Simple RE

I Was Wrong About Blogging

In my last post I mentioned that self storage owners should blog to help with their search engine optimization and to get better results out of their web presence.

I was wrong.

The problem is that blogging well enough to attract any incoming links is probably too much work for most operators.  To write things about your self storage on a regular basis that a regular human would consider reading, let alone find interesting enough to link to, is a challenge. 

Because I'm not a defeatist, I still hold out hope that someone could make it work.  The successful storage blogger would have to take a unique spin on the topic. Maybe humor.  The Onion made storage and humor work.  Heaven knows I have seen some humorous things happen at the StorageKings properties.  

The upside is that if you are a gifted writer who also happens to own self storage properties, you will have very little competition.

Your Self Storage Site Needs a Blog ASAP

I'm not talking about setting up your self storage website with a spam blog that is stuffed with keywords, but makes you gag when you read it.  I mean a real blog that is useful or entertaining or informative.  Something a real human being would read. 

Andy Sernovitz, author of Word of Mouth Marketing, makes the case on his blog that Blogs are your best search marketing investment.

Using Google's keyword suggestion tool for building a pay per click campaign, you'll see that the search term "Self Storage Sacramento" is likely going to cost you $3.95 per click and there is "High Advertiser Competition" according to Google.

For as much effort as we put into SEO in the self storage industry, this should be a no-brainer. 

As Andy correctly points out "if it stops when you stop paying, it's advertising. If it keeps going, it's word of mouth marketing."

Sell More When Your Self Storage Managers Practice

The better you are at converting callers to customers the fewer leads you need to reach your occupancy goals, and the less you have to spend on marketing. 

About two years ago I was desparate for my self storage store managers to be more effective on the phone.  I knew they had no training and telling them to "sell" and "get persuasive" wasn't going to help. So I created a written document to help them understand the sales process and included very specific guidance on what to say to get prospective customers to the store to rent storage spaces. 

It didn't help.

Then I did some conference calls to review the wtitten guidance.  I thought this way I would know for sure that they were exposed to the material and the calls would give them a chance to hear some examples and ask questions. 

That was even worse! 

The conference calls took a lot of my time and it was hard to be engaging to a group of people that I couldn't see and who couldn't see me.  Plus, my students were being interrupted with customers and potential customers who all took precedence over our phone call.  

My latest iteration (innovation) was to create a series of 5-7 minute audio segments covering everything from how to answer the phone, to how to ask effective questions, to how to talk about features and benefits, and how set an appointment. 

This last effort has really paid off.  The audio can be listened to over and over again without my involvement.  Since each segment is a bite-sized chunk, my people actually listen to it.  New employees don't have to wait until I'm available, but can get going on training right away.  

The audio training has really laid the foundation.  However, the real secret is practice.  Check out these DJ's from Daly City, CA.  (Go ahead and click, it is a fun video, and you'll learn something even if you only watch for one or two minutes).  These guys are phenomenal.  Listen to the first minute or so and you'll see why practice is the reason they are featured in this video (and you'll be entertained).  

Wouldn't selling skills also benefit from practice?  Of course our business is competitive, so there is ample motivation. The question then becomes, how can we get the right kind of practice?  

I highly recommend these two books.

Malcolm Gladwell, in his bestseller Outliers, shows through a series of facinating stories how successful people like professional hockey and baseball players, and virtuoso musicians, and people like Bill Gates got to where they are largely because their circumstances allowed them the opportunity to practice. 

In Talent Is Overrated, Geoff Colvin cites reams of scholarly research that concludes the same thing. Practice it the key to skill building and successful execution.  He biggest contribution is in showing us what it means to practice effectively. 

Once my on-site managers understood what they were supposed to do (because they listened to the audio training) they then had to actually develop the skills to do it.  It's the difference between watching a football game and knowing what the players are supposed to do on a given play and actually being able to do the right things to execute the play. 

My challenge to you is to create processes that ensure your self storage managers are practicing effectively, and you will see fantastic results.  Since we have created processes that ensure that practice is happening, our conversion rates have gone through the roof and our sales of add-on products have more than doubled.

In a future post, I'll outline how to set up processes that will ensure practice is happening.  subscribe to my blog via email in the upper left hand corner if you don't want to miss it.

Screencast - Running a Sitelink Custom Query for Lifetime Value of a Customer

Here's the promised screencast that shows how to run a custom query in Sitelink. The custom query I posted yesterday works in Sitelink and allows you to find out the average lifetime value of a customer without any brain damage. If you need to download the script for the custom query you can scroll down to the previous post or click here.  

The screencast runs 3 minutes 59 seconds.  Please leave a comment and let me know if you find it useful.

