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Just Reward: Are Customer Loyalty Programs Right for Self-Storage?

The prevalence of loyalty programs means consumers are becoming conditioned to expect them as a normal byproduct of choosing to spend discretionary income with a particular brand. As the evolution of self-storage moves increasingly toward specialty retailing, it may be time for more operators to consider establishing formal loyalty programs.

Tony Jones

May 1, 2015

6 Min Read
Just Reward: Are Customer Loyalty Programs Right for Self-Storage?

The evolution of self-storage away from the mindset of warehousing goods and more toward the arena of specialty retailing continues to gain steam, which means keeping an eye on retail strategies and gleaning ideas from successful brands or those you particularly admire is certainly in order. Customer satisfaction has always been key in the industry, but it may be time for more self-storage operators to consider establishing formal loyalty programs.

For the last five years, marketing company Bond Brand Loyalty has been tracking consumer loyalty across several sectors, including consumer packaged goods, dining, entertainment, financial services and retail, and its 2015 Loyalty Report is an interesting read. It includes survey data from more than 11,000 consumers in North America on all things connected to brand loyalty and successful loyalty programs, including ranking the most popular and fastest-falling loyalty programs by sector and brand.

The prevalence of loyalty programs means consumers are becoming conditioned to expect them as a normal byproduct of choosing to spend discretionary income with a particular brand. According to the report, 76 percent of Americans think loyalty programs are part of their relationship with brands, and 34 percent say they wouldn’t be loyal to a brand if it weren’t for its loyalty program.

More consumers have opted in to a variety of loyalty programs in the last year largely because they really, really like them. In all, 86 percent of consumers believe these programs are worth the effort they put into them to achieve a particular reward, and 83 percent say they are more likely to continue doing business with certain companies because of their loyalty programs. Interestingly, 70 percent say they actually modify when and where they make purchases in order to maximize the benefits of a loyalty program.

While those figures are certainly compelling, you should note that less than half (49 percent) of consumers say they spend more money after they have joined a loyalty program, and 44 percent believe “it would be easy to replace the program with a competitor’s program.”

Part of the problem is so many loyalty programs are more or less set up the same way and offer similar rewards, which makes consumers feel free to switch allegiances on a whim. Other than formal referral programs, which may provide a few dollars off on a tenant’s rent or $50 in his pocket, many self-storage operators don’t currently offer organized loyalty programs, so getting in on the ground floor could be a nice differentiator in your market.

Some operators have created reward systems, in which tenants accumulate points from rent paid overtime and then can redeem those points for merchandise or other services. In this example from Quartz Drive Self Storage in Auburn, Calif., tenants get three points (worth $3) for every $100 paid in rent.

Elsewhere, Storage Authority, which operates self-storage facilities in Connecticut and Florida, has launched a franchise opportunity that includes a customer-loyalty program as part of its package. The company was co-founded by Marc Goodin and Scott House. Goodin has extensive self-storage development and operating experience, while House has more than 20 years of experience in franchise development and marketing, and comes from the hotel space.

Formal loyalty programs are also available from Storage Business Owners Alliance (SBOA) Merchant Services, a credit card processing company whose program is built around facility-branded gift cards, and Storage Galleria, a group created by industry veterans “for the purpose of creating a better customer experience for self-storage tenants.” The Storage Galleria program enables operators to provide tenants rewards outside their own scope of offerings, including products and services related to home security, printing, telecommunications and other categories. Brand partners include ADT, AT&T, Comcast, DirecTV, Dish Network, Mrs. Fields Gifting and more.

The ability to offer rewards beyond storage services and related merchandise could be a factor in building a successful loyalty program long term. One of the struggles marketers have in building programs embraced by consumers comes down to their functional and experiential appeal, according to the Bond Brand Loyalty report.

“The pressure to focus on the familiar, functional attributes often outweighs the desire to differentiate through experiential attributes. In the loyalty context, rewards do have a role, and points do have a purpose, and while it’s imperative for marketers to focus on the things that matter most to customers, the focus has been so uniformly embraced across the loyalty landscape that program parity exists,” the report says. “Most loyalty programs compete on appeal of rewards, amount accumulated per $1 spent, and the ease with which rewards can be claimed. Programs that innovate to address customer needs with brand-aligned solutions in ways that are easy and enjoyable for customers will differentiate, win, and relieve this tension.”

In terms of loyalty to self-storage brands, operators may want to consider that factors like convenient location, friend recommendations and price (all historical cornerstones) rank below quality of service, product/services mix, and value for the money when it comes to consumers’ overall brand satisfaction.

These attributes are critical to cultivating brand loyalty among consumers of any business type. The more successful you are at service and value, the less need you have for a structured loyalty program. As the folks at Bond Brand Loyalty point out, successful brands like Nike and Apple’s iTunes generate huge amounts of loyalty without implementing any structured rewards.

“What is compelling is that these brands have crafted a value exchange that is not solely reliant on a discount and monetary exchange, but rather on one that fulfills customer needs, makes customers feel recognized and valued, and engages through relevant and personalized experiences,” the report says. “In short, these principles help brands outperform by making the experience with the brand better, get customers to a place where they’re willing to pay a premium, and make them more loyal to the brand.”

Value is really at the heart of customer loyalty. The best loyalty program in the world is worth nothing if customer perception about your product-and-service value is low. This is why points of differentiation, whether curb appeal, band space, office space, pack and ship services, retail merchandisingtruck rental and other ancillary services, are so critical in separating a self-storage operation from its run-of-the-mill competitors.

As I’ve said before, being a specialty retailer is much different than simply providing storage space. Providing rented space may be the core act of your operation, but it should not define the totality of your service value. In developing customer loyalty, are your customers doing business with you because you’re the only option or the best option? If your answer is the latter, then a customer loyalty program may help cultivate and enhance those relationships even further. Let us know how you create customer loyalty at your self-storage facility in the comments section below.

About the Author(s)

Tony Jones

ISS Store Manager, Contributing Editor, Inside Self-Storage

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