By Carol Krendl

The discounting of rental rates has become a surefire way for self-storage operators to gain market share. However, there are some concession practices that can hurt a self-storage operation in the long run. Here are some things operators should consider before offering discounts to customers.

There are a variety of factors to knowing if and when you need to discount your self-storage spaces. The first issue to consider is the occupancy of each unit size at your property. When it comes to pricing, each unit size should be considered a unique product and analyzed separately. Also, its important to regularly survey your competitors to see how their rates compare to yours.
When setting unit pricing, its important to understand the mindset of the buyer and the forces that influence buying behavior. Two common influencers are:

• Buyers remorse: The feeling of regret a consumer gets when a product he desires is no longer on sale.
• History of discounting: The knowledge a consumer has that a product he wants to buy was previously discounted. If he knows he can get a product for less money, he may try to bargain with you or refuse to buy from you.

Below are several examples of discounting, plus strategies operators can use when applying them.

Large Move-In Discount

If a product has once been heavily discounted (more than 30 percent) but is later priced at 25 percent off, a customer is less likely to buy because he will want to avoid the feeling of regret for not taking advantage of the original sale. For example, let's say you advertise a 10-by-25 unit in January, discounted from $200 to $140 (30 percent). In February, you change the special to only 5 percent off, or $190. Any consumer who knows about the lower sale price will want that price, regardless of when he rents.

In the storage business, were fortunate that we have the ability to increase prices with a written notice. It may be your companys policy to honor a discounted price for a consumer, but consider giving it only for a limited time. If youre going to give deep discounts, its important to limit the length of time it's available and be sure its clearly stated on the customers rental agreement.

Minimal Move-In Discount

If specific unit sizes are discounted at 10 percent or less and then the price is increased, this will not discourage the customer from renting because the level of regret is low. For example, if you offered a 10 percent discount on 5-by-10 spaces in January (to $90), and the price jumps back to $100 in February, the consumer will probably still rent from you. In this case, the discount is insignificant in the context of the overall price. Smaller discounts over a longer period of time may be more favorable to the customer.

Competition Rate Surveys

If two units of the same size are discounted equally by different storage properties, the buyer will typically rent from the manager whos the friendliest and gives the best sales presentation. It's important that each of your employees be well-trained and able to emphasize some of the unique aspects your products to create a difference from your competitors.

Before setting, discounting or changing your prices, do a complete survey of your competitors pricing. Its important not only to call or visit them, but to check their websites to see if theyre offering special pricing, giveaways or free rent. While your goal is to lead the market in rental rates, its may not always be possible, particularly for properties in oversaturated markets and in these turbulent economic times.

Rental Incentives

Rather than discounting rental rates, more storage properties are offering some type of rental incentive or sales promotion to entice new customers. Likewise, customers are asking for or responding to advertised specials. Promotions change the accepted price-value relationship by increasing the value or lowering the price of the offering. Examples of consumer-sales tools include contests, branded giveaway merchandise, bonus-size packaging supplies, limited-time discounts and coupons.

Sales promotions are a competitive weapon that provide an extra incentive for the target audience to purchase or support one brand over another. They usually operate on a short timeline, use a more rational appeal, return a tangible or real value, foster an immediate sale, and contribute highly to profitability. Promotions can benefit your company and differentiate your storage property in a meaningful way from your competitors.

Economic Impact of Concessions

There are many consequences of offering rental concessions. Some will be advantageous to your facility, such as increased occupancy, while others may actually hinder your self-storage operations success in the long term. You should consider each of these concession types carefully before introducing them in your market.

Free rent. Offering a one-time concession doesnt lower the value of the storage property. And, it doesn't affect the customers buying psychology. Also, youll find current tenants may compare rental rates and then want a lower price if you advertise the discount.

Discounted rent. Discounts can erode the standard price youre asking for your storage space. It will also adversely affect the value of the property. Most storage properties offer some kind of long-term rental discount; however, discounts of an unspecified length make raising rents much more difficult.

