I am not discouraged, because every wrong attempt discarded is another step forward.
Thomas Edison
In 2006, I personally witnessed marketing mistakes that cost their makers a fortune. Im confident that marketing and sales missteps in the self-storage industry add up to more than $100 million annually. I want to share a few of those mistakes with you. Not to rub them in your face, but because true masters learn from their own errors as well as those of others. Hopefully this review will help make 2007 your best year yet!
Major Mistake #1: Focusing on People Who Cant Say Yes!
After surveying 2,000-plus self-storage tenants across the country, we found that proximity to home or office was their No. 1 buying factor. People want their stuff close to them. Its as simple as that.
If you were to run a reverse analysis on your database (you can have this done by Melissa Data), you would find that most customers live within the 1 percent radius factor explained below.
So, why do so many storage facilities advertise outside that radius? If you run radio commercials, most of the listeners wouldnt rent from you even if your space was free, because theyre too far away. The same thing goes for most newspapers, TV stations and so on.
Rather, focus on the 1 percent factor. If you have 400 units, your target market is the closest 40,000 households. If you have 295, your target market is the closest 29,500.
Depending on the density of the population surrounding your facility, it might take 1 mile or 10 miles to achieve that household count. Dont focus on distance, because people in rural areas are accustomed to driving further for everything. Youre OK if you need to go out a few miles to get your count. I have yet to see this rule fail.
Analyze your marketing budget. How much is spent advertising to people outside the 1 percent radius? Reallocate those dollars to media directly delivered to your target market.
Major Mistake #2: Me Too Ads
Unless youre the only self-storage facility in town, you must differentiate. You have to make it instantly clear why your prospects should choose you over the other options in town. While this is definitely not a new concept, few self-storage facilities run differentiating ads where its necessary. Instead, they run me too ads.
Take a quick acid test to see if youre guilty. Open up the Yellow Pages and go to the storage section. Now, take a look at your ad and the competitors ads. If youre saying something theyre saying, cross it out; its not differentiating. How much of your ad is left after doing that?
Ill bet you could cross out your name and write in your biggest competitors name in its place and more than 90 percent of the ad will still apply!
Try this: Next time you run an ad, focus on what makes you different. If youve got nothing, you need to innovate. Extend your access hours, adjust your pricing structure, offer services such as loading and unloading assistance, etc.
Major Mistake #3: Ignoring Your Best Asset
Your primary asset is your customer base. Without them, you would have no revenue, no referrals and no retail sales. Most self-storage operators spend their time trying to acquire new customers instead of serving those theyve already spent so many resources trying to get.
What if all your customers rented for just one month longer? What if each referred one more person? What if 50 percent more of them purchased tenant insurance? Imagine selling them all the boxes, Bubble Wrap, padding and tape they need for their move-out? Answer: Your profits would soar!
Im not trying to tell you to ignore new-customer acquisitions. Im simply telling you to put together a database-marketing program focusing on existing customers. Youve already built trust with them. Every storage facility in this country should be marketing to their customer base at least once per month, offering a referral program and other ancillary products and services.
Major Mistake #4: Underestimating Customers Lifetime Value
What is the lifetime value of your customers? If your average rent rate is $80, and the average tenant stays for eight months and purchases a box and a lock at $15, then the answer is $655.
Ive seen lifetime-value numbers range from $300 to more than $2,000. In this business, so many variables will drive value up or down, you shouldnt rely on industry averages for your facilities. Figure it out for each facilityit doesnt take long.
Now, why is this relevant? Because, when you market your facility wisely, youll know what your cost per call and acquisition is. If youre spending more money to acquire a customer than hes worth, youre in trouble.
But more common in this industry is owners and operators who arent willing to spend $100 to make $655. Im not quite sure why this is, but Im certain that if they knew how much a customer was actually worth, theyd think completely differently about marketing. So, figure out the value of a customer at each of your facilities and use the information to drive your marketing decisions.
Of all the mistakes Ive seen, these are the big ones. Hopefully youll be able to make a few course corrections and have a wildly successful 2007!
Derek M. Naylor is the president of Storage Marketing Solutions, an advertising and marketing agency dedicated to the self-storage industry. For a complimentary marketing-strategy session and newsletter, call 800.941.4805; visit www.storagemarketingsolutions.com.