Customer Income Potential

Blogger Gina Six Kudo takes a closer look at the value of each self-storage customer in relation to marketing dollars spent.

Amy Campbell, Senior Editor

March 18, 2010

2 Min Read
Customer Income Potential

The Inside Self-Storage World Expo is behind us and the show was a resounding success across the board. I heard from many attendees how it was the best conference they've ever attended.

While I was a small part of it (as a speaker), I want to share with you something quite shocking I learned in my session. Most people present at my session were owners, and when I asked the 100-plus present a few questions, I was appalled at the response.

I asked for a show of hands to this question: “How many of you know what your average customer is worth to you each month?” Only 10 people raised their hands. I then asked; “How many of you know how long the average customer stays?” Again, the results were so low it was shocking.

I labeled a slide in my presentation Customer Income Potential and went on to describe what that means. If you're spending marketing dollars to gain customers you need to know what a new customer value is to your store. 

For example, if your average customer stays six months and, on average, your tenant base pays $100 per month, you don’t want to spend $600 to gain a new customer, or you’ve gained nothing in income. However, if you get that person in the door and a contract signed for a $10 discount or even one month free, you’re ahead of the game.

I find it hard to believe so many people don’t know how to value a customer in this regard, but maybe I’m the strange bird. Take a look through your software and somewhere buried in the midst should be some historical data you can review. If not, use your common sense and get a feel for what a single customer means in relation to your bottom line. Take a look at your customer-base average length of stay. Once you have the two numbers gathered, it makes determining what to spend on marketing infinitely easier to determine.

Say your average tenant stays 10 months and spends an average of $100 per month. The calculation is simple: 10 x 100 = $1,000. Starting at $1,000, is a new customer worth a $50 investment of marketing materials, discounts or your preferred method.

In my humble opinion this is a no-brainer, yet we constantly see people cringing at giving a customer a lock, a $5 out-of-pocket expense. For my money, if I can gain $995 on a $5 investment ... well, that’s just a wise business decision.

I’m sure some of you agree, while others may argue the merit of giving away "profit" from lock sales and the like. Post a comment below, or let’s debate it on Self Storage Talk, the largest and growing knowledge resource for our industry.  

About the Author(s)

Amy Campbell

Senior Editor, Inside Self Storage

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