I’ve encountered numerous customers over the last few weeks who’ve been inflicted with “rate shock,” an utter disbelief at the current local rates for a self-storage unit. Those suffering from this affliction say things like, “But I only paid X dollars for the same size unit in Atlanta,” or “I rented from you five years ago and only paid X!” I actually had one person come in and ask where the nearest national storage chain was because he believed he could rent a unit for $35 per month. Needless to say, there aren’t any such competitors in our town.
Not in Kansas Anymore
With COVID-19 causing major life changes, many consumers are making long-distance moves. Whether prompted by job relocation, downsizing, moving back home with the folks or wanting to be closer to family, self-storage is almost always needed. The problem for many prospects is unit rates can vary drastically from market to market, sometimes even within the same city.
In my experience, large cities like Atlanta, Dallas, etc., often have more national chains present. This can make a market more competitive, driving cheaper rates and bigger promotions, such as those infamous $1 move-in deals. Smaller cities and towns tend to have less competition for the storage dollar, so rates and promotions are going to be different. Privately owned facilities have to make every cent count, and price structure is based on supply and demand. Thus, in areas where demand is high, operators can pretty much set their price.
Unfortunately, this isn’t always obvious to prospects arriving to our smaller town from a big city. Higher rent here can come as a shock to customers who believe everything is more expensive in the city from which they came.
Rate shock also occurs with previous tenants who come back years later to find prices have increased. In their mind, it’s the same facility and unit, with no new amenities or updates (that they can see, anyway).
For some, it makes no sense that our rent is higher, even though insurance and utility rates aren’t what they were five years ago, and the cost of maintenance has gone up. Operating costs are often at the root of price increases over time, from the cost of new software or having to replace an AC unit to higher property taxes. Today, operators also have to factor in extra safety precautions and cleaning around COVID-19. Would any customer be happy if he went five years without a raise?
Power Through It!
Ultimately, self-storage managers face the uncomfortable task of trying to help customers overcome rate shock and make a sale. We have to sometimes walk a fine line when explaining prices. You want to get your point across without being insulting. You also don’t want to come off as affronted or defensive.
I find a friendly disposition makes the best impression. I smile and let customers know that while I understand they may be surprised by our prices, they’ll find comparable rates at nearby facilities with the same amenities. I also take the opportunity to inform them of additional features we offer and tout our great location.
In cases in which a previous tenant questions our prices, I refer to the increases we’ve incurred to operate and maintain the facility, as well as any upgrades or changes we’ve made. I’ve been known to jokingly mention—with a smile, of course—that I wish my insurance rates were the same as they were three years ago. That usually breaks the ice and allows the customer to better understand the reasons behind our price changes.
It’s important to remember that you can’t win over every customer, especially if price is the obstacle. People are increasingly working within a tight budget. If I’m running a special, I give a comparison in savings vs. a cheaper rate. This tends to benefit a prospect who’s only planning to rent short-term. It may not be as profitable to the business immediately, but building a relationship for future rentals will be. I may not close every customer, but finding new ways to do things is a constant in 2020. I’m chalking it all up to a learning experience.
Anna Ross is facility manager for Tower Self Storage in Monroe, La. She began her self-storage management career about 10 years ago in Jacksonville, Fla. She’s managed facilities as small as 258 units and large, multi-story locations with 1,260 units. She recently experienced her first property expansion and is always looking to learn new things. For more information, call 318.388.1111, email [email protected].