Lifetime Value of a Customer - a Custom Query for Sitelink

The Custom Query

If you run Sitelink and are interested in knowing the lifetime Value of your customer here's a handy custom query that you can run to make analyzing your data a breeze. 

Download Lifetime Value Of a Customer  (right click and save target/link as)

I'll post a screencast tomorrow that will show you how to run it if you don't already know how to run custom reports in Sitelink.

Why calculate the lifetime value of your customers?

Knowing the lifetime value of your customers helps you decide whether your various marketing approaches are profitable.  For example, if a direct mail program attracts new customers, but at a cost that is higher than the likely lifetime value of your customers, then you should stop the marketing program because, on average, you are losing money.

If you don't run Sitelink

Here's a quick and dirty way to calculate the lifetime value of your customers.  For the overall average, calculate the average length of stay for your customers then multiply the average length of stay by your average rent per occupied unit.  This will give you a number a little on the low side because it won't take into account any late fees or merchandise sales of moving truck revenue, etc. You can repeat the calculation for each unit size to find out the average lifetime value for customers renting 5x5's or 10x10's or 10x20's etc.

If you're a bit geeky, keep reading for the technical details.

The script I posted above for the custom query breaks down the average lifetime value of the customer for the entire facility and for each unit size.  There is a caveat to using this data. It analyzes the data based only on customers that have vacated during the period you specify.  Vacated customers are used because these vacated customers have, presumably, stopped spending money with you. In other words, the amount of their lifetime value has been determined. 

What this analysis doesn't take into account is that there may be customers who began renting long ago, and have yet to move out, or didn't move out during the period you specified.  These customers have spent a lot of money with you and, if considered, would increase the average lifetime value calculation.  However, due to the nature of the analysis, they are excluded from the consideration set.  

Ideas from the CSSA Self Storage Owners Summit - Chuck Barbo

Chuck Barbo, former Chairman of Shurgaurd Self Storage, discussed his management philosophy. 

He believes in empowering the people closest to the customer.  For example, he let his managers determine rental rates, discounts, etc.

This sounds like a fine strategy but you would absolutely need two things:

1. Adequate controls or monitoring so that you would know if a rogue or misguided manager was messing things up. 
2. A fairly robust training program for your on-site staff. (On  a personal note... I don't think my company, Crescendo Properties, is quite there yet, although we are getting much, much closer as we tighten up our operations.

Chuck discussed his success in building up a European presence with Shurgaurd.  I imagine international development is still a huge opportunity as long as one is committed to staying in the market long enough to build awareness of the product and allow time for consumers to adopt it.  In web 2.0 technologies (like blogs and wikis) we have begun to move from "what is it" to "what can I do with it" to "I have a problem identified and am looking for solutions".  I suppose the same transition has to happen to self storage when it is first introduced to a new culture.

The last point he made was that he regretted the time and energy he spent developing stores in small markets like Pocatello, Idaho.  Rental rates are low, but construction costs are more or less the same as major metropolitan areas with rent levels twice and three times as high.   In my experience owning and operating properties, the geographic redlining outlined above is most relevant to development.  An acquisition, if purchased at the right price, can be very profitable even if it is a secondary market. 

Ideas from the CSSA Self Storage Owners Summit - Dave Grant

Dave Grant, former CEO of Shurgaurd, drew the comparison between online self storage rentals and online hotel room reservations.  He believes that self storage rentals will move more and more online much like hotel room reservations.  I believe this forecast makes a lot of sense. 

When was the last time when you shopped online for a hotel room you:

1. found a prospective room online
2. Called the hotel and asked questions,
3. Went to the hotel to see a room
4. Then filled out some paperwork so that you could sleep in the room
5. Came back the next week to actually use the room

When it comes to hotel rooms, I just search online and find something that gets good reviews or is a brand I trust, check the rate, and make a reservation.  I can see this happening more and more in storage, especially as operators get more internet savvy.

What would facilitate this transition?  What can you do to get ahead of the curve and help potential customers move to a reservation over the internet after merely checking out your website?  Here are some thoughts:

1. Add more pictures to my facility website
2. Add a virtual tour
3. No, wait. Skip the virtual tour and grab my camcorder and walk through the property.  Add some fade-ins and fade-out transitions and a voice-over narration and BAM! its ready for the web.  (Thank you YouTube for lowering everyones expectations for production quality).
4. Add a bunch of authentic testimonials and format them so that they look like the comments on travel sites.
5. Link from my site to the reviews on sites like Yahoo! Yellowpages, Citysearch, Superpages, and Yelp.com.
6. Even better would be to find a way to embed those reviews right into your facility website.
7. Prominently display a badge on the site showing a. it's secure b. Your membership in the Self Storage Association c. your membership in the California Self Storage Association d. your membership in the BBB and d. your membership in the local chamber of commerce.
8. Make as wild a guarantee of quality and satisfaction as possible to lower or eliminate the consumer's perceived risk of doing business with you.

