Two vital components of a flourishing self-storage operation are your management team and your marketing program. Solid marketing brings potential customers in the door, while good managers keep them around.
In this last of a three-part series, Inside Self-Storage asked industry marketing and management experts for their insight to today’s market. Our panel discusses the evolving role of the self-storage manager, how to handle concessions, and the basis for creating an effective marketing plan. Our experts are:
- Linnea Appleby, president, PDQ Management Solutions Inc.
- Mel Holsinger, president, Professional Self-Storage Management LLC
- Derek Naylor, president, Storage Marketing Solutions
- Brad North, founder, Advantage Consulting & Management
- Maurice Pogoda, president, Pogoda Cos.
How has the role of the self-storage manager changed over the past year?
Appleby: It has been evolving over the past several years from caretaker/order-taker to sales and marketing expert. But the really big change this year has been the need for the storage manager to be the relationship-builder with the customer as well as operating a top-notch property. More is expected of the front-line staff as customer service becomes a significant and determining factor for the consumer as to where they do business.
In years gone by, the saying was, “If you build it, they will come.” Now it’s, “If they like you, they will rent.” The manager with the better customer-service skills will win the business every time regardless of factors like price and convenience.
Holsinger: A self-storage manager in today’s world needs to have a better understanding about marketing, customer relationships, lien laws, preventive and routine maintenance, pricing strategies, street presentations, and electronic communications such as e-mail, instant messenger, etc. He needs to understand the role and use of the Internet and electronic banking functions. He needs to have an understanding of accounting and bookkeeping procedures. In general, he needs to be better educated with a minimum of a high school degree if not a college degree.
Pogoda:The manager has always been critical to the success of a store. This has proven to be even truer over the past year. In these tough times, the number of prospective tenants has dropped dramatically. Therefore, being able to “sell” the store and making a rental every time the phone rings or someone comes into the office has become vital.
Getting the right person in place is imperative, and providing him with extensive training and support is essential. Plus, celebrating “victories,” no matter how small, such as achieving a weekly sundry sales goal, keeps managers motivated.
Being part of the community is more important than ever. Outside marketing through personal contacts is an excellent source for prospective tenants. That means the store manager must be involved in the community and making contacts with anyone and everyone who might be a referral source.
Dealing with delinquent tenants has become a bigger part of a manager’s job. Making collection calls has always been important, but the sheer number of past-due accounts has made this more time-consuming. To some extent, it’s taking a toll on managers, as they are regularly the target of a delinquent tenant’s anger resulting from circumstances beyond the tenant’s control, such as a job loss. In addition, managers have had to become more creative in their efforts to either get tenants to pay or vacate. Empowering managers with decision-making authority within preset parameters is important.
Concessions are huge right now. How can managers offer them without ‘giving away the farm’?
Appleby: The better the manager is at “selling,” the lower the concessions. The market determines what the average concessions are and, just as with pricing, should determine where the facility falls in the concessions game. If your concessions are higher than others in your market area, it’s due to management who doesn’t know how to properly sell. These are the folks that go immediately to their lowest offer without negotiating first. Managers should have a toolbox of items they can use to close the deal.
Holsinger: Managers really need to look at the demand for specific sizes, competitors’ pricing and occupancies, and the length of stay. They need to understand that the ultimate goal is to get the customer renting at the highest possible price or opportunity. Giving concessions of time vs. money can lessen the blow, so to speak, but each case needs to be evaluated independently.
For example, having the customer walk out and rent from someone else over a couple of dollars doesn’t make sense. Having him rent at a discounted price for a short period of time may help your cash-flow position in the short term, but not necessarily the long term.
Pogoda:Concessions can be difficult to control. We want our stores to be competitive in their markets but, at the same time, continue to generate enough income to pay the bills. We try to put a time limit on concessions. For example, we may reduce the rent on a space for a specific time and let the tenant know it will go to street rate at the end of the “special” period. We have also had success using a “Pay for X months, get the X month free” type of promotion.
In addition, we emphasize our discounts for prepaying rent. Again, this is an area where a manager needs to be empowered to make an on-the-spot decision to get the rental. Training and clearly defined authority boundaries are the keys to trusting managers to make good decisions.
What’s in the future for the self-storage manager?
Appleby: Learning what drives the business and being involved in the activities that promote success will be the difference between a good manager and a great manager. Managers need to understand not only the numbers that are important to the business like gross potential, closing ratios, etc., but how their actions or inactions affect those numbers. When they take an active rather than passive approach to the results of the facility, they will increase their personal value to the company.
Holsinger: More community involvement, professionalism, more and intense training, self-starting roles in the daily business, and more necessity for understanding the total business package—from sales and marketing to maintenance and accounting. In summary, managers need an even greater emphasis on their specific role for the success of a facility.