If your store is in distress, you may want to consider a variety of discounts and concessions to new customers. Be careful not to discount or devalue the sizes that are in demand and have a high occupancymore than 90 percent. Commonly, storage properties offer a free month on any size space. This is not a good practice if you only have one space available. Also, you may want to implement rental incentives that do not directly affect the customers rental rate. This can  include free use of the facilitys move-in truck or free supplies with each new rental.

Rent variances. These are the silent killers of a self-storage propertys income! Rent exceptions and variances dramatically affect property value. If you have $1,500 worth of monthly rent exceptions, your facility has a loss in value of $180,000 at a 10 percent capitalization rate. Its important to watch the variances monthly and work at decreasing the number of customers who have any type of discount.

Selling Storage Space

One of the things Ive learned about managing storage properties and maximizing a stores profitability is employees are critical to the propertys success. Its important to make the prospective customer your priority and have employees who make a true effort to sell the space.

Even if most of your customers come from the Internet, your staff still needs to be excellent at selling on the phone and in person. Make time to tell and sell each customer on the benefits of renting from your property. The more well-trained managers you have working for you, the less you will need to discount your storage spaces.

Carol Krendl, an industry expert and owner of SkilCheck Services, has been involved with the self-storage industry since 1984. Shes written many articles on a variety of industry topics, including a quarterly newsletter on self-storage sales and customer service. Lodi, Calif.-based SkilCheck provides customized training seminars, educational products and mystery shopping. For more information, call 800.374.7545; visit www.skilcheck.com .

Because self-storage businesses have set expenses with few variables, business owners have an opportunity to increase their revenue by adding ancillary income streams. By offering additional services, owners can increase their bottom line and property value and keep potential customers from going to a competitor. Self-storage operators can learn how to generate more profit at the Inside Self-Storage World Expo in Las Vegas, March 14-16, during the new Ancillary Symposium.

A panel of industry experts will speak about the different add-on services available to self-storage owners. Presenters will include industry operators and managers, and vendors from a variety of product and service segments. They will discuss the benefits of adding services such as records storage, wine storage, boat and RV storage, pack and ship centers, tenant insurance, telecommunications equipment, retail sales, container storage, and truck rental. They will also show operators how to get started, any drawbacks to offering these new products, and how to market them to storage customers.

The two-hour seminar will take place on March 15 at 10 a.m. The ISS Expo, held at the Paris Hotel & Resort, provides two days of product and service exhibits, education seminars, networking events and workshops. Details are available at www.insideselfstorageworldexpo.com.

On Feb. 21, self-storage real estate investment trust Extra Space Storage Inc. will release financial results for the three months and year ended Dec. 31. Company representatives will also host a conference call at 1 p.m. EST on Feb. 22 to discuss the results. Extra Space CEO and Chairman Spencer Kirk will host the call, joined by Scott Stubbs, executive vice president and chief financial officer, and Karl Haas, executive vice president and chief operations officer.

During the conference call, company officers will review fourth-quarter performance, discuss recent events and conduct a question-and-answer period. The Q&A will be limited to registered financial analysts. Other participants will have listen-only capability.

To participate, attendees should use the following phone numbers and credentials. The company encourages participants to dial in at least five minutes before the start time.

Domestic: 866.700.6979
International: 617.213.8836
Conference ID: 11461378

For the conference-call playback, which will be available through March 22, listeners should use the following phone numbers and credentials:

Domestic: 888.286.8010
International: 617.801.6888
Conference ID: 84857761

The conference call will stream live on the Investor Relations page of ExtraSpace.com. The company suggests visiting the website at least 15 minutes before the scheduled start time to register, download and install any necessary audio software. A replay of the call will also be available for 30 days on the company's website.

Headquartered in Salt Lake City, Extra Space owns or operates 882 self-storage facilities in 34 U.S. states and Washington, D.C. The company's properties comprise approximately 585,000 units and approximately 64 million square feet of rentable storage space.