What else would you do?

Ideas from the CSSA Self Storage Owners Summit - Kent Christensen

If you operate self storage properties you need to read the next two sentences.  You can increase the rental rate on existing customers 7% and it will have no impact on the number of move outs.  You can raise rents as often as every 9 months (rather than every 12) and it will have no impact on the number of people who move out. 

I learned this from Kent Christensen, CFO of Extra Space.  They run statistical experiments on their customer base.  For example, 25,000 customers get no rent increase and 25,000 in the same markets get a 5% rent increase, another 25,0000 get 6% etc. and then the statisticians compare the move out data among the control and experimental groups.  It would be fun to have such a capability.   Its also an interesting advantage to having a lot of scale.   In the end, I'm thankful for him for sharing.  It will have a huge impact on how we run our stores moving forward. 

Evidently, he already disclosed all of this info in a public call with analysts.  Makes me think dialing into future quarterly calls with the public REITS might not be a bad idea. 

According to Kent, the softest markets from Extra Space's perspective are Atlanta, Florida, Philidelphia, and Southern New Jersey.  The strongest markets are Boston, Chicago, Dallas, Houston, and Northern California.

All of the panelists commented on how development has slowed.  Extra Space polls all of its stores monthly about new construction activity in its trade areas.  In 2007 they were impacted by 48 new competitors. In 2008 they have only seen 36. 

Commercial Real Estate Investing and Property Management Require Two Different Skill Sets

Crescendo Properties has acquired 16 commercial properties  valued at over $100 million over the last 5 years.  We've also acquired or leased, and arranged for the debt and equity financing for several Splash and Dash Carwash development sites.  We also manage our portfolio properties.  From this experience I've discovered that real estate investment and property management require two completely different skill sets.

If you consider yourself an investor or developer and are able to you grow your portfolio to more than one or two properties you need to do some hard thinking before you plunge into doing your own property management. 

Don't believe me?  Consider this...

Successful investment requires an understanding of market cycles, financing, cash flow forecasting, due diligence, and contract negotiation. 

Successful property management requires an understanding of operations, leases, facility maintenance, marketing, hiring, training, and bookkeeping.

Investment companies tend to be very lean with small staffs full of well educated and intelligent people that don't require a lot of managing.

Property management firms require professional managers because they have larger staffs with more hirearhy.  By professional managers, I mean people who know how to give direction to their direct reports, give adjusting and affirming feedback, coach and develop direct reports, hire, discipline, and fire employees.  They need to know how to train and coach. 

What it really comes down to is this question. Are you willing to do the hard work of developing the second and different skill set within your company?  If not, you are better off hiring a professional third-party management firm.

If you operate self storage properties and want to swap ideas shoot me an email and we'll talk. 

Customers, Leg Lamps, and a Note From Your Stuff

In a previous post I talked about an idea we hatched to reach out to our current customer base for referrals.  We wanted something that was interesting and would stand out from the regular statements that we send them. The campaign also has to be motivating enough and easy enough to act on that our customers will actually do something.

Maybe I'm over analyzing, but storage isn't the easiest thing to make word of mouth worthy.  How many times has your local storage facility come up in a conversations with friends?  Probably not very often unless you are in the business.  Storage is not new or cool.  My guess is that if you were using storage because you have too much stuff, you may have even been a little embarrassed to admit you were paying for a place to keep your overflow.

So here's what we did to get storage out of the closet (pun intended), and make it fun.

Each customer received the following mailer written as though their stuff that is in storage is sending them a postcard:

Front

Back

Click for Larger Image (Note the web address: www.notefromstuff.com)

These were mailed to each of our existing customers.  The web address will be more prominent on future versions.  The idea behind the micro-website was to allow people to share the referral card/offer with more people more easily, i.e. electronically.  My guess is most people are not noticing the URL.

I like the campaign because we can track our results. I'm not sure if this campaign will be effective, but the only way to know is to test it and measure it and we are now on our way to doing that.  We know if it generates actual new customers because to redeem the offer they will have the card or an email generated from our micro-site.  Traffic to the micro-site is also easily tracked.  We are also using a tracking number on the card so that all of the calls generated by the mailed piece, the micro-site, or the follow-up pieces are automatically logged as being a result of this campaign. 

Here's the piece that will piggy-back in the envelopes that carry our customer's bills for the next several months as a follow up.

Front (these are 1/4 the size of the original mailer, maybe smaller)

Back

Kinda like a ticket - each section is micro-perforated so it can be torn off and shared.
We should have put the www.notefromstuff.com URL on these too! Live and learn.

I'd love it if you leave a comment to tell me what you think.