Running an Automated Self-Storage Site: Customers Clamor for Self-Service

As the economy continues to take America for a wild ride, self-storage owners are left looking for creative ways to rent more units, reduce operating cost and improve customer retention. Many have found that using technology to automate existing facilities is producing some real benefit. Some have even discovered they can operate their facility with limited or no onsite staff.

“In this tough economic climate, automation has enabled me to undercut the market and still be open when my competitors are not,” says Robert Walker, owner of Self Storage of America, an 1,100-unit facility in downtown Indianapolis. “A minimal investment in automation has allowed me to eliminate staffing expenses on Sundays, Mondays and all holidays, saving me $10,000 annually.”

Five years ago, running a self-storage facility without an onsite manager was something attempted by owners of only very small facilities. The idea of running a 25,000- to 40,000-square-foot facility without a manager was unheard of; but today, unmanned sites have become more commonplace. As it turns out, all facilities end up being unmanned to some degree.

Hours of Operation

It’s no secret that consumers have become use to and even expect to do business on their schedule. Gone are the days when a business can keep banker’s hours. In this respect, automated storage facilities are better equipped to serve today’s consumers. Traditional facilities with onsite or resident managers usually hold office hours for 8 to 10 hours and are closed for business the rest of the day, where unmanned facilities are open up to 24 hours.

When it comes to renting more units, there’s not much argument that when a potential renter is looking for a storage space after hours, he will bypass facilities with the light out in the office and go to the one down the street where business is still happening. But there’s a catch: To be open for business when the office is closed takes an investment in infrastructure including electronically controlled access, security cameras, ample lighting, a self-service kiosk to rent units and process payments and, yes, people.

While technology has improved to a point where customers can serve themselves, there are still times when only a live person will do. Someone still needs to answer calls, clean out units, perform lock checks, hold auctions and be available to deal with customer issues. This part of the puzzle is being solved with the help of a call center and a part-time employee to stop by the facility on a regular basis.

Designing and Building Unmanned Facilities

Self-service kiosk at Secure Holdings Inc.

Jim Adams, president of Secure Holdings Inc. in Indiana, has made developing and operating fully automated facilities a part of his company’s long-term strategy. “Having built unmanned facilities from the ground up as well as more traditional storage facilities, I know firsthand each model can be done successfully,” Adams says. “A few years ago, it became obvious that we could not all buy prime locations in urban markets like Public Storage. With many of the metropolitan markets already saturated, I started looking at how I could develop a quality facility in second- and third-tier markets.”

Adams found the competition in these markets would be easy to beat, but the markets would not support large facilities that could carry the overhead associated with traditional manned storage. With an eye on development and operating costs, he determined he could build a high-quality, smaller facility by focusing on the property and not the office.

“When I surveyed the competition, I saw most did not have paved driveways, which I felt was a must,” he says. “They did not have the 8-foot fencing, cameras or good lighting and, more important, they were closed more than often than they were open. Focusing more on the quality of the facility as a whole and less on the office, we are able to provide customers with the same level of amenities found at a class-A property.”

Adams also points out that development and construction cost less too. A smaller site plan means lower legal fees, easier access to permits and better cash-on-cash return.

As far as marketing, Adams says the game is the same when it comes to attracting customers. “You still have to get the phone to ring, and the kiosk will only rent to people who are standing in front of it. You must be close to your customers, advertise on the Web and in the Yellow Pages as well as on site. Having a facility with class-A amenities is the secret.”

Managing Unmanned Facilities

After fully automating his facilities, Adams has discovered the technological advantages he offers provide customers with benefits that often exceed those available from his competitors, and they allow him to operate his facilities at a lower cost. He can manage several facilities from a central location and provide even greater focus on cleanliness, security and convenience, at a price that keeps his customers happy and coming back.

Jon Mutchner, owner of The Storage Center in Terre Haute, Ind., converted his two traditional facilities into a single, centrally managed operation. Even though his sites are three miles apart, they operate seamlessly and efficiently with the use of inventive technology. He found that within 90 days of implementing an automated approach, his kiosk served 88 customers and brought in $28,000 in new rentals.

“There are no excuses. We’re always open, and we can rent a unit or take a payment anytime of the day or night,” Mutchner says. He also finds that outstanding accounts-receivable have diminished since installation of this new technology. “Our automation is a unique convenience, and it increases our potential to keep customers.”

Owners operating unmanned or partially automated facilities agree that customers like the self-service experience and appreciate the benefits the technology provides. “I can sometimes look out of my window and watch customers as they use the kiosk—they love it,” Mutchner confirms. He finds the younger generation of self-storage customers is increasingly adapted to technology, find it comfortable, and often prefer automated solutions that allow them to conduct business quickly, at times that work best for them.

While there are those who say operating an unmanned facility is risky, Adams says, not really. In fact, he finds there is no appreciable difference in the number of break-ins or incidents of vandalism that occur at manned vs. unmanned locations. Proper site configuration reduces any unit-number confusion, and his kiosks even print maps for new customers so they know exactly where their unit is located. He also says customers don’t seem to have a preference as to whether the facility is manned. Mutchner agrees: “These days, some people put too much weight on the value of eye-to-eye contact and handshakes. This generation wants to do it themselves.”

Technology

When you examine the differences between a traditional storage location and a more automated or unmanned facility, the key differentiator becomes clear: technical sophistication. While the traditional model takes advantage of a personal touch (so long as there’s a good, personable manager available), more automated locations give customer access to valuable services even after the office has closed. Self-serve options on the Internet and on site give new and existing customers the ability to rent units, pay their bill, retrieve gate codes and update their account information. Connectivity allows management to take place remotely, often in real time.

Unmanned locations do require a greater investment in technical infrastructure, and connectivity is critical. Nevertheless, most owners find the return on investment is sound. “When we consider the faster lease-up, lower operating cost and increased cash-on-cash return automated facilities provide, unmanned operations are the secret to making money in many markets,” Adams concludes.

Robert A. Chiti is the president and CEO of Phoenix-based OpenTech Alliance Inc., developer of the INSOMNIAC line of self-storage kiosks. For more information or to see an online demo, visit www.opentechalliance.com.

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