Last week we discussed systemizing your operational systems and procedures.
That one business concept can do so much to add value to your self storage business.
We also had a five-episode series on how to create a lens into your business by learning how to read and understand your financial reports. Something over 90% of business owner’s can’t or don’t do…that stat still amazes me).
Today I want to give you another way to create lenses so you can see into your business.
Like most things in life that are good, this concept is really simple.
Measure everything.
At this point, measure things even if you can’t figure out why you’re doing it.
If the phone rings, measure it. How many inquiry calls do you have a week? A month? Important to know.
If someone walks into your business, measure that.
If someone complains, measure that.
For sure measure, or know where to look for, how many new leases your facilities does in a month, quarter, year.
Measure (by asking) where the customer heard about your business.
Measure how long customers stay at your facilities.
Remember Episode 115? Measure the value of a Customer.
Measure everything.
Why?
So you can make better decisions.
The days of 93% occupancy are not going to be here forever. In some of our markets and submarkets, it’s already over.
As a business owner, you are going to have to decide where to put your marketing dollars.
Without real information, without real numbers, you are only guessing and hoping.
That is a bad business strategy…guessing and hoping. I’ve done it before. When I got back in the self storage business in 2008, I remembered most of my customers in early 2000’s came from Yellow Pages. So I bought ads in Yellow Pages.
I couldn’t figure out why my occupancy was dropping. And more baffling, why weren’t people calling like they used to?
Did I need a bigger Yellow Page Ad?
Fortunately, I realized that if I started asking questions I could figure out if I needed a bigger Yellow Page ad. I asked people where they found us. Then I could see where the people that moved in were finding us.
Here is what I found out:
Back then the average value of a customer at that facility was around $2,000. By measuring where people found out about us, I learned that it cost me over $3,200 per customer to run that Yellow Page ad.
Now, did I need a bigger ad?
In August we are going to run a series on online marketing and advertising. But, if you don’t know your numbers, you’ll be shooting in the dark. You will be guessing.
Here are some of the items I suggest you or your managers start measuring:
- How many inquiry calls do you receive?
- How many appointments are set from those calls?
- How many walk-ins do you get?
- How many leases are signed each month, quarter?
From the above, you want to know your conversion rate. (i.e. We get 60% of inquiry calls to come in for an appointment. We sign leases on 93% of people who come in for a preview) This measurement will tell you if your marketing is generating calls. Or if you need more sales training for yourself or your manager.
Measure:
- Where did the people who sign leases find out about your facility?
- When people who move out, why?
- What is the average stay of a customer?
- Would they refer you?
- Have they referred you?
- How long is the average stay of a customer?
From the measurements above, you can determine the quality of your perceived customer service and the average value of a customer.
Measure everything. If you ever think about or wonder about something related to your business, measure it.
This data can begin to inform where to spend your money.
Here’s a real life example:
We have a facility that has been losing occupancy.
Our exit survey indicates the customers are not leaving for any reason other than they no longer need self storage (i.e. closed on home, move complete, etc.)
Our move-in numbers have dropped off by 35% from a year ago. The inquiry calls are down over 52%.
Our occupancy has dropped about 4%.
We also know the value of a customer in this facility is $2,220.
We now have a very aggressive competitor in the marketplace offering 10 x 10’s for about half of what we charge. We don’t want to go that low, but we do need to compete to some degree with them.
So we are running a special for half off the first month’s rent (a cost of $72.50). We are running online ads and are budgeting up to $800 for a 4-week period.
If we get 4 new tenants from the ads, we will know the return on the expense we have spent.
The math:
Now, would you run an ad with a 14% return?
Would you spend $1,100 to get 4 customers? If you know the value of a customer is $2200 you would. If you didn’t, it might sound like a lot to spend on some internet advertising.
The self storage business is becoming very sophisticated. And believe me, the REITS know their customer value and ROI on advertising spent.
There is no reason you can’t as well.
Start measuring everything and you will. You will know if Facebook or Google Adwords offers a bigger return.
We always have 2 ads running and are testing which one works better. We know if video ads work better than static ads. If coupons work better than having a customer reserve a unit online.
Measure everything.
Then your partners, your banker, even your spouse will be impressed with how much you know about your business.
You will know exactly what to spend where to Create True Wealth Through Self Storage.
