I am on a self storage mission this year.
My mission is to close the gap between how the larger players in the self storage business and the smaller investors run their businesses.
In last week’s episode, we discussed the data analytics program available to us today. It allows us to see what every competitor in any submarket is offering and our unit pricing in relation to the market in almost real time.
There is another benefit to this type of program.
Value pricing.
The concept is simple.
Not all 10 x 10’s are created equal (or 5 x 10, etc.).
Some are actually worth more because of their location. They are closer to the gate or office. They are closer to the elevator or drive in door.
Some are premium.
Why not charge more for these?
I am not talking about raising your rates on them necessarily, just allowing the customer to pay more for a unit if they want to.
Our Veritec Data Analytics program allows our managers to receive a daily email at the start of the day to see our analytics.
For example, if our street rate for a 10 x 10 is $90, there will be a list of about three “Premium” 10 x 10’s and three “Upgraded” 10 x 10’s. The “Premium” unit pricing that day could be 20% more and the “Upgraded” units are 10% more than the street rate.
No bait and switch.
Our 10 x 10’s are $90.
The Manager may say something like “Yes our 10 x 10’s are $90. Let me show you one.”
Then on the way to the unit, the Manager may say something like “Here is a 10 x 10 that is one of our premium units. It is a little more than what I am going to show you because of its ease of access.” Or they can say it’s “because you can drive right up to it,” or whatever the reason its location makes it premium.
“If you are interested in upgrading, this unit is available, but let me show you your unit.”
Think of being at the gate of an airport about to board a crowded plane for a 4 and 1/2 flight and you can upgrade to first class for an additional $50.
Would you do it?
I would do it every time.
My wife would never do it. She would downgrade if possible.
There are a certain amount of people who will upgrade for convenience.
Using a strategy such as this will allow you to gain a lift in gross income from the percentage of your customer base that would enjoy upgrading. And you don’t have to raise your prices to use this technique.
Our Managers don’t have to do a lot of work to figure it out now. Every day they get an email from our program telling them the units, based on availability, that they can upcharge that day if someone will take it.
Simple. Elegant.
I will be tracking the lift we get and report back to you.
It will have more impact on the projects we have that are in lease-up and still have a lot of units to lease.
As I look into the next year, I do not see the level of price increases we have enjoyed over the past few years (over 6% gross for us per year).
This strategy is a way we can keep the income rising over operating expenses without having a price increase.
Also, this is a way to maximize income potential using the same level of data analytics the big players use.
As we move into the future, how we run our self storage business is going to change rapidly. It is up to us as the leaders of our company to lead the way.
Yes, there is resistance from Managers and Partners at first. It’s new.
But it is our responsibility to grow and try new things. This is a simple strategy that has a lot of advantages, is used by other industries, and gives our customer base choices.
When customers have choices, they feel empowered.
When people feel empowered, they do business with you.
It takes some training with the Managers.
It take’s a new benchmark to measure (a new KPI Key Performance Indicator).
But in the final measure, if it adds a 5% lift to your gross income without raising your prices, it’s worth the effort to employ.
I invite you to join me in this quest to close the gap between how the larger players run their businesses and how we do.
Any ideas, experiences, suggestions you have…share them.
We can create an episode of what you are doing in the self storage space.
Thanks. And as always, share your successes and challenges as we create wealth in this fantastic business of self storage.
