Marketing Self Storage – Is the Australasian industry mature enough to compete on price alone?

tug of war between businessmen

With almost 40 years under its belt, the Australasian Self Storage market has developed well beyond its infancy. Standing like bookends to the Australasian market are the now extremely mature US market with 0.68m2 of self storage space per capita, and the new kid on the block, the Asian market with just markets as small as 0.009m2 per capita in Japan and a miniscule 0.0001 m2 in China. What does our level of market maturity mean for how we are selling self storage, or how we elect to position self storage in the consumer market, and are there any lessons to be learned from the more experienced American market, or fresh faced Asian markets? Further, are we ready for online pricing or is our product not well enough understood to be compared (and compete) on price alone.

I recently attended the SSA Asia conference in Tokyo where I had the opportunity to lead a panel on self storage law. Covering relatively new markets across Asia, the Asian Self Storage Association and its members are still working hard to define self storage both professionally and legally. The challenge in Asia is to alert consumers to the existence of the product, a vast majority of the market never having heard of self storage, and many more not really understanding how it works or how it might be of benefit to them.

In our market many will remember the iconic Millers television advertisements in the 1980s depicting the diverse uses for self storage. In the commercial, people were shown storing fully constructed and operational model train sets, a vintage car, and if memory serves me correctly, wine. Simple, clear and effective, the advertisement did a fantastic job of educating the Australasian public about what self storage was, and what it could do for them. It is this sort of basic marketing, educating consumers of the existence of the product, that the Asian market will need to focus on.

A similar ‘this is what our product is’ approach to marketing is evident in the also young French self storage industry. I have previously written about Annexx Self Storage and their external displays, posting on their buildings oversized photographic images of people using self storage. People carrying filing cabinets, lounges and so forth send a clear educative message about what self storage is.

Do we need to be engaged in this base level marketing of self storage? In our market, one in three people have used self storage, and a very low 20% of those surveyed in 2013 had little or no idea what self storage is.

With more than two thirds of the market having knowledge of self storage, albeit often limited, and with 0.15m2 self storage space per capita across Australasia self storage in our part of the world can no longer be classified diminutive or ‘largely unknown’.

At the other end of the spectrum is the extremely mature US market, with self storage supply per capita sitting at a huge 0.7m2. In that market, self storage is no longer a new, novel or even fringe purchase item. The proliferation of self storage default sale shows, like Storage Wars and Auction Hunters have helped to create mainstream interest in self storage in that market.

I read with interest a recent article on loyalty programs and their potential applicability to the self storage market in the US. The article starts with the presumption that self storage is no longer a ‘one off’ or occasional purchase, but a product or service that is part of main stream consumer life. It’s not whether people can be convinced to use self storage, but rather how we can ensure they keep coming back to a certain brand or facility.

When a market focuses on loyalty schemes it is clear that the market is no longer in the educative phase. Customers know the product, customers are using the product, the challenge is to sway the consumer choice to favour your businesses over a competitors. I don’t believe this is where the Australasia market is at this time.

I would suggest that our market is no longer in the ‘what is self storage’ phase, but nor are we in a position to focus entirely on directing the demand of a customer base in an existing market. I believe the focus in our markets should now be on differentiating our products, an extension or more sophisticated version of the ‘what is elf storage’ approach. Where once our focus was on explaining what a space could be used for, now we need to focus on the many different types of self storage.

Although our market may understand self storage as a concept, as a whole the general public do not understand that all spaces and self storage facilities are not the same. They do not appreciate the difference between various products in the market. This means if a facility wants to compete for a customer’s business they may focus on easily understood features, like price – but there is only so long an industry can compete on price alone.

Competing on price alone has long been identified as a race to the bottom.

With respect, competing on price alone is the lazy, white sugar, white flour, drive thru fast food approach to selling. When we compete on price alone, we educate our customers to look no further than the price, and we diminish the value other elements our product has – like security, quality of construction of buildings and customer service.

And when we compete on price alone, and don’t market the other unique or particular benefits of our product, we miss the opportunity to educate our customers to be more savvy consumers.

Ever paid a low price for a crappy hotel room and then complained about the threadbare sheets? Probably not, because the hotel industry is mature enough that you understand the product and how the products within that market differentiate from one another.

