One of the worst scenarios a self-storage owner can contend with is the fallout from poor crisis management. Any crisis is bad enough without compounding the situation by being slow to react, opaque or invisible with information, or appearing ambivalent toward tenants who have been impacted by whatever incident has occurred.
Crisis management is also reputation management. It is the most difficult customer service test any self-storage business can endure. Disaster can strike at any time from myriad places, whether from a break-in, cyber crime, earthquake, fire, flood, illegally stored goods, and a number of weather-related issues. Large crises can generally impact three major areas of your operation: physical damage to the self-storage property, damage to tenant belongings and damage to the public image of the business.
Although keeping public image intact may seem less important than dealing with the immediacy of damage to your facility and/or tenant property, how you handle both of these areas will determine whether or not you emerge from the crisis with your reputation enhanced or tarnished. Depending on the severity of the latter, negative public perception could have a lasting impact on the viability of your business long after damage to property is repaired and insurance claims are settled.
Each year, self-storage operators across the globe must manage crises caused by natural or man-made disasters. In 2012, dozens of operators along the eastern seaboard had to deal with flooding and weather-related damage caused by Hurricane Sandy. Last year, Kiwi Self Storage in New Zealand was put through the wringer after an arsonist set a devastating fire that burned for nearly 24 hours. More recently, Napa Self Storage in Napa, Calif., has spent a year trying to manage a building and tenant-property crisis after a 6.0-magnitude earthquake caused the partial collapse of a two-story building, trapping tenant belongings inside the structure.
In the Kiwi case, tenants flooded media outlets with claims that they’d been treated unfairly and given short windows to examine and collect what remained of their belongings. Some also complained to reporters that they received little information from Kiwi within 10 days of the blaze. Making matters worse, the facility was built without a sprinkler system, causing tenants to submit a written plea to the internal affairs minister to investigate if Kiwi was culpable for damages.
Representatives from the self-storage facility countered that they had been forthcoming with information and even contacted nearly all 750 impacted customers via phone or e-mail the day of the fire. In addition, the company regularly updated its website with information for tenants, including an FAQ page, and set up a call center to handle queries. Ultimately, authorities determined Kiwi met all building-code requirements and was not at fault for the fire.
The damage sustained at Napa Self Storage has also created tension between tenants and the business. Building 900, which partially collapsed, was red-tagged by officials due to its structural instability, prohibiting entry and trapping property inside 230 units. Less than a month after the quake, the local newspaper published a letter to the editor from a tenant who criticized the self-storage company for a lack of communication with those who had been impacted and called on fellow tenants to press the business not to demolish the building without customers being able to recover their property.
Although RMB Management Inc., the property-management company that co-owns the facility, had expressed empathy for its tenants’ situation through local press coverage, rumors began to swirl about the demolition of Building 900 even though RMB had no intention of tearing it down without presenting a plan to salvage items. The problem was it took weeks for RMB to issue written communication to tenants about the situation, and the formation of a cost-effective plan to brace the building proved difficult and time consuming.
By the time RMB issued a letter and questionnaire to tenants outlining a recovery plan and informing them they would have to help pay for the project (estimated between $700 and $2,000 per tenant), nearly four months had passed and customers were incensed. During a tenant meeting that also had the mayor and a local news station in attendance, affected customers likened RMB’s plan to have renters pay recovery fees to “extortion” and “ransom.” Some tenants threatened to sue the operator. This was late December. The earthquake occurred on Aug. 24. In January, tenants were informed they would have to pay a majority of the $167,000 needed to safely retrieve property.
Since then, tenant contributions and community donations have raised enough money to stabilize the structure. Although the self-storage company more than doubled its initial pledge of $15,000 to $39,000 toward the recovery costs, the feel-good aspects of this still-evolving story conveyed by the local press will concentrate on the impacted tenants and community support. RMB has been portrayed largely like a villain protecting its own interests. In late December, the company acknowledged it should have been in better communication with tenants, and going forward, it will have work to do to repair its relationship with the community and rebuild trust with tenants.
Both Kiwi and Napa Self Storage were put in unenviable positions through no fault of their own. Heck, Kiwi did a lot right in being out front with information and still got hit with negative publicity. Crisis management can be extremely difficult and needs to be handled with some expertise to minimize negative perceptions. The inaccuracies of misperception can’t prevent prevailing thoughts and rumors from becoming alternative truths, and once misinformation builds, it’s difficult to dispel.
Fair or not, when a crisis strikes, your self-storage business will be judged by the public on how it reacts and manages the aftermath, particularly when dealing with customer issues. In the heat and emotion of an emergency, it’s easy for tenants to become singularly focused on themselves and how circumstances affect their lives. Local press will be quick to sympathize with their plight. If the affected business is not out front communicating with tenants and the media (if necessary)—helping to shape the narrative—most of the diligent work being conducted behind the scenes to make the best of a bad situation will be largely lost on customers and go under reported. With today’s connectivity via the Internet and social media, it takes much longer to repair mistrust and restore loyalty than it does to unravel a good reputation.
The best thing you can do is be prepared for any disaster. Develop an action plan. Make sure you have the right insurance coverages for your business and that customers understand the rental agreement their about to sign, including their responsibilities regarding insurance or property protection. Although you may have firm legal footing on numerous aspects of the crisis you’re managing, history has shown the public may hold you to a higher standard.
Please share your disaster protocols or any specific experiences with protecting your brand during a crisis in the comments section.