Market Saturation, Pain Points and Solutions for Self Storage
The 2020 forecasts are in – and depending on where you operate, it may not look great. Markets are becoming over-saturated, making it difficult for facilities to thrive. Without adequate occupancy, your facility could struggle to compete. Small facility owners are finding it challenging to keep up with REITs and big-box companies that have larger marketing budgets, but it doesn’t have to be that way. If your local market is gaining competitiveness and your facility is struggling to keep up, try improving success with digital marketing and value pricing. Economy experts are predicting a recession, so recession-proof your facility with digital marketing before it hits.
Current State of the Industry
If you haven’t had a chance to look at the reports put out by the industry, that’s okay – we’ll bring you up to speed. In September, Yardi released a Monthly Supply and Rate Recap that said, “Heightened completion levels continue to drive down street rates in most markets nationwide.” As more new-build facilities continue to open, many markets are finding that demand and supply no longer align and that many units are sitting untouched.
Only two markets, Las Vegas and the Inland Empire, have had year-over-year street rate growth. This means that when you’re considering the market you’re in, it’s worth tuning in and making sure your market isn’t oversaturated. If it is oversaturated, you need to beef up your digital marketing tactics to stay competitive as these big-name facilities fill the area. Whether the biggest competitor in your market is down the street or ranking above you on Google, digital marketing is the perfect solution to battling over saturation.
If your market is saturated, you likely already know it. It shows in the way occupancy drops, and you probably see the shiny new facilities when you drive around town.
Are You Recession-Proof?
During the 2008 recession, many facilities not only stayed open but thrived. As families downsized their homes, they rented units to store their items in. In fact, according to Forbes, “In fact, during the 2008 economic downturn, self-storage was the only REIT sector that posted a positive return of five percent including dividends.”
Not every facility can be so lucky during a recession, especially if they’re in the over-saturated markets we’ve been focusing on thus far. To help your facility be recession-proof, fill units when the economy is strong. You can use Search Engine Optimization and Pay-Per-Click ads to attract leads, and then embrace value pricing to get leases signed to drive home optimal revenue.
Defining Pain Points
If your facility is having difficulty with profitability, take the time to breakdown your business, local market, and target renters. Ask yourself questions such as “Does my facility offer the features that potential tenants are looking for?” “How are my prices compared to others?” “Is my area becoming over-saturated with facilities?” “How am I attracting new tenants?”
Identify and define your facility’s pain points before making any drastic changes – after all, if you don’t have a clear understanding of what’s wrong, you can’t expect to fix it. Once you’ve identified where the facility needs help, you can dive into finding and implementing solutions. Keep reading to see what solutions your facility should consider using!
Value Pricing
If you’ve been to a trade show lately, chances are you’ve heard of value pricing. Value pricing helps improve revenue 4-9% from move-ins by allowing facilities to easily charge more for desirable units.
Value Pricing is done through a first-of-its-kind integration with Veritec Solutions. We all know what a big role unit pricing plays in facility success, and Value Pricing is the most advanced pricing technology to ever exist in self storage. Value Pricing is a highly automated process, and store managers can expect to receive updated prices every day via email.
Value Pricing can easily be compared to buying a seat on an airline. Seats near the front of the plane, in the aisle, or with extra legroom all come with a surcharge that many travelers are more than willing to pay. While this is a simplified explanation, self storage facilities can charge units near the office, security cameras, or that have specific features for more than they charge units with no ‘selling points’.
Let’s take a moment to think about consumer habits. According to Insight Association, “Marketing research studies find that respondents unequivocally report that they want choices.” Think about this and how it applies to your facility. How can you let consumers feel like they’re getting a choice in their unit and price without having to sacrifice your facility’s bottom line?
The Search for First – Success on Google
Search Engine Optimization, or SEO, is the process of improving the quality and quantity of website traffic by improving your overall Google search rankings. We’ve talked a lot about this before, and you can actually watch a recent recording of our webinar on SEO and how it can impact revenue by clicking here.
There are more than 200 search engine ranking factors, ranging from keywords and local listings to Google My Business accounts and social media. To improve your SEO, your facility needs to take a hands-on deep dive into your entire online presence. In the self storage industry, many marketing agencies outsource their SEO work to other firms, making it difficult to understand if your facility is getting top-notch results. By improving website traffic, your facility can increase lead generation, conversions, and overall occupancy.
While Search Engine Optimization serves as the basis for most online success, Pay-Per-Click Ads are a natural next step to any facility’s online presence. Your facility only pays when someone actually clicks on your ad, helping make this one of the most cost-effective advertising methods on the market. In fact, on average, Google PPC creates $2 in revenue for every $1 spent. This means that a well-run Pay-Per-Click campaign can have a huge impact on a facility’s revenue.
Rise or Fall in the Future?
At this point, you might be wondering what to do when your biggest threat is the big-box name down the street. When the next recession hits, how will you be able to stay successful without the resources and budget of a household name? It’s not about being reactionary, but rather, proactive.
Proactively invest in sustainable, long-term marketing tactics. There’s absolutely nothing wrong with being creative, but consider whether your marketing dollars are going into short-term or long-term goals. If you’re finding that campaigns are failing to hit the mark, it’s probably time to find a new strategy before profitability becomes a serious concern. It’s not about the size of your budget, because with careful planning, even a small budget can drive serious results.
If revenue is your biggest concern, the best way to get started is by finding the right marketing agency for your needs. You should only use marketing agencies that specialize in self storage – without that expert knowledge, your facility may not get the best possible results. Look for a marketing agency with proven results and extensive experience in marketing. While it can be tempting to go with a newer company or one that offers a great deal, it’s important to keep in mind that if it sounds too good to be true, it probably is.
While you can attempt these digital marketing and pricing tactics on your own, having a team of trained professionals manage your marketing efforts will make the process go smoother and the results more successful. It’s with careful planning and expert execution that you can make sure your facility rises to the challenge during a recession or economic change.