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Want to take your self storage business from one to two? What about five to ten? Growing means all kinds of new challenges and opportunities. In this Session, we'll hear from real owners and operators who have taken these leaps and what they've learned along the way.
Focus: Owners & Investors
Aired: August 12, 2021
If you don't have time to watch the whole Session, here are some of our favorite parts:
We asked our experts: With so many self storage businesses growing, how do I find my competitive advantage?
"Drive to every facility around you. See what they're doing wrong and see what they're doing right. That's a quick way to uncover your advantages. Ask yourself, 'what are they doing better than me?' Usually it's pretty obvious." - Alan Lindsey
"Tune in to your customers. What's important to your particular customer at your facility, your demographic, your site. Everybody's perspective isn't the same. What's important to one group may not be as important to the next. Figure out where their pain points are and element them. Make everything customer-based, so whatever questions you keep getting, you don't get those questions any more." - Jane Sauls
Growing your self storage business starts with maximizing your first facility. If you can't hone in good processes, attentional to detail, and strategic marketing with one location, it'll be nearly impossible to scale. Once your first facility is humming, you're ready to grow - the choice of expanding, buying used, or building new has everything to do with your context, your market, and your experience. Whatever you choose, don't overextend yourself. Despite the best projections, self storage is still in flux, so it's important operators don't bite off more than they can chew. Have space in your growth plan to develop new processes, hire and train the right team, and make adjustments. New facilities bring new challenges. Don't get too far out ahead of yourself. Build something with a long-term mindset, and you'll have a long-term asset.
Gabfocus Sessions are virtual workshops for self storage owners, managers, and operators. Brought to you by the team behind Gabfest: StoragePug and Affordable Storage Guys Management.
Each session features hand-picked industry pros who will dive deep into relevant topics surrounding our industry, share best practices, and explore trends in the market. It's our hope that these sessions help you navigate your self storage business better during these uncertain times.
Want to learn more about self storage? Join us on select Thursdays for Gabfocus.
Our panelists will be happy to answer any questions you have. We hope you enjoyed this Gabfest Session. Talk soon!
“Once your operation is in place, you can become more dynamic with your pricing, but that requires data. You need some method of being able to record the data that you need to know whether your price is in the right place - whether you need to move it up or start giving some concessions.” - Warren Lieberman
“I never want to downplay to what someone else is doing. I'm better than they are, then I'm going to be worth a higher price. That's what value is. If you go out to a restaurant and get really good service, would you go back? Yes! What if it was pricier? You'd still go back because you got better service and a better product.” - Jim Mooney
"It's good to be informed on your competition. I don't want to ignore them, but I don't want to respond too strongly to them either." - Warren Lieberman
"We did a survey of 10,000 facilities on their pricing. We found out that two-thirds of those operators didn't change the price of a single unit of the course of a month." - Warren Lieberman
“Rate increases and value pricing are the number one ways to grow your revenue.” - Jim Mooney
"Tenants in more convenient units tend to be less price sensitive." - Warren Lieberman
"The size of the unit is only one aspect of what people are willing to pay for." - Warren Lieberman
Lease up marketing strategies:
Your average customer value
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.
Your average lead value
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.
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.
Typical Lease-up timeline
According to our panelists, it's typical to see a 3-4% increase each month, putting your facility at 36% after the first year, and 72% after the second.
Alternately, you can look at your lease up goals through the lens of your units, aiming for 20 units rented per month.
For Nick and StorageMax, they pro forma their economic occupancy at 85% with their sweet spot at 92%.
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