Can Self-Storage Operators Benefit From Groupon?
By Jim Bradbury
On the heels of rumors of Google acquiring Groupon, the No. 1 deal-of-the-day website, a lot of self-storage professionals are wondering if Groupons is a great marketing opportunity for their businesses. With numerous proponents and seemingly few flaws, we’ve taken a long hard look at the pros and cons of these fast, furious buyer-incentives to expose truths that may cause self-storage operators to think twice before jumping in.
For those unfamiliar with Groupon, here’s how it works: Consumers sign up for a daily, deeply discounted coupon delivered to their e-mail inbox and available for a very limited time, causing a knee-jerk reaction for deal seekers to buy now or miss out. In exchange for creating, hosting and deploying the offers to their e-mail subscribers, Groupon generally receives 50 percent of the sale—not exactly a small piece of the pie.
While there may be a valid opportunity to bring in more business through the use of Groupons, the implications of using this marketing channel should be recognized and planned for first. We recommend a “look before you leap” approach to Groupon campaigns. First, you need to determine objectives. What do you hope to get out of it? More customers, but for how long? You need to strike a balance. For most operators, this will require clear objectives and an understanding of impact to the types of customers they will service from that channel.
Self-storage owners also need to determine whether Groupon’s 50 percent take is offset by the quantity and quality of the coupon redemptions. A short-term Groupon campaign can be a “break-even” proposition, so it’s important to weigh the long-term implications of a campaign against short-term losses.
Offering a deeply discounted Groupon special could impact future marketing by creating a client base that has less predictability for long-term revenue. For example, new clients may sign up at a reduced price, but start looking for a new storage space once the deal expires. Groupon promotions can also damage your brand if consumers view it as a ploy to “hook” them into moving into the facility, only to hike up the rates once they’re in. There’s also a chance consumers will hold out on signing up until another promotion pops up, training good prospects to wait for the next deal.
Some self-storage operators have encountered yet another obstacle: Groupon's refusing to work with them because the number of redeemed coupons is too low for their business model, or because it’s not convenient for them.
Despite these downsides, many self-storage owners have expressed interest in Groupon on Self-Storage Talk. Instead of offering bargain-priced units, one company offered reduced prices on packing materials and had a good turnout. Realistically, deeply discounted units may be offering too much to consumers who generally do not buy self-storage space on impulse. Perhaps this is an area where owners can be little creative as to what to offer. If Groupon appeal to you, the key is to strike a balance by making Groupon work for you.
Jim Bradbury is an account executive with G5, a provider of vertical-specific local marketing solutions. Jim is responsible for developing new partnerships in self-storage. He’s active in the Self Storage Association and is always eager to learn more about how self-storage operators are marketing their properties. G5 helps mid-market companies get found online, generate more qualified leads, convert more leads into new customers and track marketing performance.