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May 15, 2008

7 Min Read
Do-It-Your-Self-Storage: Kiosks!

To compete in today’s economic environment, many self-storage operators are turning to technology to lure customers to their facilities and provide superior service once they sign on the dotted line.

Industry studies show the increasing usage of technology in facilities of all ages. Self-storage operators are employing the Internet for marketing, rental payments and online reservations. Facilities are benefiting from computer-management software, surveillance cameras accessible over the Internet, and digital video recorders.

One emerging item in their technical arsenal is the self-service kiosk. When looking for ways to increase profitability and enhance customer service, more storage owners are turning to kiosks, including many of the largest names in the industry such as U-Store-It, Simply Self Storage and Extra Space Storage.

Self-storage kiosks enable prospects to rent storage units 24 hours a day even if the manager is not available. A potential customer can take a virtual tour of the facility, select a unit, purchase a lock, pay for the unit, print out a rental agreement, and even sign up for tenant insurance. Existing tenants can use the kiosk—which interacts in real-time with a facility’s management software—to make payments and changes to update their accounts.

Lease Up Faster

Some operators are discovering that kiosks can unlock new revenue streams and even free financing funds. John Leslie, owner of Kentucky Avenue Self-Storage in Indianapolis, Ind., says his kiosk helped him accelerate the timetable of his development, resulting in more favorable financing. The kiosk helped to escalate the lease-up rate of his new facility. Leslie was able to convert a construction loan to permanent financing faster, freeing money for the second phase of his project.

Leslie attributes the kiosk he installed last year with the rental of 72 units out of the facility’s 235. As a result, his facility achieved more than 92 percent occupancy after only one year of operation.

"What that has allowed us to do is to start phase two about a year ahead of schedule," he says. "We were hoping to start phase two in 2009 and we’re actually starting it now. We have 72 additional leases that the kiosk has done. It’s incredible."

Kentucky Avenue opened in 2007 with the goal of attaining 50 percent occupancy after one year of operation and 80 percent during the second year. This rental activity would trigger a favorable financing package allowing the owner to start the development of the second phase of the project. By achieving the higher occupancy rate, Leslie’s operation acquired new financing for Kentucky Avenue’s expansion sooner.

"We can’t lock into a permanent lease until occupancy reaches 70 percent to 80 percent," he says. "So the faster the lease-up, the better the term of the loan you get for the next phase."

The additional rentals taken in by the kiosk allowed occupancy to exceed the 80 percent level faster, thus accelerating the timetable for expansion. Kentucky Avenue’s second phase will consist of 295 units with 41,000 square feet, bringing the project to 76,000 square feet total.

Leslie believes the added convenience of the kiosk better accommodated customers’ work schedules. "In that particular community, we have a lot of people working until 5 p.m. or 5:30 in the evening," he says. "They’ve been coming in after hours and renting a unit at 7 p.m. or 8 p.m. We’ve had some customers come in at midnight to rent units. We found the kiosk adds great value to our operation."

Kiosks Collect Late Fees

Leslie discovered another added bonus of the kiosk: the ability to always collect late-fee payments. When he reviewed his balance sheet, he made a startling discovery.

"We’re actually collecting more late fees than ever through the kiosk. It’s generating additional income," Leslie reports. "It allows customers to come in and pay their late fee without having to face my managers, and they have immediate access to the facility. If someone wants to get into their unit after hours, they’re going to have to pay the late fees to get in. They don’t have to contact the manager or the owner asking to get a break. The first time a customer is late we normally waive that late fee. When they come in after hours, there’s no one here to waive that, so the kiosk automatically charges the late fees."

The Kentucky Avenue facility collected more than $2,100 in late fees during the first two months of the year, which was more than the amount collected all of last year. The trend duplicates a similar experience at Leslie’s other Indiana facility, Avon Self Storage Locker. During the first two months of 2008, Avon collected approximately $4,000 in late fees, which was almost $1,500 more than the same period in 2007.

The Avon facility, which opened in 1995, contains 105,000 square feet of storage space. Leslie’s first kiosk was installed at Avon in December 2006. "The ability of owners to gain favorable financing terms faster as a result of using a kiosk during lease-up is an added value we seldom talk about," says Robert Chiti, CEO of OpenTech Alliance Inc., manufacturers of a self-storage kiosk. "On top of that, to witness how late-fee collections can ramp up an income stream for a self-storage operator is stunning."

Better Customer Service

While managers remain available to greet customers, answer questions and take payments, Leslie says the kiosk frees up his staff to pursue revenue-generating activities. "We have a lot of people come in and pay at the kiosk, wave ‘hi’ to the manager and leave," Leslie says. "That allows our manager time to make marketing calls without being interrupted to collect a payment."

In an age of ATMs and self-service checkout at home-improvement centers, some customers prefer the speed of using a kiosk to striking up a conversation with a living, breathing manager. Others take longer to warm up to a self-service machine.

"We had a woman who has been with us many years—she’s in her 80s—and she used to come in and pay with a check," Leslie recalls. "One day we showed her how to use the kiosk. At first she didn’t want to have anything to do with it. Now when she makes her payments at the kiosk she waves at us. She is proud she has the ability to use current technology and loves it."

The kiosks also tie in with another modern piece of equipment: the cell phone. "Our managers take cell phones with them and a lot of times someone will call and they can direct them to the kiosk after hours," Leslie says. Should a customer need assistance with the kiosk, there is a lifeline to immediate help. "There is a call button on the kiosk that goes directly to the manager or whoever is on call that day," Leslie adds.

Kiosks Don’t Take Holidays

For Leslie and many other self-storage operators, technology has allowed them to become more efficient and profitable in an increasingly competitive environment. While the high cost of having staff on duty forces most self-storage facilities to be closed on holidays and Sundays, owners with a kiosk are finding renting units on off-days is an easy way to attract customers when their competitors are closed.

"I have witnessed the real financial impact of installing kiosks at our two facilities," Leslie says. "Using the kiosk keeps our managers happy by giving them their holidays and Sundays off, but still allows us to be open for business 24/7. We rented two units on Thanksgiving and one on Christmas. I was happy we could help these customers find storage when they needed it."

Many owners and managers say the convenience factor their customers experience is truly significant since many need to take time off from work to stop by a facility and make their unit payments each month. However, by having a kiosk that takes payments, this enables them to stop by after hours, on weekends and holidays when the facility office is closed.

As many in the self-storage industry have already discovered, kiosks reduce staffing costs while providing customers with increased convenience. Without paying costly overtime, kiosks enable facilities to keep their open sign lit permanently, even during holidays. Of course, increased occupancy rates and reduced staffing costs translate into an increase in the bottom line and facility valuation.

As more industries move toward self-service, it’s worth considering the role of kiosks in self-storage. There is a good chance you might find they help lease-up your facility faster, increase profits and differentiate your facility from your competition. 

Russ Norris is director of marketing for Phoenix-based OpenTech Alliance Inc., makers of the Insomniac line of self-storage kiosks. To reach him, call 602.749.9370; e-mail [email protected]; visit www.opentechalliance.com

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