The article explains why and how more self-storage operators are using artificial intelligence and the benefits it brings to the business.

John Egan, Editor

March 1, 2024

8 Min Read

Over the past year or so, self-storage operator 10 Federal has cut its call-center staff by nearly 25% while expanding its portfolio. That’s quite an accomplishment, considering that payroll often represents the biggest expense for most companies, according to ProjectionHub, which helps business owners create financial projections. Despite the reduction, 10 Federal executives feel the company’s customer experience remains strong.

How is it possible to trim headcount while maintaining a high level of service? For 10 Federal, the answer is artificial intelligence (AI). For instance, an AI-powered chatbot now handles 80% of customers’ frequently asked questions, rather than call-center agents, says Brad Minsley, co-founder and principal of the Raleigh, Carolina-based company, which operates nearly 80 locations. Minsley goes so far as to equate the rise of AI to the advent of the internet.

“AI is tremendously exciting for us,” he says. “We’ve been a frontrunner, I think, in using technology to automate facilities.”

In fact, that “frontrunner” status has helped 10 Federal drop its employees-per-facility ratio to 0.8 from an industry norm of roughly 1.8 to 2.0, according to Minsley. Further adoption of AI and automation should enable the company to decrease this to 0.4, he adds. “AI is the extension of automation. It’s the next level of automation.”

Not Just Automation

Rodolfo Ramirez, co-founder and chief operating officer of Denver-based self-storage automation platform Swivl, notes that there’s a distinction between automation and AI, though. “AI is often incorrectly used as a buzzword to describe any automation. True AI is technology that can mimic human thinking in an autonomous way.”

For the self-storage industry, AI might represent a new frontier, but it’s gaining momentum as vendors introduce new technologies and operators add them to their business. It has the potential to benefit facilities on many levels including customer service, marketing, data analysis, security, and inventory management.

It can even help self-storage operators create content, which is something Storage Asset Management (SAM), a York, Pennsylvania-based third-party management firm, began doing three years ago. The company leans on AI to create material for its websites, social media platforms and paid media efforts. “As SAM started to grow, it was important that the quantity and quality of content on our websites were sustained,” says Melissa Stiles, chief marketing officer.

SAM’s content producers now churn out two to three times more with the help of AI. However, Stiles emphasizes that AI should supplement—not replace—human involvement in the creation process. For instance, employees responsible for this task might shift from writing content to editing AI-generated information.

Exploring the Pros and Cons

As with any technology, AI comes with advantages and disadvantages. Masha Nova is a self-storage owner and founder of investing firm Your Freedom Investments. She’s also an advocate for AI use. According to her, the primary pros are:

  • Enhanced operational efficiency

  • Improved and personalized customer experience

  • Better data-driven decision-making

  • Heightened security

Among the cons, she cites:

  • The need for technical expertise to install and manage the technology

  • Concerns about data security and privacy

  • The risk that less human interaction could dampen customer relations

At 10 Federal facilities, customers don’t realize they’re interacting with a chatbot or being handed off by one to a human agent, Minsley says. And that’s the goal: creating a seamless, hassle-free experience.

Next Door Self Storage, which operates 20 locations in Illinois, has found a balance between a great customer experience and AI support. Some of its facilities are equipped with AI-powered voice agents to navigate callers through things like renting a storage unit. For instance, they can hold a conversation with a caller and ask what they’d like to store, then estimate space needs and quote prices, says company president Phil Murphy. For self-storage operators, AI represents a “force multiplier.” It just streamlines their operations, he says.

Meanwhile, Murphy’s other business, technology provider CallPotential, is counting on AI to help analyze the millions of calls its human customer-service agents take. This enables the company to find out whether agents are adhering to scripts or mentioning rent promotions, for example.

Even so, there are still challenges for operators who choose to use AI. “AI is still in its infancy,” Murphy acknowledges. “There’s going to be those things that it doesn’t correctly process or understand, or there’s going to be those times when customers are frustrated.”

As a result, it’s vital for self-storage tenants to be given the option to speak with a human agent when necessary. Furthermore, facility operators must tread carefully if a voice agent is taking a customer’s credit card information. Any AI tool accepting this information must be compliant with the Payment Card Industry Data Security Standard, Murphy adds.

Using AI for Software Development … and More

Gazing into his AI crystal ball, Minsley says 10 Federal expects to embrace AI innovations such as security drones that detect people and objects, bots that perform landscaping tasks, and technology that handles accounts payable. The company has already latched on to several advances that, at one time, would’ve seemed futuristic.

