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Consistency in Self Storage Billing

November 15, 2022

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5 min

“Come on, just this once?”

Every self storage operator is faced with questions like this. Maybe your tenant is late with a payment, maybe they broke some rules, or maybe they just want to get their stuff out of the unit.

Should you work with them? Or should you keep firm to the rules?

We asked some of the most experienced hands in the industry what they tend to do in these situations - and while the actual answer differed, one thing didn’t.

Self storage operators must answer these questions consistently!

 

Late Fees

Late fees are a common point of conflict in self storage. Most customers feel like they have a good reason to not be charged a late fee - and if you listened to them every time, you wouldn’t ever charge one!

As the small business owner, you have to find a balance between treating your customers right and making sure they’re not taking advantage of you. 

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Brian Wofford, of Storage Masters, says the most important thing is to just be nice to people. Kindness will take you a long way with your customers. This includes being polite, of course, but extends to giving them a hand moving in if they need it or whatever else you can do!

If you can build up good relationships with your customers, you’ll be in a better position when something goes south. 

In fact, the entire collections GabFocus session is full of helpful information on this subject!

Both of our guests for that session agreed - you’ve got to teach your tenants. That means explaining in-depth what will be expected from them and then following through with those expectations.

One of those expectations is, of course, paying on time.

On the other hand, it’s essential to be kind to your customers - and to be understanding when something goes wrong (or if they just make a mistake). Treating your customers kindly will improve the overall customer experience, which is necessary to run a successful business.

A bit of extra kindness could cause a customer to refer you to their friends and neighbors. It could prompt them to leave a good review on Google (worth far more than any late fees). 

So, do we have to choose one or the other? Do we have to be either consistent or kind?

Or is there a way to balance both?

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Many self storage operators solve this by simply exercising their discretion when a customer asks for something. This makes sense - you want to reward good customers who simply made a mistake, and be firm with customers who are going to repeat the offense.

When you start making judgment calls, though, you give up on consistency. This hurts your business by:

  1. Adds uncertainty to your processes
  2. Risks treating customers unfairly
  3. Promotes favoritism

The whole problem gets exponentially more complicated the bigger your business is. At a small facility, you may be able to remember what you did with tenant X and do the same with tenant Y. When you’ve got hundreds and hundreds of tenants, there’s no way you remember if you’ve been lenient with one specific customer before.

If you’re looking for a compromise, you could forgive the first late fee, and then enforce every subsequent one. When you do this for every customer, you can both build your relationships and ensure no one gets away with cheating consistently. 

Don’t make this a public policy, of course, but if you make it ubiquitous throughout your business, your managers can be sure everyone is treated the same.

If you have good property management software, you can keep track of whom you’ve forgiven a late fee, when, and why! 

If not, use our late fee waiver form to keep track!

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Rate Increases

No matter how often you raise rates, it’s sure to cause some controversy. You know why you’ve got to do it - costs are increasing, wages are increasing, and you’ve got to make money.

But your tenants aren’t always understanding. Some will complain, some will simply move out, and some will come in to argue with you.

At what point should you let a tenant get away with avoiding a rent increase?

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Again, you’ve got to be consistent. You want to avoid greasing the squeaky wheel (as this encourages more squeaking).

Consider how long your tenant has been renting with you. The value of a tenant who’s been with you for years is higher than a tenant who’s been with you for a few months.

However, if you’re confident in your ability to raise rates - which means the demand for your self storage units is high - you may not want to offer leniency at all. Some operators find themselves with tenants who are paying extremely discounted rates because they’ve avoided increases for years.

One middle ground is offering discounted rates for longer leases. If you can guarantee the customer will stay for a year, having them pay a lower rate might be worth it.

Again, you need to have a plan in place before sending out a rental rate increase letter

Your managers need to know if there are some customers you’ll exempt based on their tenure with you or other factors. If you want to offer a discounted rate (or exemption from the increase) for signing a long-term lease, that needs to be in place beforehand, too!

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Take Your Stuff and Go

Auctions suck. 

Opinions differ on how much - some operators find themselves making a decent bit of money on auctions, while others feel like they’re losing money with the small returns and all the time dedicated to running them.

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If you find yourself in the latter camp, you may want to just tell your tenants to take their stuff and go, forgiving any late fees and getting your unit back. 

This is often the most efficient solution - but if you do it often, your tenants may not fear their self storage unit being auctioned. You could find yourself with more delinquent tenants rather than fewer!

Consistency might be the hardest for this one. If you forgive back dues, you’ll never send anyone to auction - so you may end up auctioning every unit.

If you hate auctions, you can try to make a deal with the tenants that doesn’t make “not paying” an appealing option. If they can afford half the back dues - or even the last month’s rent - you could let them go. Then you make money, they don’t get out for free, and no one has to deal with auctions.

Best of all, you get your unit back and can start making money again!

No matter what policy you settle on, be sure your staff understands! This will help maintain consistency and, as our experts say, will teach your customers how the business works!

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Learn more ways to improve your self storage facility with these:

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