Establishing your self-storage marketing budget: a data-driven approach

The pace of self-storage over the past five years has been all about new supply. For existing operations and new leased facilities, the struggle to gain occupancy has meant spending marketing dollars to reach prospects and stay ahead of the competition. Many new sites have worked hard just to break even.

Now the world has suddenly changed due to the coronavirus pandemic. Across the country, unemployment has skyrocketed and continues to rise. Our industry will likely see an increase in tenant delinquency as a result. While we may not be hit as hard as the retail and housing markets, we will undoubtedly feel the ripple effects of this global crisis.

Tracking the return on investment (ROI) for every dollar spent will make the difference between storage facilities that survive and those that don’t. Marketing efforts are more crucial in times like these because what you promote today will translate into revenue tomorrow. Self-storage operators should be aware of all budgets and expenses, especially those related to advertising.

Start with the “low-hanging fruit”

Marketing is the effort to generate new business. Before setting your budget, consider how well you manage the basics to ensure the best return on investment.

Car traffic. This consistently ranks as the #1 lead generator for self-storage. Having excellent curb appeal and eye-catching signage and banners will help your property stand out and grab the attention of prospects.

Online presence. This is just as critical as the physical appearance of your property. Claiming your Google My Business listing, using great photos, and keeping store information up-to-date will boost your visibility on the web. Your marketing will be more effective if your online content is up-to-date and engaging. Additionally, a website that allows customers to rent units online is an essential part of your plan, especially now as people self-isolate and practice social distancing.

The base. Self-storage is a community enterprise. Your customers are also your neighbors, so it makes sense to strengthen those relationships as much as possible. A strong core campaign can help marketing efforts when there isn’t room in your budget for numerous pay-per-click (PPC) campaigns. Go out, shake hands and kiss the babies (not literally). Connecting with local moving services, real estate agents, banks, small business owners, restaurants and others can help publicize your facility at a reasonably low cost.

References. A strong program encourages your current customers to refer others to your property. The May campaign is: “It pays to have friends, literally. We generously reward our tenants who refer their friends to us.

Once all of these “low hanging fruits” are managed to make your marketing as effective as possible, it’s time to build your budget!

start at the end

To calculate your marketing budget, you need to understand the following metrics and formulas:

• Marketing spend x marketing conversion = demand events
• Demand Events x Closing Rate = New Rentals
• New rentals – Vacancies = net occupancy gain

To be data-driven, you have to start with the end in mind. What is your target occupancy and how many rentals do you need to get there? If 90% is the goal and your ownership is at 45%, how many new rentals are needed each month? When determining this number, you need to consider moves as well as move-ins. The net of the two will be the occupancy gain.

To plan your monthly moves, you need to know your average length of stay per customer. Some of my properties have an average of six months, while for others it’s three years. Understanding how many new rentals are needed to overcome vacancies and reach your target occupancy rate will help you prepare the marketing budget. Obviously, it is easier to be busy and to break even when the average length of stay is longer.

Know your closing rate

New rentals are a factor in demand events and closing rates. Both parameters must be followed. We track each request by source, size, type and other factors. The same detail should be monitored for closing rates.

For example, if your self-storage facility generates 20 website request events for 10×10 units each month and you need three units to meet your occupancy goal, the conversion rate you have need to reach your number is very low. This knowledge can help you eliminate special offers or unnecessary discounts, as your decisions are based on data rather than reactionary. Reacting to the market rather than using strategic planning often results in random price drops or spikes, blanket promotions, and unnecessary customer credits. It’s like using a hammer in surgery instead of a scalpel.

Create request events

Once you’ve calculated your existing demand and closing rate, you can make smart budget decisions. Spending money to increase drive-through traffic, online presence, base, or referrals should be predictable if you track metrics and understand conversion rates. Let’s put this into practice using our formulas.

Let’s say our self-storage property needs to replace 10 vacant units each month and gain four additional moves to meet its occupancy goal. If we have a close rate of 30%, we need 47 demand events per month to get those 14 units per month. We develop a marketing budget based on our needs. Here is our current monthly plan:

Our new marketing plan might look like this:

The key to developing and maintaining a successful marketing budget is to regularly review demand by source and note whether results are meeting expectations. Tracking every demand event and close rate is key to understanding if your marketing investments are working for you.

Too many self-storage operators just throw money at the problem without charting the return on investment, monitoring the conversion rate and accompanying facility managers during shutdowns. Gather the right metrics so you can make smart, data-driven decisions. With everything that is likely to impact your business in these uncertain times, you simply cannot afford not to.

Magen Smith is co-founder of Atomic storage groupa self-storage management company and owner of Magen Smith CPA, an outsourced accounting firm specializing in self-storage. She is also a partner in Safe Space Development, which builds self-storage properties. Magen started in the industry as a facilities manager and has held almost every operational role. She has a passion for the industry, helping owners improve their businesses, teaching asset management and performing self storage audits. To reach her, e-mail [email protected].