For instance, it now depends on AI to assist its in-house developers with software programming. AI-powered GitHub Copilot technology is writing a “material portion” of the company’s new software, under the developers’ guidance, “to the point that we’ve rapidly expanded our code output without adding headcount” to one of its software teams, Minsley says.

Yet another application for AI in self-storage is competitive analysis. The technology allows an operator to go beyond looking at competitors’ rates to include an examination of their service offerings, market positioning, customer reviews and social media presence, among other factors, Nova says. This AI-fueled exercise “provides insights into competitors’ strengths, weaknesses and strategies, enabling storage businesses to make informed decisions and stay ahead in a dynamic market,” she adds.

The Future of AI

While AI is still evolving, its use in self-storage promises to keep growing. Ramirez predicts future applications will include “smart” storage in which AI can adjust temperature or humidity levels in units as needed. Among the array of other potential uses are forecasting foot traffic, better managing power consumption and foreseeing maintenance needs, he adds.

Nova mentions Columbia, Missouri-based self-storage operator StorageMart as an example of a company that has adopted AI for predictive maintenance. “AI algorithms analyze data from sensors installed on equipment to predict potential failures before they occur,” she says. “This proactive approach enables StorageMart to schedule maintenance activities promptly, preventing unexpected downtime and minimizing disruptions to customer service.”

Furthermore, StorageMart is relying on AI to help combat fraud. “AI models are trained to identify patterns and anomalies in customer transactions, credit card usage and other data sources,” Nova says. “This AI-powered fraud detection system helps StorageMart protect its business from financial losses and safeguard customer information.”

If You’re Considering It

While AI already delivers a lot of value to a self-storage operator, Ramirez cautions against leaning on it too much. “Over-reliance on AI could lead to challenges if the system malfunctions or fails. It’s important to have backup systems and processes in place,” he says, adding that incorporating the tech into business operation demands careful consideration of ethical and privacy issues.

There also are legal factors to ponder. A self-storage business must comply with data-protection laws. It must also clearly inform customers about the use of AI and AI-generated data and keep up to date on AI-oriented legal requirements, Nova notes.

“If AI leads to job displacement, operators must handle layoffs in accordance with employment laws to avoid potential legal issues,” adds Ramirez.

To ensure AI is correctly and efficiently deployed, a self-storage operator should come up with a straightforward strategy that focuses on areas where it can provide the most benefit, balance it with human oversight, and regularly evaluate the system’s performance and make any necessary changes, Nova advises. Ramirez adds that owners should ensure their employees understand how their roles will or won’t change as a result of incorporating AI into the business. They also need to define areas where the tech will complement their work vs. handling tasks automatically.

At 10 Federal, further adoption of AI will mean the company needs fewer call-center agents, lawn technicians and accounts-payable representatives, Minsley says. However, it’ll create new job opportunities for people who are well-versed in the technology.

Even so, it might not make sense to automate certain tasks or processes, especially if doing so would have little impact on the business or the customer experience. “To get started, review the customer touchpoints in your self-storage business, from the initial rental inquiry to the move-out, and identify where this can have the greatest impact,” Ramirez recommends. “If you’re feeling overwhelmed by the sheer number of possibilities, the best thing you can do is start small. Consider automating just one or two tasks.”

Nonetheless, the return-on-investment potential for AI is so compelling that self-storage operators can’t afford to ignore it. “You can’t be an operator who’s going to compete successfully if you don’t have some of the most basic tools. And that’s where AI is going to go,” Minsley says.

AI adoption will require help from outside vendors, Murphy says. But the cost savings should outweigh the expense of implementation. One thing that’s certain is it’s absolutely critical for self-storage operators of all sizes to plug into AI to be competitive. Soon, it’ll transition from a “nice to have” to a “must have,” Murphy says. “AI is something that needs to be interwoven into all of the different pieces in your vendor pool.”

John Egan is an Austin, Texas-based freelance writer and content-marketing strategist who specializes in real estate, personal finance, and health and wellness. He’s the former editor-in-chief at SpareFoot (now Storable) and the author of “The Stripped-Down Guide to Content Marketing.” His work has been published by outlets such as Nareit, Wealth Management, Urban Land magazine, Bankrate, Forbes Advisor, Experian, Investopedia and U.S. News & World Report. To contact him, visit https://johnegan.net.

About the Author(s)

John Egan

Editor, Storable

John Egan is a freelance writer and editor for Storable, a supplier of cloud-based access control as well as management software, marketing services, payment processing, website development and other services. He’s also a frequent contributor to the SpareFoot Storage Beat industry blog. Based in Austin, Texas, he loves pizza, University of Kansas basketball and puns. For more information, call 888.403.0665; email [email protected].

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