In last week’s episode, I share a few things I learned from attending the Self Storage Association’s (SSA’s) national convention in Las Vegas. This week I want to share some of the things our company is exploring doing differently and implementing as a result of what we learned.
Tenant Insurance
One thing we are exploring, and the verdict is still out on this, is self-funding our tenant insurance.
We came across a vendor who helps companies move from tenant insurance providers towards funding it yourself.
I discovered because we own and operate over 1,000 units, it is feasible to explore this option. I know the REITs do something similar and make a lot of money doing this. The last figure I saw was one of them made over $13 million a few years ago with their tenant insurance program.
As we dive deeper into this, I will report back.
Customer Service
Every company I know, and especially every third party management company, says that they provide outstanding customer service.
We do too.
Our primary KPI to measure this (key performance indicator) has been the percentage of referrals each facility and our company as a whole gets. The logic is that it is our good customer service that drives referrals.
We average in the high 20% to low 30% as a company every quarter. In other words, last quarter, 28.6% of all our new tenants company wide came to us from referrals. It is usually number one or two in terms of where our new tenants come from.
However, I heard a speaker who runs a company I respect and is more successful than we are (i.e. has grown to 100’s of locations but not a REIT) indicated that their measurement of customer service was how fast a tenant can get into a lease and have access to their unit.
I have explored our customer journey periodically, but have never measured this.
This is going to be a focus of mine over the next few months.
It can encompass many things, starting for example with how fast your web site loads up. Studies show that if it takes more than a few seconds for your web site to appear, you have lost the vast majority of potential customers. This company said they spent over $1 million reworking their web site because it took over 13 seconds to load.
I don’t see us going to any extreme like that, but it was an interesting concept, customer service being measured by how fast a customer can rent a unit.
How many clicks does it take to rent a unit?
How many questions on the questionnaire managers ask when someone moves in?
How long at a kiosk does it take to rent a unit?
Is it easier to rent a unit from us than it is to reserve a hotel room for the conference or buy the airline ticket to the conference?
I found this a fascinating way to add another benchmark to how we measure “good customer service”.
Pricing Strategies
I found the biggest AH-HA from the convention was a new look at some pricing strategies.
Now as a smaller owner of self storage, I have prided ourselves on how we explore and implement strategic pricing strategies.
We have not adopted “dynamic pricing” much like a hotel or airline, where the pricing can change daily depending on supply/demand. But this was a conscious decision after looking at the pros and cons.
I felt very proud that we have adopted “value pricing” where we can upgrade new customers to more convenient (and more expensive) units.
In some ways this was an uphill push to get partners and managers on board with the idea that not all units are created equal. Some 10 x 10’s is more valuable. But we are using this in full force in most of our locations, especially in our new lease up projects.
But I learned that this is just the tip of the iceberg.
Rather than just base the pricing on unit location, what would it look like to base it on customer centric behavior?
Besides the concept that not all units are created equal, what about the idea not all customers are created equal?
That’s right, some tenants are more willing to pay more.
The longer a tenant stays with you, the more apt they are to pay rent increases. Again, if a tenant is at your facility for a year or more, and we all have those tenants, they are more likely to absorb price increases and not move.
Did you know that climate controlled tenants stay on average (at this company) 20% longer?
Auto pay tenants stay 50% longer.
What if for example, regardless of your street rate, you raised auto pay tenants every quarter or every six months… period.
What if after a customer had a negative experience with you or a complaint, you undid their next auto price increase for the next raise in an effort to keep them.
What if after a positive experience with a customer, they had a price increase?
Now I am not saying we, or you should do this, but I realized I this entire concept was pushing up against a belief I had that in a perfect world, all 10 x 10 would be paying street rate.
I had to question that. “Why not have some people pay above street rate?”
“Well, it’s not fair” was my immediate answer.
“But didn’t you arbitrarily just create the street rate? Were you not trying to get it as high as possible?”
Who says it is not fair to pay above street rate? If a customer is willing to pay it, haven’t they just said with their wallet that they are OK with it?
(You see I talk to myself a lot. My wife keeps reminding me to either whisper or do it in my head as to not draw attention. Sometimes she reminds me just to keep my ear piece on so people think I am talking in the phone).
We are still deciding how we are going to relate to going customer centric as well as unit centric on the value pricing strategies.
Bonus For Managers
Another concept that was discussed that I could relate to was how to bonus you managers based on behaviors that are important to you.
For example, if you are going to implement some of the above customer centric pricing strategies, much of your success will be based on customer longevity.
Nothing insures longevity like auto pay. So wouldn’t it make since to bonus a manager based on auto pay?
If you are implementing tenant insurance, shouldn’t you bonus based on how much tenant insurance is sold?
Simple but elegant. However, most owners I have worked with do not bonus in this way.
Conclusion
I love it when I discover a belief I have that may be what has held us back.
I love it because it is the only thing in life I have total control over.
It is the only thing that I have the ability to change that does not require anyone else to be involved.
It is also the source of every breakthrough I have ever experienced in my life either personally or professionally.
When I can return from a business conference and I am questioning a belief system, I know I have gotten my money’s worth.
This is another reason why I like going to these conferences.
If you are getting in, or are already in the self storage business, I highly recommend joining and going to the Self Storage Association’s conventions and Inside Self Storage and their conventions.
I’ll see you there.
