Take a look at your self-storage operations last profit-and-loss statement and notice the line item titled marketing. Is it accompanied by a significant number? If soand in this challenging market, it should bethen it makes sense to ensure you are making well-informed, almost scientific decisions about how you spend your marketing dollars.
Whats your marketing plan for 2012? If you dont yet have one, youre several months behind the marketplace and many of your competitors. Your marketing plan is far too important to the success (or failure) of your business to leave it to chance or just do what you did last year. The following suggestions will help you make smart decisions about your business marketing and create an effective plan that maximizes your budget.
Whats a Rental Worth?
The first question to ask yourself is: What is a rental worth to you? To make intelligent decisions about your marketing investments, you must know the answer. In most cases, the true value of a rental is far more than you would guess, and yet many operators avoid investing in specific marketing efforts based cost. They create a marketing plan based on the price of the marketing, not the value of the income the marketing will produce.
How do you determine the true value of a rental? Using tools built into your facility-management software. Using your software, create a marketing report that will show you customers average length of stay and an inventory report that will indicate your average rental rate. These two numbers will help you determine an average value for each rental.
For example, if your average length of stay is 12 months and your average rental rate is $100, your average rental is worth $1,200. If you go further and figure out the average amount of ancillary sales per rental, youll find that number is even higher. You can get even more sophisticated and calculate how much a residential customer is worth vs. a commercial tenant.
Whats a Lead Worth?
Now that you know what the average rental is worth to your facility, what are you willing to spend to make that amount? To answer, you must know the value of a customer lead. Again, you can use your management software to help figure this out, but only if youre using a lead-tracking system. You cant know what marketing efforts to pursue if you dont know what has worked historically at your facility.
Facility managers must track the source of every new rental. When I conduct mystery-shopping expeditions, most managers never ask what brought me into the facility or why I called. You cannot make marketing decisions based on instinct. You might think you know where your leads come from, but youre often wrong. A simple-lead tracking system will take the guesswork out of what is far too important a decision to leave to your gut.
Once youre consistently sourcing your leads and rentals, an easy calculation will give you the cost per lead and rental for each type of marketing. For example, take the number of leads or rentals generated by your website and divide that into your monthly website costs. Do the same for your Yellow Pages ads, direct mail, referrals, etc. Its important to calculate the cost for leads and rentals separately, as you may find some marketing channels produce a lot of leads but few actual sales.
One owner assembled a spreadsheet of his facilitys 2010 marketing efforts, including dollar amounts and the number of rentals generated by each campaign. He was convinced that Yellow Pages, which had generated 120 rentals during the year, had been the most effective, while direct mail, which had generated only 35 rentals, had not been effective enough to consider using again.
The facilitys average rental was worth just over $2,200. As it turned out, the average cost of each Yellow Pages rental was $1,000, while the average cost of each direct-mail rental was only $200. Armed with this information, the owner able to make smart decisions and create a more effective marketing plan for 2011.
A referral program can provide one of the best possible returns on your marketing dollar, so consider it carefully when building your 2012 budget and allot an appropriate amount. It really doesnt make sense to offer a meager $25 referral bonus when your average rental is worth more than $1,000 and you spend a great deal more on other leads and rentals. Of all the marketing efforts, a referral program is the only one that only costs you money if it works!
I know one self-storage owner who cancelled his referral program because it was costing too much money, but it was working. He would have done better to spend more on his referral program instead.
After much urging, another self-storage operator in central Florida upped his $25 referral fee to $100 and has seen a dramatic increase in rentals. While he has to pay for Yellow Pages and Internet marketing regardless of whether these efforts work, he only pays a referral fee when someone actually rents a space. How cool is that?
Also, if you want your referral program to be effective, pay the referring person in cash or check. Programs that offer a credit on a customers storage account or a discount on future storage are never as successful.
Know Where Tenants Live
Another piece of information you need to make smart marketing decisions is where your current tenants live. Your management software should be able to produce a marketing report or map that shows you, by ZIP code, the areas that contain your highest concentration of customers. Your marketing efforts should focus aggressively on those regions. Dont try to make a primary market out of one that hasnt emerged as one organicallyyou will be disappointed with the results.
So, are you going to prepare your 2012 marketing plan with actual data or by the seat of your pants? Make better use of those precious marketing dollars and use your management-software reports to make more informed and cost-effective decisions. Your business depends on it.
Bob Copper is 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 [email protected].