Pogoda:The self-storage manager will always be integral to a store. The personal contact they provide is something that sets our industry apart from many others. In large part, our business relies on the trust of our tenants who are leaving their belongings at our store. The manager is the face of our business, which is something that’s becoming less common in our technologically advancing world.
However, managers will need to become true professionals. They’ll need to be well-trained self-storage experts so they can provide tenants with the level of knowledge and sophistication they’re coming to expect.
What role does marketing play, and what’s the manager’s responsibility?
Appleby: Marketing is a huge part of the manager’s job. Self-storage is an extension of the tenant’s home or business, so the manager should be a very visible and an active part of the community and neighborhood. Creating relationships and reputation is a way to differentiate yourself in the market. Getting out, meeting people and making friends is key.
Holsinger: Marketing is the total package. The way the manager dresses and greets a customer on the telephone or in person is critical. The way the facility is presented to a prospective customer is important. Benefits such as wide aisles, good lighting, security features, the office smell and feel, the display of ancillary products, etc., all contribute. The advertising is just a way to entice a person to contact the store; the marketing is how you make the store sell itself.
Pogoda:In the current environment, marketing is one of the most important roles of the manager by getting the store’s name out into the community through personal contacts. By nature, human beings are willing to help each other out. If a person knows Paula, our store manager, through some type of community involvement, he is more likely to make a referral to her rather than to some stranger.
On a company-wide basis, we have placed an emphasis on getting stores more involved in worthwhile and creative community activities. For example, we are involved in the “Cell Phones for Soldiers” program, which collects used cell phones and provides new ones to members of the military serving on overseas assignments. At one of our stores, we partnered with Hospice of Michigan and used the side of the storage building as a movie screen for a benefit they sponsored.
Should marketing be a self-storage operator’s No. 1 goal? Why?
Naylor: Being as profitable as possible should be an operator’s No. 1 goal. The best way to do that is lowering expenses and increasing revenue. Marketing plays a critical role in the “increasing revenue” part of that equation, so it should be a priority rather than goal.
In today’s economy and competitive environment, operators must differentiate themselves from the competition and find effective and efficient customer-acquisition systems, then leverage the customer relationship for maximum revenue, and do it all for the least amount of money and time. An effective marketing plan does all three. Far too many operators still have marketing classified as an “optional expense” and not a mandatory activity for their staff. For operators to thrive now and in the future, this must change for them.
North: The No. 1 goal of a self-storage operator is to maximize his sales program. Become the best at building value and trust through an effective sales presentation. In addition, become very good at lead generation through prospecting and creating customer visits to the store.
Once this is accomplished, a self-storage operator can spend more money on marketing and maximize the return on marketing dollars spent. I’ve seen too many operators “throw away” money on marketing because they were not equipped to handle the calls when they came into the store. In summary, spend the time, money and energy on maximizing sales so you can maximize your return on marketing dollars.
What constitutes a good marketing plan?
Naylor: A good marketing plan should focus on three objectives: increasing occupancy, increasing tenant value to the facility, and improving marketing efficiency. It should also be based on results and flexible. It will clearly outline specific activities to accomplish those three objectives, with deadlines.
The plan should provide strict guidelines for logo usage, copy creation and offers so your marketing has a consistent and recognizable look and feel. The plan should also discuss how the marketing is going to be tracked for effectiveness and what constitutes “effective” so that quick, smart decisions can be made throughout the year.
North: A good marketing plan must be comprehensive and focused on the target markets that produce the best results. It must be a combination of building relationships in the community, customer referral, key influencer referrals, search-engine marketing, social networking, Yellow Pages ads, and niche marketing specific to the local community. The marketing plan must be implemented on a consistent basis with tracking and measuring to make ongoing improvements.
What role will online marketing play moving forward?
Naylor: As consumers’ comfort and use of the Internet continues to grow, online marketing will become an important part of every operator’s marketing plan. With the wild explosion in social media, and a sure explosion in “the next big thing,” operators will be well-suited to pay close attention to the Internet and embrace change as it presents itself.
However, I caution everyone to put emotion and excitement aside as new things come out and avoid falling in love with something because it’s “cool” rather than because it makes good business sense to participate. The Internet will always play these two roles for operators—attract new customers and allow existing customers to maintain their accounts.
North: Online marketing is the wave of the future. Five years ago, we were receiving approximately 3 percent of our rentals from the Internet. Today we range between 10 percent and 20, depending on location. This will only increase over time and will eventually take over Yellow Pages advertising altogether.
What are the top three marketing tactics every facility should be practicing today?
Naylor: Internet marketing, database marketing, and community-network creation and maintenance.
North: Every self-storage operation must have an effective search-engine marketing program. Second, there must be a comprehensive program to target key influencers in the area surrounding the facility.
These key influencers can be real estate agents, chambers of commerce, business-networking organizations, apartment communities, housing communities, etc. Lastly, there must be a program to reach out to the community and become a credible organization that helps others. Through helping others you will become known throughout the community and improve your business.