San Diego Self Storage (SDSS), an operator with 19 facilities in the Greater San Diego area, collected 10,726 toys during its 2011 Toys for Tots holiday-donation drive, establishing a new company record. The company collected 8,570 toys in 2010.

"This year we increased the number of toys collected despite a challenging economy, and were grateful to our SDSS staff, tenants and the community members we serve who were instrumental in making this annual toy drive a success," said Managing Member J. Terry Aston. "We were also fortunate to have several media partners who helped us spread the word to enlist the support of the general public. These combined elements helped us exceed our expectations.

SDSS in the following communities participated: Carlsbad, Carmel Valley, East Lake, Encinitas, Golden Triangle, Jamacha Point, La Jolla, Mira Mesa, National City, North County (Escondido), Temecula, Olivenhain, Otay Crossing, Otay Mesa, Poway, Solana Beach, Sorrento Mesa and Sorrento Valley.

The U.S. Marine Corps Reserve Toys for Tots program provides underprivileged children with new toys at Christmas.

Founded in 1972, SDSS provides self-storage in San Diego, Los Angeles and Orange counties. The company is locally owned and operated.

In a $1.8 million transaction, Gulf Coast operator The Storage Center sold a two-property self-storage portfolio in Baton Rouge, La., on Dec. 23. The company still has 11 self-storage facilities throughout Louisiana, Mississippi and Texas.

The facility at 9190 Parkway Drive sold for $1 million. It consists of 47,273 rentable square feet and sits on 2.6 acres. It was approximately 50 percent occupied at the time of sale.

The facility at 11520 Richcroft Ave. sold for $800,000. It consists of 56,675 rentable square feet and sits on 2.8 acres. The facility was 32 percent occupied at the time of sale. Approximately $100,000 of deferred maintenance was part of the transaction.

Ricky Lennard of Shreveport, La.-based Lennard Properties LLC brokered the sale. Lennard is the Argus Self Storage Sales Network broker affiliate for the state of Louisiana.

Both properties sold on an 8 percent capitalization rate, according to an Argus press release.

Based in Denver, Argus was formed in 1994 to assist self-storage owners and investors with their real estate needs. The company has broker affiliates covering nearly 40 U.S. markets.

A real estate fund managed by Morgan Stanley recently acquired a 69,945-square-foot, 698-unit self-storage facility in McCook, Ill. The facility had been managed by Extra Space Storage Inc. on behalf of JSM Ventures but will be rebranded as Safeguard Self Storage. The Self Storage Group of Chicago-based MJ Partners Real Estate Services brokered the sale.

The facility is approximately 90 percent occupied and features a two-story glass atrium entrance with complete drive-through access. Located at 9001 W. 47th St. in McCook, the facility is approximately three miles from the southwest border of Chicago.

The sale represents the first non-distressed sale of a stabilized, class-A self-storage property in Chicagoland in more than three years, said Marc Boorstein, principal with MJ Partners, in a news release.

MJ Partners is a full-service real estate brokerage and investment banking company specializing in commercial real estate, mortgage banking and consulting services.

Atlanta-based Safeguard Self Storage was founded in 1989 and today operates facilities in Florida, Illinois, Louisiana, New Jersey, New York and Pennsylvania. Safeguard is a privately held company owned by a real estate investment trust and managed by Morgan Stanley Real Estate Advisors.

StorageMart, a self-storage company with more than 130 locations across the United States and Canada, recently gave away $1,000 scholarships to five students pursuing degrees at various levels of higher education as part of the its 2012 ScholarSmarts program. The following students received the scholarships:

• Jennifer Lopes-Silva of Baylor University in Waco, Texas
• Alan Shields of Ozarks Technical Community College in Springfield, Mo.
• Isabela Guizan of Broward College in Ft. Lauderdale, Fla.
• Simone Samuels of McGill University in Montreal, Quebec, Canada
• Chelsea Schultz of Arizona State University in Tempe, Ariz.

