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March 7, 2023
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Your customers are bombarded with deals and specials every waking hour, and most of the time those deals aren’t all that special. Too often, the “deal” is just the normal price with a bit of spice!
In this blog, we’ll cover how you can structure your specials so that they’ll actually reach and convince your customers to rent with you, as well as how to stay flexible to market conditions.
Self storage operators have a bunch of different ways they can structure their discounts. Some of the most popular are:
Not all discounts are created equal, though! You’ll need to put some thought into which programs you’re going to offer.
Some will cost you more money but could generate more revenue over time. Other discount programs might cost you a lot of money without increasing demand by all that much.
We’ll go over the options so you can pick the best self storage discount plan for your business.
Before we go any further, do discounts actually work? Or are we just handing money to our tenants for no reason? After all, storage is kind of necessary - do we have the leverage?
Self storage discounts do work. Discounts can encourage customers to hit that “rent” button, and if you’re in a competitive market, good discounts can help your business stand out from the crowd
97% of retailers use discounting as their main pricing strategy because it works. But not all discounts work the same!
As discounts become more common, 60% of customers expect to get some form of discount with their purchase.
52% of consumers are significantly influenced towards purchasing when offered personalized discounts!
Before you start taking less money for your self storage units, it’s important to lay out your goals.
Discounts are offered to try and increase demand, or to move customers to a preferred rental option.
In practice, the main reason self storage operators offer discounts is to get more tenants to rent with them. You’re willing to sacrifice a portion of your full rental rate in order to secure a new tenant.
That new tenant needs to be worth more to your business than the discount costs you. The average value of each tenant can be calculated by multiplying the number of months your tenants rent on average with the cost of your self storage units.
Compared to that (the lifetime value of your customer), the amount you’re giving up on the discount isn’t very much! The discounts that encourage customers to sign up initially are:
This is the same logic behind offering discounts that extend the rental period. These encourage your new tenants to rent for a longer period of time and often can be more generous than simple discounted rates. These look like:
These ensure that you’ll get the full value of your new tenant in exchange for a hefty discount. You can afford to offer bigger discounts the longer the customer is committing to renting with you, so these make for great marketing.
Customers are more likely to respond to a great big number or free!
One consideration you need to make before you start drawing in customers with big discounts, though - what would the customer do without the discount?
If you’re the sole facility in town, you’re only competing against “not renting storage at all,” and while you can’t extort your customers or they’ll leave, you also don’t have to reduce your prices to the bargain bin.
If there are a bunch of other facilities offering generous discounts, you’ll have to at least be in their ballpark or your customers will go to your competitors.
Lastly, how’s your demand? If customers are queueing up to get a self storage unit in your facility, you can cut your discounts entirely. A full facility at steeply discounted rates can make you less money than being 80% full at street rates.
Check out our blog on the three types of self storage occupancy for more information.
And what value do they bring!
These discounts accrue regardless of the length of time a tenant has stayed or paid for. That means you can’t guarantee to make up the difference later.
For that reason, many self storage operators opt for time-tied discounts.
Long-term rentals are a self storage facility’s bread and butter. Once you get a tenant moved in and on autopay, you’re generally just collecting checks until it’s time for them to move out!
Storage operators try to encourage long-term tenants through steep discounts, because the discounted amount will be eclipsed by the overall profit. These are particularly effective because the amount you’re offering, whether that’s a percentage, a dollar amount, or a free month, is large enough for your customers to take notice!
Free has special value. According to CM Commerce, customers are drawn to free items more than to even heavily discounted items. Bonuses work better than equivalent discounts, so if you can offer a Free Seventh Month, even if that means smaller savings than a twenty percent discount, your customers will like it better.
Just like with your self storage marketing, you’ve got to keep track of the discount plans you’re using to judge whether they’re effective or not.
You should also create a spreadsheet somewhere that lists all the places you’ve posted a specific discount (billboards, web pages, Google ads, etc), because you don’t want customers coming in claiming a discount you no longer offer.
Even if you don’t mind turning them away, you’re creating a bad customer experience, which could come back to hurt you later.
Track these numbers to see how well your discounts are doing:
With this information, you’ll be able to see how much you’re spending on a given discount program, as well as how many of your customers find it useful.
You can also keep up with the total amount you’re giving up in discounts. There’s no easy way to compare it to the hypothetical “What would I have made without discounts,” but the more information you have, the better answers you can come up with.
One last important point! Whatever style of discount you go for, make sure you can change it when you need to.
Once your facility is close to full (usually around 80-85%), you can start pulling back on your discount offers. A full facility paying discounted rates can be worth much less than a partially full facility paying full price!
You also need to keep an eye on your competition.
If everyone else starts offering better discounts, you may need to step yours up. If they cut their bonuses, that means there’s plenty of demand out there and you may not need to be giving up money to get your share.
If you keep track of where you’re advertising, what you’re advertising, and how often people are using it, you’ll be in a strong position to drive demand and end up with happy customers.
When you’re planning your discount programs, keep your goals at the front of your mind.
You want to drive demand, without cheating yourself out of profits.
You want to keep customers around for long-term rentals. Be sure that your best deals are oriented around long-term customers.
Keep your discounts simple. Don't overcomplicate the math - "50% off the first month" is much more digestible than "30% off the first three months."
Remember that ‘Free’ is the best deal. People love getting something for free - whether that’s a free lock, a free size upgrade, or a free month on their rental, deals that offer something for free are great at getting customers over the line!
Speaking of free, see what customers are looking for with our free Top 9 Self Storage Amenities download!
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