“Referrals” as a source of new self storage leases average between 10% on the low end to 40% on the high end per quarter between 2016 and 2021.
We do our best to track everything, including where our new leases come from, and referrals have always been a very high source of new leases for us.
That is a function of customer service.
Now I am not a management expert, and especially not an expert on managing a fully automated facility, but to a large degree, at least for us, the high referral percentage is a function of our managers.
Each facility is slightly different, but as a general rule, each facility’s number one and number two source of referrals alternates between (1) current and past customers and (2) other self storage facilities.
I know it sounds crazy but true. Other self storage facilities are often the number one source of referrals to our self storage facilities.
Manager Training – Customer Service
Here is what our managers do.
They were trained to ask for referrals.
Usually, after a positive customer experience.
Like when someone moves in.
Like when the manager solves a problem for them. And when they leave our facility when they no longer need our storage.
And sometimes, even after they are no longer a customer as we stay in touch with them.
And, oh yes, did I forget to mention that we pay cash for referrals? Anywhere from $50 to $300 depending on the facility, the market, and the situation. But mostly $50 or $100.
When people move into our facilities, usually it was a positive experience for the customers.
That is an excellent time to ask for a referral and remind them we pay cash. Yes, we could reduce the rent for a month or something. But, offering cash and letting the customer decide how to use it cost the same for us, and at least I think, offers a bigger incentive.
Another example of a positive customer experience I can remember is we have a portable jumper kit at most of our facilities. When customers need a jump, which can often happen when they park vehicles at our facilities, we can give one.
We may not immediately ask for one at that moment, but within 48 hours, a card is sent, or an email is sent reminding them we pay cash for referrals.
Returning past customers and referrals from existing customers are a very high source of our referrals.
And referrals are our number one or two sources of new leases, even today in the internet age.
Other Self Storage Facilities
One of the more interesting facts that can solely be attributed to our managers is the fact that other self storage facilities are the number one or number two source of our referrals.
I know it seems hard to believe, but true.
Our managers establish relationships with other managers. When they don’t have a unit a potential customer of theirs needs, they very often refer those customers to our facilities.
Why?
Our managers told them to ensure the customer acknowledged who sent them our way. After moving them in, our managers would close the office if they have to and run over a $50 or $100 fee depending on the location and the average value of a customer.
Their goal is to have the fee in the hands of the other manager within one hour of the move-in.
I even wrote about one situation in the book, Creating Wealth Through Self Storage.
We noticed at one facility that it seemed every Friday we would get one to three referrals from this facility about a quarter of a mile away.
After a couple of months, our manager asked the young person working there what was happening.
It turned out that the person was the grandson of the owner. He was using the referral fees we were offering as his weekend party money.
I told them to double the fees. Let’s help this kid party.
Conclusions
Referrals are the least expensive source of new leases there is.
I firmly believe that referrals are a function of good customer service.
The goal for us as an industry is to figure out how to provide the same level of customer service as we automate more and more.
I certainly don’t have that figured out yet.