Out of a pool of nearly 200 submissions, winners were chosen on the basis of essays written answering the question, What link is there between a clutter-free workspace and increased productivity? or How has self-storage improved your lifestyle? Winning essays have been published to the Storage Insider, StorageMart's blog.

ScholarSmarts scholarships are open to any student enrolled at any college, university, apprenticeship program or other institution of higher learning. The $1,000 gifts are given directly to the recipients, allowing for use toward any expenses involved with the pursuit of higher education, such as tuition, books, rent, mortgage, child care or other living expenses.

StorageMart will launch another ScholarSmarts program leading up to the beginning of the Fall 2012 semester. Updates will be available on the company's Facebook page, www.facebook.com/StorageMart, and Twitter page, www.twitter.com/StorageMart.

Time is what we want most, but what we use worst.
William Penn, philosopher and founder of the Province of Pennsylvania

Ah, teenagers. Just like hearing It looks like typhoid or 60 Minutes is calling, the mere mention of the word teenager strikes trepidation into even the most stalwart individuals. How could that happy, bubbly bundle of joy have turned so quickly into someone who thinks I'm an idiot and my primary function is to act as an ATM? I hate to think I might have been such a thorn in the sides of my loving parents.

Of everything Im attempting to teach my 17-year-old before hes unleashed onto an unsuspecting world, establishing time-management skills is proving to be one of the most difficult. An otherwise very intelligent young man simply cannot grasp the idea that there are only so many hours per day, and how you manage that time says a lot about your abilities, commitment and work ethic. No matter ... Hes is an effective practitioner of procrastination, inefficiency and laziness.

These characteristics remind me of some self-storage managers Ive encountered over the years. The learned skills my teenager can use to improve his time management are the same ones a facility manager can use to improve his productivity. Following are tips to help you become the most efficient manager possible.

Document Daily Tasks 

As American author H. Jackson Brown Jr. once said, Dont say you dont have enough time. You have exactly the same number of hours per day that were given to Helen Keller, Pasteur, Michelangelo, Mother Teresa, Leonardo da Vinci, Thomas Jefferson and Albert Einstein. I conduct a good deal of manager training throughout the year, and one key area of focus is time management. I start by asking managers how many units they rented in the previous month as well as vacates, truck rentals, locks sales, etc. I then ask how long it takes to complete each task.

Whatever the consensus is, I add more time. For example, if the managers say it takes 15 to 20 minutes to lease a unit, I increase that time to 30 minutes. As we add up how long it takes to conduct all these tasks during any given month, we always have the same outcome: There are about two to three hours per day for which we cannot account.

Once I demonstrate to my students that they have plenty of time to do their job well and on time, I give them some homework, asking them to document their work activities every 30 minutes over the next 30 days. For example, they need to write down what they do from 9-9:30, 9:30-10, 10-10:30, etc. While I have no way to ensure who completes the exercise, I've had enough feedback from managers and their supervisors to know it works. One manager told me the exercise changed her life, as it transformed how much she now enjoys her job. Knowing how to do your job and do it well really does make a difference in ones attitude.

Having worked with hundreds of self-storage managers over the years, Ive watched and learned from the very worst to the very best. Invariably, there are skills and practices the best managers use to manage their time. How do they complete their work and "get it all done" the right way? Lets explore.

Be Productive During Down Time

For starters, effective managers make better use of their down time. Just about every self-storage manager can easily handle the busy days. They can rent six or eight units, handle a few truck rentals and sell some merchandise like theyre in "a zone." The day goes by quickly, and after work, they have a real sense of accomplishment. But the key to time management isnt being efficient during busy days, its making good use of down time.

Highly effective self-storage managers make sure there are always plenty of lease packets ready. They prepare the truck-rental paperwork throughout the week instead of waiting until Saturday morning. They keep up with their e-mail marketing efforts and conduct regular lock checks to quickly address any discrepancies. Highly effective managers make sure they have two or three rent-ready units of each size always available to show. They check voicemail and print their vacant-space list before the first customer comes in each day.

