The aura of Las Vegas proved irresistible for self storage facility operators and suppliers to industry who gathered at the Paris Hotel recently for the Inside Self Storage World Expo, run from March 31st to April 2nd. A contingent of Australian self storage operators and SSAA Service Members made the lengthy trip across the Pacific Ocean to attend the Expo and hear first-hand about the latest industry developments in America.
Opening Keynote – Systematic and Dynamic Self Storage Pricing
A training seminar conducted by Sitelink on the Sunday afternoon prior to the Expo’s commencement was followed by an informative opening session on the power of systematic and dynamic pricing to increase revenues and profits of self storage facilities. The session was presented by Dr Warren Lieberman, President of Veritec Solutions, a consulting and software development firm focused on helping companies optimise their pricing and revenue management capabilities.
Dr Lieberman spoke of the fact that when using price to stimulate demand, it’s important not to send incongruent messages about unit pricing to current and potential customers. By understanding current demand for different unit sizes and availability of same, an operator is less likely (for example) to offer a 50% discount on a unit size in scarce supply. He demonstrated that modest price increases can lead to significantly larger positive impacts on facility profits.
Dr Lieberman also challenged facility operators to monitor price sensitivity and length of stay of their customers, reiterating that many may not necessarily terminate storage agreements when prices are increased. In doing so, he reinforced the benefit for a facility to use descriptive and predictive analytics tools that consider likely changes in demand and occupancy as pricing structures are altered. Ultimately, Dr Lieberman endorsed open communication between a corporate head office and local storage facilities regarding price setting, appreciating that managers operating these stores will likely have an intimate knowledge of local trends and competitor activity.
Expense Management and Cost Reduction – Collin Duncan, Extra Space Storage
Collin Duncan, Senior Director of Operations, Extra Space Storage, presented a thought-provoking session on how self storage facilities can minimise variable costs. He spoke of how the group’s advertising budget had been cut by 23% in a move from traditional Yellow Pages advertising to predominantly internet based marketing initiatives. Mr Duncan also described how, through analysing time and motion studies of facility staff, Extra Space were able to determine that 28% of their time was spent engaged in direct customer facing activities (e.g. renting units and foreclosure activities).
He demonstrated how a conscious move to paperless, electronic processes has afforded a significant reduction in paper and toner costs, from $75 per site, per month in 2010 to $21 in 2013, as documents are instead scanned into self storage software programs. From an energy use perspective Mr Duncan described $50 savings, per light fitting, per year in a move from 150 watt lights to 35 watt LED lights, that come complete with a five-year warranty and have three times the lamp life of traditional non-LED fittings. He detailed a delamping project where the number of lights (and resultant costs) were reduced, given replacement LED lamps had greater lumens (brightness). Mr Duncan also advocated taking advantage of available rebates on alternative energy sources like solar power.
Managing Self Storage Collections – Tried and Tested Techniques
Brad North is an internationally renowned self storage facility owner, operator, consultant and trainer, having been in the industry since 1989. He presented an informative session on developing a collection system that works, including collection tips and techniques and how to create urgency among delinquent customers to take action. Unsurprisingly, he reinforced the importance of documenting all interactions with customers during this process.
Tried and tested techniques he described included:
– Calling delinquent customers from a blocked number to generate a better answer response rate
– Courtesy reminder phone calls – tomorrow is the day your late fee is imposed. Pay now to avoid it.
– Waiving a late fee in the event a customer agrees to set up an automatic monthly payment
– Cross reference different communication methods – e.g. call to ensure customers received an e-mail
– Promote a ‘No late fee program’ for customers who sign up to a credit card auto-payment scheme
– Creating urgency when making an appointment for a customer to pay an outstanding bill. “Would 11am or 4pm work better for you?”
– Immediate follow-up if a customer does not keep their payment appointment to maintain accountability!
– Demonstrate compassion – “I’m on your side. I’m trying to assist you to avoid a late fee!” “I don’t want an outstanding payment to impact your credit rating.”
– Finding days and times that ensure more likely direct contact e.g. making calls on Saturday AM
– Show appreciation and thank people who make payments
– Keep abreast of when credit card expiries occur and advise customers, in advance, of forthcoming dates
– Know customer pay days and contact them in the days prior to ensure they can make the payment
– Ensure customer contact information is up to date – address, phone number and e-mail address
Training Self Storage Staff to Create a High Performance Team
Frank Certo, Director of Property Management with Guardian Storage in the US presented a comprehensive appraisal of steps to undertake in developing committed, capable employees. From the outset he spoke of the distinction between making the ‘right hire’ vs. the ‘easy hire’ and the need to hire a different skill set based on the profile of the facility i.e. in a mature facility hiring a manager well versed in relationship and revenue management and in a new store one who is a sales orientated ‘go-getter!’
He reinforced the importance of providing the employee with a comprehensive overview of the self storage market and competitive environment in which the facility operates; its ownership and management structure and an explanation of self storage specific jargon like ‘gross potential rent’ and ‘economic occupancy.’ Mr Certo also endorsed providing three weeks of initial structured training, where each week the training concentrates on six specific aspects of the self storage business and is signed off, as completed. Between 45-90 days of employment he suggested it was timely to fill in any apparent training gaps for the new employee and reassess progress to ensure both parties (employer and employee) were well suited to one another. He also emphasised the Facility Manager should act in a manner consistent with how the owner of the business would think. Finally, Mr Certo encouraged the setting of KPIs that not only consider metrics specific to the business, but also comparisons against ‘like’ businesses in the industry. This included a motivational tool for site managers that ranks them based on such key metrics and is attached to a bonus structure that is challenging, attainable and consistent.
A summary of other informative sessions delivered at the Inside Self Storage Expo will be presented in part 2. These include: “Planning your Self Storage Exit Strategy,” “Self Storage Facility Maintenance – from A to Z,” “Owner/Operator Executive Workshop,” and “Self Storage Management Workshop.”