There’s no escaping the growing recession across the United States. Many self-storage markets are experiencing a drop in occupancy and an inability to raise rental rates. These forces are creating a market environment in which we all need to capitalize on any competitive advantage available.
Many are turning increasingly to various discounting ideas. Ray Wilson, president of Self Storage Data Services (SSDS), indicated during his keynote presentation at the Inside Self-Storage Expo in Nashville, Tenn., Oct. 7-10, that SSDS is tracking more than 40 different discounting programs. He also maintained that discounting doesn’t necessarily negatively impact overall operational income, so take heart.
Thinking about discounts made me wonder if we are maximizing competitive advantages that cost us nothing by simply discussing them in positive terms to prospective customers. Two of these advantages are not charging security deposits and offering rent guarantees.
I know security deposits are a thing of the past, but simply saying, “We will not be charging you a security deposit today,” to a prospect can become a positive advantage. Remember that the 2007 national Self Storage Association’s Self Storage Demand research indicates 51 percent of Americans have never used storage. Instead of just ignoring the fact that you don’t collect a security deposit, use it as a positive statement in your rental dialogue.
What is your company’s policy on increasing rents on new customers? Most owners will not raise rents on new tenants for six months or a year. However, if you don’t explain this to potential customers as a part of your sales closing process, you are missing out on a significant competitive advantage.
Some companies, as you know, will attempt to attract new customers with “low-ball” pricing only to turn around and increase rental rates within a month or two. At a time of such financial uncertainty, assuring your new renters the facility’s rates will not increase for a significant number of months encourages them to sign your rental agreement. This can also be a great statement to make on the phone as you are trying to get the caller to come into the facility.
Owners and managers should adopt an aggressive closing mindset wrapped around the following: “No one leaves without renting a unit.” Managers should have the authority to make whatever deal necessary to finalize the sale with potential renters in the office.
The same is true about every incoming phone call. Every inquiry must be converted to an appointment and every appointment turned into a rental if we are to maintain current occupancy levels throughout 2009.
The job is not to sell units; it’s to sell storage solutions. Salesmanship and taking advantage of all of our competitive advantages must be priorities for 2009.
Remodeling Your Future
As I travel across the country and visit hundreds of self-storage facilities, I see some brand-new beauties with positive drive-by images and large retail-oriented offices. The vast majority of facilities, though, are 10 or 20 years old and haven’t been well maintained. I see faded doors, damaged buildings, broken pavement and storm water detention areas that are all sending negative messages to future and existing customers.
My intuition tells me the greatest opportunities in our industry over the next decade will not be in the development of new stores, but rather in the rehabilitation and re-branding of our existing facilities. Every owner needs to take an objective view, during the day and at night, of their facilities.
Are you proud of what you see? Would you rent at your facility? Is your office space adequate in today’s competitive environment? If your answer is “no” to any of the above, you probably need to turn it around to stay competitive.
Building upgrades often result in dramatic improvements in net operating income and increased facility values. Maybe you are not in a position to replace the 75 old doors at your complex but can afford to clean or paint them and alter the image of your business. Repainting your office can have a positive and immediate impact. Replacing a solid entrance door with an all-glass version not only improves the natural lighting in the office, but presents a more positive image, especially to female customers.
Broken pavement especially deserves attention. Postponing minor repairs always produces a bigger repair bill later on. Concrete and blacktop just don’t heal themselves, but they will worsen. Think about the message you are sending to tenants if you can’t even maintain parking lots and drive aisles.
Take a close look at your own facility and see if your capital improvement projects for 2009 are really sufficient to keep new customers coming in every day.
Have You Written Your Goals for 2009?
As one year ends and another starts, I ask owners and managers how they did on their written goals for the year. All too often this question is answered with a blank stare. For all too many the budget turns out to be their only success measurement. Having specific goals can pay huge benefits in keeping everyone focused on the objectives for the year.
For example, if you challenge yourself to sell a minimum of $10 in supplies per newly written lease, it’s very easy to measure your achievement. If you write 10 leases, the goal is to sell $100 in supplies. Did you achieve that goal?
If you have only 10 percent of your current customers paying by credit card or ACH deposits, you might set a goal of 15 or 20 percent in the year ahead. Knowing that people who pay by credit card stay longer should be sufficient motivation to get managers to ask customers to pay by credit card and to get them to sign an auto-pay form.
A great goal is to set a number for total leases to write in the year ahead. Few managers can get current customers to keep their unit when their storage need is over, so there will always be a given level of move-outs.
Let’s say you have a 500-unit project operating at 80 percent occupancy (400 units). If your traditional pattern is approximately 100 people move out annually, and you want to get your facility to 85 percent occupancy by December, your written goal should be to rent a minimum of 125 total units.
If move-outs increase, the goal will need to be revised upward during the year. Putting these goals in writing and getting the agreement of everyone on the management team gives everyone direction for the year ahead.
If you haven’t already done so, get your team together. Talk about the things you want to achieve for the year financially and even personally, and put it in writing. Remember, without having a measurable goal, you don’t know if you have achieved it.
See You in Vegas?
The Inside Self-Storage World Expo in Las Vegas is always the biggest storage event of the year. The ISS team has put together an outstanding educational program, as well as the largest vendor and supplier tradeshow. Returning to the Venetian Resort Hotel Casino for the meeting gives us outstanding meeting space. Las Vegas also has a variety of hotel selections with room deals and vacation packages, so everyone can take advantage of coming even on a strict budget.
You can get complete details on the agenda and exhibitors at www.insideselfstorageworldexpo.com. I hope to see you there.
Jim Chiswell is the owner of Chiswell & Associates LLC. Since 1990, his firm has provided feasibility studies, acquisition due diligence and customized manager training for the self-storage industry. Jim has served for a number of years on the Inside Self-Storage Editorial Advisory Board, is a moderator of the Self-Storage Talk online community and an instructor of the Self-Storage Training Institute. Mr. Chiswell can be reached at 434.589.4446 or [email protected]; visit www.selfstorageconsulting.com.