As our industry matures, so perhaps should our sales pitch. Perhaps it is time to move away from marketing self storage on pricing or location principals alone and engage in a more educative approach with marketing. Using the hotel industry as an example again, if I am booking a hotel room of course price is relevant, however it is only one factor. I know a room at the Hilton is going to cost me more (and be a better product) than a room at an Ibis Budget. As an industry, aside from those engaged in brand marketing, I believe in self storage we don’t make enough of the points of difference when promoting our product, and I believe it is time we did.

I can almost hear as I type the outrage with which some members will respond to my next argument, but stay with me. It is for the reasons outlined above that many operators choose not to list their prices online. I know of one multi site operator who was displaying their prices online for some time, and they were disappointed with the decrease in phone enquiries. They removed their online pricing, their phone enquiries tripled and their occupancy soared. Why? Because staff were able to speak with callers and point out the benefits of those facilities – security, location, access, cleanliness, quality of the build and the consequential stable internal temperatures and humidity, and good customer service. When they were competing on price alone (as they were when they had online prices displayed) there was no focus on these other important differentiating aspects of the product.

Interesting, some other industries who do not openly display their prices or display limited price information online include luxury furniture manufacturers, certain bespoke electrical and plumbing products, timber flooring manufacturers, software providers and animal kennelling services. These industries know that their product can’t compete on price alone, because the value of their products can’t be articulated successfully from customer lead internet research. Instead, if Big Ass Fans (it’s a real company) are going to have any hope of convincing me to spend $1200 a fan that looks pretty much like a $80 fan from Bunnings, they are going to have to actually speak with me and tell me all about why their product is so fantastic that I’d be throwing money away if I didn’t buy their product.

Interestingly, many vendors who choose not to put their prices online or display limited prices have extremely informative websites. This means as I’m jumping around on the bespoke tap website, I am learning why the product is so much better than anything else on the market. By the time I call the company or send an email requesting a price, I’m so convinced I need the product that I pretty much don’t care what it costs.

As to the argument that tapware, furniture and other items for the home are an emotive purchase, I make the suggestion that nothing is more emotional than storing one’s personal possessions. Self storage is an emotional purchase as the items people are choosing to store are important enough that the Storer is electing to spend money on their protection, rather than throwing them away or sticking them in their mates garage.

Unlike the mature US market, I don’t believe our market is mature enough at this time, and our product not well enough understood in Australasia, for it to stand up to transparent online pricing such as exists in the hotel and airline industries. This is not a criticism of any member who does choose to put their prices on line, but it is a challenge to members to reflect on our next whole industry challenge – how do we educate the public about the differences in our product? How do we move into the next phase where there is room for both the Ibis Budgets and the Hiltons of self storage and ensure price is only one factor in the consumer decision choice process. Surely that approach, a move away from competing on price alone, would be good for everyone?

2 Comments on Marketing Self Storage – Is the Australasian industry mature enough to compete on price alone?

  1. Interesting article – thank you for posting it.

    My personal opinion is in this day and age, where 50%+ of your enquiry is now coming online (most of which from mobile devices) more consumers than ever will want to make a booking online and therefore need to know what the price is.

    This trend will only continue and therefore this form of consumer behaviour will only increase. Also, with the trend in online shopping generally, consumers increasingly (I feel) don’t want to speak to a sales person with the same old same pitch, asking for all your details, etc. For a product like self storage, I cant see this trend being any different. Therefore, the market here needs to deal with this changing business dynamic and not be afraid of it.

    Therefore what is the point of difference so you don’t have to rely on price alone and a pretty website ?

    That is difficult to answer, but as seen in the US, the winners from this trend has largely been the big brands (akin to your Hilton example for hotels). They operate a visible pricing model, and despite being a mature market relative to the rest of the world, financial results delivered to shareholders has been nothing short of outstanding.

  2. Interesting points. Small Self Storage companies have been using our online pricing and move in technology for 4 years, some have hundreds and hundreds of online full price moves ins. The big three all have online pricing and we can assume they have done their research.

    Its naive to think that online pricing is always the best price. One operator I know achieved 12% rent increase by having prices and move ins online. Staff can be eager to give cash away, Internet pricing not so eager. Consumer trends have changed and there is ample evidence and research that many customers desert web sites without clear and concise pricing with a clear call to action.The job of your website is to get across the reasons to buy – sites who ignore online prices do so knowing that the site up the road is taking their business. We see the results from this tech every day from hundreds of sites. We are not only ready for this tech but are embracing it. Self Storage customers rent online every day and its real. Ignoring online pricing is no different to ignoring potential storers at your counter in your store – and you wouldn’t do that now would you….!

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