storage, when they’ll need it, what kind of unit, etc. Taking notes forces you to focus, and it gives you personal information you can use when the customer comes to the facility. “So did your son get off to college, OK?” You can ask that type of question if you made a note of it.
- Make sure the spaces listed on your vacant list are actually clean and rent-ready. There’s nothing more embarrassing than to show a unit that turns out to be dirty and unrentable.
- Close the sale! The customer contacted you about solving a need, so don’t be shy about asking what it will take to get him to rent a space today. What have you got to lose?
Vacant storage space has no value to a self-storage operation. Keeping an empty facility spotlessly clean won’t ever pay the bills. Fill the space, and you’ll be much more likely to be successful in this business.
Bob Copper is the partner in charge at Self Storage 101, an industry consulting firm that assists facility owner/operators and managers in developing more effective and profitable operational systems. It also aids in conducting performance reviews and providing the necessary tools to perform at higher levels in a competitive industry. To reach him, call 866.269.1311; e-mail firstname.lastname@example.org; visit www.selfstorage101.com .