Your facility is doing OK. You could use a few new renters, but you’re not desperate.
The new year is coming up, and you’re trying to budget. Some items are obvious - you’re going to pay down your loans, and you’re going to pay your staff.
But how much should you set aside for marketing?
It’s easy to find advice online (hi). But the advice isn’t consistent, and your facility isn’t the same as the example. You don’t want to waste money on advertisements that don’t bring new tenants - but you’re afraid that if you don’t advertise enough, the REITs will snatch up all the business.
How much should you spend on self storage marketing?
It’s a simple question with a complicated answer and one that’s going to be changing all the time. Early in lease-up, you’ll need to spend far more than when your facility is mostly full.
In this blog, we’ll go over more than just how much. We’ll show you how to decide the appropriate amount based on occupancy, effectiveness, and all the other factors that make your facility - and your budget - unique.
Everyone knows your goal in spending marketing dollars is to get that back (and more) in revenue. But did you know that you can directly calculate your marketing budget by how much you want to make?
With enough data, you can look at the empty storage units in your facility and determine (approximately) how much you’ll have to spend to get tenants in there.
First off, to determine how much you want to make, you need to know:
How much your average customer is worth (lifetime value)
And
How many units you’re aiming to fill (over the next 90 days or so).
To calculate the lifetime value of your customers, you need to know how long they stay and how much they’re paying on average.
If you want, you can calculate this out for different types of storage units - a customer in a 10x20 climate-controlled self storage unit is worth more to your business than one in a 5x5 non-climate unit.
But if you want to just have one average lifetime value, that works too.
Let’s assume your average customer lifetime value is $1,200, and you’ve got 40 units you want to fill. That means you stand to make $48,000.
How much would you spend on marketing to make $48,000?
Depending on your market and the effectiveness of your marketing, you may have to pay a fifth of that, or a third, or even half - regardless, you need to know what you’re likely to gain before you start dedicating money to marketing.
How much does it cost you to land a new tenant?
If you don’t know the answer to that, you need to start tracking your marketing budget and returns.
Marketing can be very hard to track, especially in self storage, because your tenants might have found you in a bunch of different ways, only some of which can be tracked with software.
Maybe a tenant found your website, started renting, then decided to just stop by in person after their phone ran out of battery. Or maybe someone saw your marketing flier, threw it away, but then Googled your facility name later.
For these reasons, you’re never going to have an exact count, but you can still get pretty close. Track how much you’re spending on marketing every quarter, and apply those numbers to the total number of tenants you’ve gained over the quarter.
Add a question to your onboarding process - how did you first find us?
You’ll still get outliers like the examples above, but over time you should be able to discover the normal pathways people take to find your business.
Read up on how your customers find you here!
Some marketing methods have built-in tracking - like pay-per-click advertising and some self storage websites. Utilize these options for the most accurate marketing Return-on-Investment (ROI) tracking.
Once you’ve got some numbers, the calculation is pretty simple:
How much you spent divided by how many tenants you acquired.
You’ll need multiple months’ worth of data for this to be a useful number! If you try to measure over one month or even one week, outliers could mislead you.
Some months you’ll get five returns from your PPC campaign, and others you may get ten, or none! Once you average them out, you can start working with that data.
A few key points to remember:
Ok! That was a lot of math, but we’re at the last step.
How many units are you looking to fill? That is, how many tenants do we need marketing to bring in? And how much money will they be worth to the business?
Then, how efficient is our marketing? How much will we need to spend to get those tenants?
That’s your marketing budget!
Using a set percentage can give you a budget that doesn’t match your needs. If you’re always spending 10% of your revenue on marketing, that money would be wasted if your facility fills up. On the other hand, if you get a ton of moveouts during a season, you may need to surge your marketing dollars to fill back up!
Don’t let marketing be isolated from the rest of your business!
Marketing is a tool to fill up storage units with paying customers. Consider how much you want to make, and how much it’ll cost you to make it.
If you’re happy with the return on your investment - whether that’s 2x, 3x, or 5x your marketing budget - then you’re in a good spot. If you’re not happy, there are ways to up your marketing game!
Check out these posts if you’re interested in getting more out of your marketing:
Self Storage Marketing with StoragePugAt StoragePug , we build self storage websites that make it easy for new customers to find you and easy for them to rent from you.