Eliminate Errors

Effective managers perform their tasks right the first time. As basketball coaching great John Wooden said, If you don't have time to do it right, when will you have time to do it over?

Great managers dont focus on how to best handle customer complaints, they work to prevent complaints and customer-service issues altogether. They keep their promises and look for solutions to potential challenges before they become problems. For example, they call tenants about possible leaks in their units instead of waiting for customers to complain.

Great managers take the time to clearly explain leases and head off potential misunderstandings about expectations, and they make a big deal out of the no late-fee guarantee auto-billing option. If you want to improve job efficiency and performance with more effective time management, work smarter to reduce problems instead of spending inefficient time fixing them.

Pull Your Weight

Effective managers also learn to do their part. Im amused when I hear of managersoften assistant managerswhose tasks dont include vacating units or making collections calls. Why not? Typically, theres a training or trust issue.

Everyone who works at a self-storage facility must be able to conduct all day-to-day aspects of the job, or they should not be there. If everyone does their part on their day, work will never get backed up.

Be a Schedule-Maker

The most critical skill to master when  improving time management is to learn to make time for important tasks. A common trait among the most productive managers is they formally schedule tasks, such as making past-due calls, conducting lock checks, going to the bank and following up on rental leads. This may seem almost magical, but its a simple proposition: If you schedule tasks, you will get more done.

One of the best aspects the self-storage manager position is you can do a great job, get it all done in eight hours and go home. Anyone who tells you they eat and sleep storage really needs to get out more. You can actually have a life outside of your self-storage career, but to do that, you must have effective time-management skills. If you practice the techniques discussed above, they really will make a difference in how well you do your job and how much you enjoy it. 

Bob Copper is partner in charge at Self Storage 101, an industry consulting firm that assists facility owner/operators and managers in developing more effective and profitable operational systems. It also aids in conducting performance reviews and providing the necessary tools to perform at higher levels in a competitive industry. To reach him, call 866.269.1311; e-mail [email protected] .

SmartStop Self Storage, the retail brand for Strategic Storage Trust Inc., has launched a new smartphone application called the SmartTracker Inventory List App to help customers organize and track the contents of their self-storage units and use the company's Web-based account-management tools.

The SmartTracker app is available for iPhone and Android smartphones via the iTunes App Store and Android Market, respectively. SmartStop has also deployed an enhanced mobile website to better accommodate the on-the-go needs of its customers.

SmartTracker serves two primary functions. The first is to allow customers to view or organize property stored in SmartStop storage units from their mobile devices and the SmartStop website by using an integrated service called "Manage My Inventory." The second is to allow SmartStop customers to manage their accounts or make online purchases from their mobile device.

With Manage My Inventory, customers can quickly and easily add, remove, organize and locate their property within their storage unit electronically. They can also tag and track their valuables with QR (quick response) codes by affixing a QR code sticker to an object such as a storage box or piece of furniture, scanning the code with the integrated QR code scanner and providing the item's location and description. The information is then available to 24/7 through the app or within their online account.

"We are passionately committed to leveraging the latest technology to engage our customers and provide them with an easier, smarter and more enriching self-storage experience," said H. Michael Schwartz, chairman and CEO. "The Manage My Inventory service is an extension of that. It's like having a window into your unit from wherever you happen to be."

SmartTracker also features a keyword-search functionality, the ability to see a "View All Items" list, and a "Unit Info" section where users can store information relevant to their unit for quick and easy access.

In addition, SmartTracker incorporates links that allow registered users to access all of their account information directly from within the app via links to the SmartStop mobile website. Registered users can then search for and reserve additional rental units, pay their bill online, and purchase storage and packing supplies.

Non-SmartStop customers also can use the app, but they will need to register and provide a username and password. Registering is free.

Strategic Storage Trust Inc. is a publicly registered, non-traded real estate investment trust that is not publicly traded on the stock exchange. Since the companys launch in 2008, its portfolio has expanded to include 91 facilities in 17 states and Canada, comprising approximately 60,000 self-storage units and 7.5 million rentable square feet of storage space.