Let me share a new self storage metric that has become important to me over the past few months.
I have tracked this off and on but never watched it closely and never used it to make many decisions.
This looks like it will be different as the market changes with a lot of new self storage inventory hitting it.
The metric is “Cost Per Lease.”
It’s not a new metric, but one that hasn’t been at the top of my radar screen.
Why?
Because if you are running at 95% occupancy and not doing much to stay there other than turning on the lights each morning, how important is it really?
Well, I predict it will be very important in the next year or so.
Why?
As new space hits the market, many of these companies are going to do whatever they can to get customers that in the past went to your facility. This will show up in the form of discounts, marketing and so on.
So you are now going to have to burn some calories to get what used to come to you by just turning on the lights.
We have been spoiled over the past few years.
Let me give you a couple of examples.
Here is a typical facility in our portfolio.
3rd Quarter 2017:
- Move in’s: 93
- Average Value of a Customer: $1,971.97
- Cost Per Move-in: $31.72
If you are running at 93% or so, I would venture to say this is close to yours as well.
I don’t include payroll cost in the Cost Per Move in the calculation. We include referral fees, cost of the website, and any marketing we do.
We are also spoiled because marketing used to be much more expensive in the days of Yellow Pages. Remember $30,000 to $50,000 per year Yellow Pages’ contracts?
In my opinion, if this represents your facility and suddenly you start dropping in occupancy because new space has hit the market, many of us are going to start scrambling and reacting.
You will notice the normal number of move outs for a stabilized facility. Then you will also notice that the normal number of move-ins is down.
Oh well, no big deal this month.
Then it’s a quarter.
Then you are trying to figure out what to do.
I know because it has been like that for us in a submarket.
We will spend some time in the upcoming months talking about this and preparing you for this phenomena if and when it happens to you.
If you are prepared and it doesn’t happen, great. If you are prepared and it does, you won’t be trying five different things, hoping one will work. And if one does, you have no idea which one to scale.
No, we will take a systematic, steady approach.
It is not an exact science, but there are some very effective marketing strategies to use. But to be effective and not overspend money you need to know your numbers.
So start now.
Figure out for the last year the value of a customer and your cost per move in.
To figure out the average value of a customer, you can watch Episode 115 (Click Here) where we discussed this and how to calculate it.
Your Cost Per Move-In was explained above.
If you learn these numbers for your facility, I think you will be surprised.
If the value of an average customer is $2000, what will you spend to get this customer?
Well, that will depend on your occupancy. If it is low or you are in lease-up, you will spend a lot, won’t you?
Would you spend $1,000?
More?
Your competition is willing.
My coaching is to start tracking these numbers. Then as we start to get deep in creating marketing strategies, you will know what you can spend.
Here is a hot tip: Most self storage operators have no idea the average value of a customer and have no idea what they spend per lease.
Knowing this puts you in the elite of self storage owners.
Using this information to make strategic decisions make you a “Special Ops” or “Green Beret” in the self storage industry.
Let’s earn our stripes and use this fantastic business to create True Wealth in this fantastic business.
