Springtime in the self-storage business spells the beginning of opportunity for most facilities. Springtime usually means move-ins, new tenants, busy days, and hopefully a highly occupied facility by mid-summer. Unfortunately busy work does not always translate into our most profitable work. Sometimes, that busy season provides us with rentals that may only put us out in front temporarily. Springtime strategy should include the moves required to keep you out in front for the longer haul!
Consider these two processes when approaching the busy season:
Balance the type of tenants you are leasing to.
Successfully manage your response time to all incoming leads.
The busy rental season can quickly put a facility into “reaction mode,” causing a sink or swim response to rentals. So before getting on the busy season “treadmill,” consider these strategies for your long-term growth!
Commercial vs. Residential Tenants
Current industry statistics show us that the average commercial tenant is worth roughly $2,000 more than the average residential tenant. The average rent is higher ($135 vs. $75) and the average commercial tenant stay is longer (24 months vs. 11 months) for a residential tenant. Year-round, operators should have a strategy in place for moving in two or three new commercial tenants each month—and this includes during the busy season! These are the months that will make your occupancy look a lot better when the fall and winter months roll around.
Finding and landing a commercial tenant will require using “honey.” The most proven strategy is direct mail combined with a phone campaign. It is easy to plan and calculate a return on investment. You can outsource this effort or deploy it yourself; either way, it needs to get done. Follow these simple guidelines if you choose to run your own commercial marketing program:
Think Nearby First. If you are going to manage your own campaign instead of outsourcing it, start with proximity. You will first need to purchase a mailing list of businesses you will be mailing to and following up with by phone. “The list” is as important as the offer itself. Start close by and target businesses in a three- to five-mile radius of your facility. If you don’t have enough facilities within that geographical area, expand your radius until you do. This corresponds with the laws of self-storage marketing and how far customers will drive to store their items.
Get Specific with Target Businesses. The second step is to target by types of businesses. Think along the lines of businesses such as law firms and accounting offices that need storage space for files and other documents.
Present an Enticing Offer. “The offer” is as important as the list so be sure it is compelling. For example, offer the first, third, and fifth month free. If you go the “free rent” route, however, be sure to show the effective annual rate of the rent after these three months are factored in as free. This will make it difficult for the competition to “match” your price. Remember to think as the customer thinks. The early free rent means cash flow for them. If a free rent incentive is too strong for your facility, perhaps it could be half price for two months. The idea is to play with the offer until you find one that works well, but be sure you are specific with the terms of your offer. It should have an expiration date to create urgency. Typically, a six-week window is sufficient for promotions.
Use a Title That Works. This means your direct mail piece must get the message across quickly. Sometimes the list is right but the offer is wrong. Other times, the offer is right but they just didn’t capture the idea quickly enough and it hit the trash before it sank in.
Deploy a Phone Campaign. This may be difficult if you are managing the campaign internally versus outsourcing this process. However, if you are managing this process, be sure to use a phone campaign to follow up. You want to be sure they received the offer. Remind them of the contact, what the savings are, and probe to see if this business is a potential lead.
Know the Numbers. Typical direct mail will produce a 1 to 2 percent response rate. Response rate doesn’t mean rental rate; it means response to the mailer. The rental rate will be about 50 percent of the response rate when properly handled. So, if you target mail 500 businesses with a 1 percent response rate, you should uncover five leads and two or three should move in.
Adding Phone Follow-Up. Phone follow-up can easily double the response and close rate of a campaign. A 3 to 5 percent response rate is possible with proper phone follow-up during the campaign. This effort alone can change the results of a 500-mailer campaign from two or three rentals to eight to 20 rentals!
If At First … Direct mail with effective follow-up works. If one person has done it with success, then it is proven to work. The lack of success in any campaign should be tied to the list, the offer, and the follow-up.
Track It! And finally, track the results of each campaign. Use a vanity number to track the results and pay for a solution (usually as little as $30 per month) to track and record the response rate of the campaign.
Managing Response Times
I adhere to the saying that the “fast eat the slow.” You probably agree with that statement relative to capturing and converting leads to rentals. You have to be ready for your leads as this is one of the things that will set you apart in the shopping process. Prospective leads can come to the facility in one of a few ways:
Although the Yellow Pages still exist and advertising is sold in it, more than half of your leads will look for a facility at some point using the Web.
If you are managing this process internally versus outsourcing it, your role is to get the lead to the property for a rental conversion. Some things to consider if you are manage your own leads:
A Ready Voice. A ready voice is better than an answering machine every time. The prospect wants some questions answered.
Anticipate. There are probably peak times for your facility. Know them and be prepared to man them.
Internet Lead Response. Make sure you have a contact form enabled on your Web site so prospects can contact you. If you do not, hire someone to enable your site to do so because it will pay for itself in the first three months. These Web leads need to be responded to by e-mail or phone within two hours of inquiry, and anything faster than two hours will improve your closing percentages.
What’s Most Important to the Prospect? The most important thing to know is what is most important to the prospective tenant. Too often, we get into feature selling instead of pausing and asking a few questions first. Once we understand what is most important, we can place more emphasis on those specific areas during the call. It may be price, temperature controlled units, or some other need or want.
Make sure that this spring, you are springing ahead of the competition by leveraging these core marketing principles. Remember, the most profitable activity of a property manager is moving in a new tenant. Be sure the processes for your springtime strategy are being implemented for your facility so your property manager can do what he or she does best!
John Traver is Chief Executive Officer of XPS Solutions, Ltd. XPS Solutions is based in Richardson, Texas, and provides call management solutions for self-storage facilities.