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As the self storage industry grows more and more competitive, leads are becoming more and more valuable. From PPC campaigns to aggregators, it's impossible to set a marketing budget if you don't know what a lead is worth to your facility, and to find that out, first you need to know the lifetime value of your customers.
In this Spotlight, StorageMax's Nick Newcomb walks us through how he and his team calculate these important metrics and how that determines their marketing strategy.
Check out the video clip below to hear Nick's answer.
In this Gabfocus Session: The Bottom Line, we were joined by Grace Totty of Absolute Storage Group and Nick Newcomb of StorageMax to discuss the complexities, challenges, and strategies of revenue management, leasing up, cutting expenses, and everything in between.
Check out the full Session to dive deeper!
Here's a breakdown of the formulas Nick and his team use:
Find the average stay length of all tenants. Next, take your economic occupancy and divide by how many units you have. That will tell you what the average customer pays.
Multiply the average length of stay by what the average customer pays, and that's the average value of a customer.
For example, if a customer stays for 12 months and pays $100 per month, then their value is $1,200.
Figure out your closing rate (or conversion rate) i.e. how many leads do you turn into tenants? Multiply that by your average customer lifetime value to figure out what your leads are worth.
For example, a 60% closing rate would mean you multiply .6 by your average customer value.
Pug Pro Tip: see which lead sources are converting the best. It may be that certain sources have a higher conversion rate, so those leads are worth more to you than a source that barely converts