Lessons from Large Operators | Self Storage Virtual Workshop

Gabfocus Episode 42 | Lessons from Large Operators

What can we learn from larger storage businesses?

From operations to marketing to team processes, there are plenty of lessons that large, multi-location storage businesses have to teach us. Whether you're a fellow large operator looking to improve or a small operator looking to level up, we dive into how these big brands are making it happen.

Featured Speakers: Guy Middlebrooks & Darren Kelley
Moderators: Tommy Nguyen & Melissa Huff

Category: Large Operators
Focus: Owners & Operators
Aired: October 20, 2022
Duration: 1:10:53

Overview

If you don't have time to watch the whole session, here are some of our favorite parts:

At 5:08, our panelists outline the growth they’ve seen over the last couple of years in the self storage industry and what they expect for 2023.
8:40, Guy discusses the growth of self storage businesses in the southern US and how it is being driven by people migrating from other parts of the country.
Starting at 11:50, Darren highlights the increase in demand for non-climate-controlled units, which in some cases can be more profitable than climate-controlled units.
At 14:30, Guy talks about testing updates to staffing and technology in 2023 and how any change they make needs to better serve their customers.
16:45, Darren highlights how he is focusing on alternative ways to generate more revenue while also identifying missed opportunities by competitors to compete.
Around 18:20, our experts discuss the technology stacks they use along with some specific vendors you could consider using at your business.
At 20:38, Darren discusses the importance of security to his customers, citing that over 80% of customers list security as one of their top concerns.
23:10, Guy highlights the features of their in-house app and how customers can make payments, update their info, and access the facility from it.
Starting at 27:20, Darren talks about how additional security can be a value ad and revenue generator for your business.
Around 31:50, Guy outlines how contactless rentals have become over 30% of their business, but at least 1/3 of their customers still prefer to speak to an actual person.
40:20, our panelists discuss the benefits call center employees or services have added to their own businesses.
At 42:30, our experts talk about unmanned self storage locations along with the pros and cons of this location model.
Starting around 47:20, both Guy and Darren discuss how they hire and train their staff in a hybrid environment (a mix of virtual and in-person training).
53:20, our guests explain how marketing has changed over 10 years, including how important your website is now.
Starting at 59:45, our panelists talk about their expectations of consolidation in the market moving forward.
At 1:03:00, the experts answer the Question of the Week!

Question of the Week

We asked our experts: What is one important thing you think smaller businesses could learn from the larger operators?

You can learn. Look what the REITs are doing, look at their websites, that's what I do. I look and see what they're doing. I look and see what trends are happening." - Darren Kelley

"Don't go a year without doing something positive at your facility. Even if things are going great this year, you still have to put money back in, and you have to put effort and energy back into your facility every year." - Guy Middlebrooks

Gabfocus Takeaway

Large operators have the budget and resources to test new initiatives and technologies prior to launching them, so smaller operators can follow what these larger competitors are doing to learn tactics they can use as well. In addition to this, there are many vendors and services out there that can help smaller operators remain competitive against their larger neighbors by offering new services or features that many of the REITs have in-house. The industry is also growing, but not just when it comes to larger operators. The percentage share of smaller operators and "mom & pop" self storage businesses is staying strong and growing!

What are Gabfocus Sessions?

Gabfocus Sessions are virtual workshops for self storage owners, managers, and operators. Brought to you by the team behind Gabfest: StoragePug and Affordable Storage Guys Management.

Each session features hand-picked industry pros who will dive deep into relevant topics surrounding our industry, share best practices, and explore trends in the market. It's our hope that these sessions help you navigate your self storage business better during these uncertain times.

Want to learn more about self storage? Join us on select Thursdays for Gabfocus.

Questions Answered in this Session

What kind of growth are large operators and REITs seeing?
Are there specific markets that are growing more?
Are there certain facilities or storage types that are getting more attention?
What are you prepping for going into next year (and beyond)?
Do your facilities have a set technology stack or is there a range of across your locations?
Is there any tool or technology you use that gives you a specific competitive advantage?
How are tenants reacting to more automated experiences?
How do you see automation evolving in the future?
How do you build and train your team?
What was marketing like 10 years ago? What’s the environment now? What are you expecting it to be?
How much consolidation do you foresee happening in the industry over the next five years?
What is one important thing you think smaller businesses could learn from the larger operators?

Guy Middlebrooks

Guy Middlebrooks

CubeSmart

Website: https://www.cubesmart.com/
Email: gmiddlebrooks@cubesmart.com

Darren Kelley

Right Move Storage

Website: https://www.rightmovestorage.com/
Email: dkelley@rightmovestorage.com

Resources from this session

Awesome Quotes

“Once your operation is in place, you can become more dynamic with your pricing, but that requires data. You need some method of being able to record the data that you need to know whether your price is in the right place - whether you need to move it up or start giving some concessions.” - Warren Lieberman

“I never want to downplay to what someone else is doing. I'm better than they are, then I'm going to be worth a higher price. That's what value is. If you go out to a restaurant and get really good service, would you go back? Yes! What if it was pricier? You'd still go back because you got better service and a better product.” - Jim Mooney

"It's good to be informed on your competition. I don't want to ignore them, but I don't want to respond too strongly to them either." - Warren Lieberman

"We did a survey of 10,000 facilities on their pricing. We found out that two-thirds of those operators didn't change the price of a single unit of the course of a month." - Warren Lieberman

“Rate increases and value pricing are the number one ways to grow your revenue.” - Jim Mooney

"Tenants in more convenient units tend to be less price sensitive." - Warren Lieberman

"The size of the unit is only one aspect of what people are willing to pay for." - Warren Lieberman

Highlights

Foundational marketing strategies to have in place - whether leasing up or stabilized:

Website
Set up listings (Yelp, Google My Business, Apple Maps)
Social Media
Establish Local Partnerships

Lease up marketing strategies:

Lead Generating Strategies (like digital ads)
Aggregators (Sparefoot, Storagefront, etc.)
Awareness Campaigns (like billboards, flyers, and sponsorships)

Your average customer value
Find the average stay length of all tenants. Next take your economic occupancy and divide by how many units you have. That will tell you what the average customer pays.

Multiply the average length of stay by what the average customer pays, and that's the average value of a customer.

For example, if a customer stays for 12 months and pays $100 per month, then their value is $1,200.

Your average lead value

Figure out your closing rate (or conversion rate) i.e. how many leads do you turn into tenants? Multiply that by your average customer lifetime value to figure out what your leads are worth.

Pro Tip: see which lead sources are converting the best. It may be that certain sources have a higher conversion rate, so those leads are worth more to you than a source that barely converts.

Typical Lease-up timeline

According to our panelists, it's typical to see a 3-4% increase each month, putting your facility at 36% after the first year, and 72% after the second.

Alternately, you can look at your lease up goals through the lens of your units, aiming for 20 units rented per month.

For Nick and StorageMax, they pro forma their economic occupancy at 85% with their sweet spot at 92%.