3 Revenue-Optimizing KPIs Every Self-Storage Operator Should Be Tracking

There’s a wealth of data available to self-storage operators via their facility-management software. Some of it’s just noise, but if you mine and monitor the right key performance indicators (KPIs), you can actually increase revenue and, ultimately, net operating income.

The question is where to focus your time and energy. The software my company uses offers 126 reports, each with dozens of data points. These address several standard KPIs commonly used in the self-storage industry such as physical occupancy, economic occupancy, achieved rent (dollars per square foot), gross potential rent, and so on. These are all important metrics, but after 15 years in this business, I’ve learned the value of using three particular KPIs that may not be on your radar. Let’s look at how they can help you improve operational performance.

Tenant Length of Stay (Term)

This KPI tells you how long your self-storage tenants stay in their units before moving out. Though it may seem like an extremely simple metric, it can reveal a lot.

To calculate it, pull a list of your former customers with their move-in and move-out dates. For example, our management software includes a Unit Activities Report that provides longevity in months for each tenant. You can then import the data to Excel and use the summation function to calculate the average.

Sometimes, however, the median is a more meaningful metric. For example, at one of our facilities, we’ve had a couple of tenants stay with us for 200 months. That skewed the average length of stay, putting it at 15 months. When we instead calculated the median, it was only eight months.

What about existing customers? It’s tough to include them in your tenant-term data, as you have no idea how long they’ll actually stay. However, if you wish to include them, you’ll have to make assumptions. One approach is to assume all current renters are two-thirds through their stay with you. Then you simply multiply their current length of stay in months by 1.5. Your true KPI will likely lie somewhere between the moved-out and existing tenant term.

One of the reasons length of stay is important is it can indicate customer tolerance for rate increases. Our data indicates that tenants who’ve been with us longer are less resistant to price bumps. In fact, those who’ve rented for more than three years are 80% less likely to move out compared to those who receive a rate increase in the first six months.

Tenant term also helps you determine average lifetime value (LTV), which is the total revenue you expect to generate from a single customer. Calculate this by multiplying the average length of stay (or median, depending on your situation) by the average monthly rental rate. The resulting number can then help you make spending decisions.

For example, how much would you be willing to spend on marketing and discounts to capture a new tenant? Let’s say your LTV is $1,000. That means you’d break even if you spent $1,000 to win the business, however, customer-acquisition cost is almost never as much as LTV. Instead, each tenant increases your profitability in the long run.

Paying attention to tenant term may also provide insight to the condition of your self-storage property or customer experience. The choices you make while a person is renting with you can impact their decision to stay or go. Rate increases can often be the catalyst for a move-out, but a decrease in length of stay may also indicate that customers are unhappy with specific aspects of your site or services. The key is to pay attention and listen. If a customer believes their concerns are being heard, you may have a better chance of increasing their term.

Percentage of Customers on Autopay

Some self-storage operators require their tenants to set up autopay and for good reason. Payments then occur automatically, either from a credit card or bank account. In our portfolio, the percentage of tenants on autopay varies from 40% to 85% depending on the site. We’ve noticed that facilities in high-income areas tend to have more autopay customers.

Most self-storage software programs will tell you the number of tenants who are on autopay in the Management Summary Report. If it’s provided as a head count rather than a percentage, simply divide the number of customers on autopay by your total number of tenants.

Knowing this metric is important for two reasons. First, autopay tenants are significantly less likely to become delinquent. They don’t have to set a calendar reminder, write a check or mail anything. Since funds are withdrawn automatically, it removes forgetfulness as a payment variable. This has a materially positive impact on bad-debt write-offs as well as the number of units that wind up going to auction.

Second, autopay customers are much more accepting of rate increases. Our data shows that non-autopay tenants are seven times more likely to move out after an increase than those making automatic payments. This makes sense because a change in rent is more noticeable when you suddenly have to cut a check for a new amount. Autopay has the benefit of being “out of sight, out of mind.”

Reservation-Conversion Rate

Unit reservations are great, but they’re worthless if those prospects don’t become paying tenants. As a self-storage operator, you spend a great deal of time, energy and money on signage, advertising, brand awareness and discounts, so don’t waste them! That brings us to our third important KPI: the percentage of reservations that convert to move-ins.

In my company’s portfolio, customers have three ways to reserve a unit: in person, via our website and through a call center. The average conversion rate is 40% to 80% depending on the site. We generally have better rates at sites that are more customer-friendly—that is, clean and easily accessible with high visibility and traffic counts. In contrast, conversion tends to be lower at facilities that are difficult to access, hard to find and less attractive. Also, not surprisingly, we convert more reservations when customers physically visit the facility.

There are real dollars to be had by optimizing your reservation-conversion rate. For example, let’s say the average rent at your facility is $150 per month. If you get 30 reservations per month and are able to increase your conversion rate from 60% to 65%, that’s an additional 18 rentals per year, or $32,000.

The way to increase your conversion rate is to follow up on leads. Everyone who makes a reservation should have to provide contact information, preferably phone and email. Communicate with those people using both methods. Prospects sometimes need to be reminded three to four times before they act. If months go by and move-ins are slow, re-engage previously cold reservations with an email campaign that promotes your latest discount.

Most self-storage software programs offer a Reservation Statistics Report or something similar that allows you to track reservations and move-ins over a period of time. Track this KPI monthly to see how conversions are trending. Just keep in mind that some software programs automatically create a reservation for every move-in, even if the customer rented immediately. Removing these transactions from your conversion calculation will provide a better “manager-impacted” conversion rate.

Cut Through the Clutter

Most self-storage management software offers a plethora of reports. Some data is extremely important and should be tracked regularly. If you keep a close eye on your average tenant term, percentage of autopay customers and reservation-conversion rates, and adjust based on what the numbers tell you, you stand to see a positive impact to your facility’s bottom line.

Casey McGrath is director of revenue management and marketing for SpareBox Storage, which operates 109 remotely managed self-storage facilities across nine states. Founded in 2020, the company has a portfolio comprising 7.2 million square feet. To reach Casey, email [email protected].