Congratulations. You now own at least one self-storage facility.
In the old days, we would just set up shop, get our operating system up and running, and turn on the lights.
Voila. Soon, our facility would be rented up, or if we just took over an existing one, we would institute our operational changes and sit back and run it.
Those days are long gone.
It is a very competitive business, and to stay relevant with customers who pay the bills, we need to constantly monitor exactly where our facility sits competitively in our trade area. This includes street rates and the customer experience both online and at the facility.
I tell people if they don’t want to learn online marketing, Google metrics, and how to compete effectively online with their competitors, they should either buy or build big projects so they can pay someone to do that or get into another business.
Here is the reality today: The best marketer wins.
If you want to win in the game of self-storage, you must win in the game of marketing.
And don’t think that just because a REIT is in your trade area, you have already lost. This is just not the case. I have beaten them, and I have seen others beat them in the marketing game in a trade area.
Let’s discuss how to conduct a competitor analysis. Here are the four things I look at.
Your Competitors
The first thing to do is to identify your main competitors.
These facilities are usually within a 1- to 3-mile radius in most cities, sometimes up to 5 miles.
In more rural markets, competition can be as far as 7 to 10 miles away.
Your feasibility report will tell you where your competitors are and who they are.
Online Presence
Next, I want to see how good their online presence is.
Do they use dynamic pricing?
If you have REITs like Extra Space, etc., in your trade area, they usually do.
Next, see if the independents have static pricing, offer move-in specials, and how user-friendly their websites are.
I create a spreadsheet showing which competitor can rent online and who can’t, what their move-in specials are, and who is running ads on Google.
Ultimately, I am determining how sophisticated the trade area is and who looks like they are on top of their online marketing game.
They are my main competitors.
I am not going to tell you if you should use dynamic pricing to compete with your main competitors.
At the very least, you may be running move-in specials. I don’t currently use dynamic pricing, but we have used it.
I do offer move-in specials and upgrades for more convenient units.
Ultimately, we price based on our occupancy in a specific unit size. Most operational software will allow you to preset prices based on your occupancy.
If I am in lease-up, I run pricing closer to what is the lowest in my trade area to get occupancy. I will work on raising prices later.
If I am stabilized or close to it, I don’t try to compete with the lowest price for a unit that may be online in my trade area. I keep my eye on my occupancy, but usually, after stabilization, I am more focused on revenue. I would rather drop a few percentages in occupancy but keep the integrity of my pricing and revenue in place.
Like most things in life, there are no absolutes. Play with it and find a balance for your business and your preferences.
I adjust this spreadsheet quarterly and know where I am in the market price-wise and marketing-wise.
To win the game of marketing, one needs to show up on Google.
In other words, I pay for pay-per-click on Google. I show up on the first page of Google. Customers can rent from my website. We offer move-in specials that don’t give the store away if I am stabilized.
To win the game of marketing, one needs to know what they are spending for online marketing, their marketing cost per move-in (cost per conversion), and how effective their marketing is compared to the competition’s.
Google Analytics gives you most (but not all) of the data.
Most of us are not too knowledgeable about online marketing when we start. Google has free training. There is a lot on YouTube. I also have hired online marketing coaches.
You can also hire a third-party company to do it, but I recommend educating yourself about online marketing so you can manage third-party vendors or the marketing itself.
If you are a small self-storage operator today, online marketing is just part of your world and the first step in a competitor analysis.
My Competitors’ Physical Appearance
Next, I physically go by each of my main competitors.
I want to compare their locations and physical appearances to my facility, as well as their amenities.
What do I need to do to improve my facility in relation to my competitors?
In the past, I have updated landscaping, painted buildings, repaired dented corners, added bollards, etc.
I don’t go crazy here, but I do design an improvement plan and create a time period to execute it.
In a perfect world, I want to be the highest rent in a trade area (unless the location or condition is such that one would have to discount to get customers there). My mindset is focused on what I can do to make my facility the best in the area.
My Competitors’ Weaknesses
We all have weaknesses.
Even the fiercest competitor.
I often rent a small unit at some of my main competitors so I can see their strengths and weaknesses.
I want to see what happens if I am late paying. How quickly can I get a gate code if I forget? If a manager is present, I assess how good they are and where they are weak.
Some facility weaknesses can be as simple as narrow drive lanes, water puddling in front of doors, or poor customer service.
We do this so we can create our facility’s unique selling points, and we tell potential customers what they are (feature) and the benefit of each feature.
One example is a project we had in Florida. Some of our main competitors flooded in major rain events.
We would tell prospective clients to ask our main competitors when they last flooded.
We never flood (feature), so when you place your belongings in our facility, you can expect them to be dry when you show up, no matter what the weather is (benefit).
These are unique selling propositions (USPs).
We create at least three USPs for each facility, and our managers and phone people know them inside and out.
Today, winning the game of self-storage means excelling at the game of marketing.
And it all starts with a good competitor analysis.
Self-storage is a game worth winning.
