Many people think that there is only one type of storage vacancy: an empty unit. But why is that unit empty? In this episode of the Self-Storage University podcast, we’re going to analyze the different types of storage vacancy and what they really mean, as well as how to fix them. In today’s competitive environment, it’s essential that you understand the components of vacancy and how to use them as a tool to better position your property for success.
Episode 12: Understanding Vacancy Transcript
Vacancy's a big deal to all self storage owners yet many people don't put enough careful consideration into what causes the vacancy or real life solutions to fix it. This is Frank Rolfe, the Self Storage University Podcast. We're going to be focusing all about vacancy.
Now there's any number of reasons why something can be vacant but are you able to actually discern exactly what it is? Can you do a little math, a little research? Can you say, "Well, let's see, in my storage facility, what size units are vacant and which are occupied?" Can you see a trend there? Is there one size that customers seem to prefer and another size that they do not?
Is that vacancy a temporary issue or is it a long-term problem? When you look back historically on the property's performance? Can you say, "Well, I didn't have this problem at that date going backwards, so what happened on this date going forwards?"
Is it a seasonal phenomenon? When you look back, do you say, "Well, it looks to me like the property is vacant during these months of the year, more than the other months." Can you see any kind of physical location in which the units in one part of the facility rent much better, much quicker and hold their tenants much longer than another portion? Is everything at the front occupied, but everything at the back is not?
So those are some basic things you want to ask yourself. You want to get really drilled down on historically, like a scientist with a white lab coat, what's really been going on. And when you do that, when you start gathering data, start thinking about your vacancy, you're going to find your vacancy falls into some defined areas.
The first one is that the demand for what you have size-wise may not meet what your customers are looking for. So how do you fix that one? What if you have the wrong size stuff? Well, obviously one key item would be, can you reconfigure it? If you have units that are 10 by 20 feet that no one wants to rent but yet all your 10 by 10s are occupied, maybe it's time to reconfigure that into two 10 by 10s instead of one, 10 by 20. So is there some way when you look scientifically at what is in demand, can I go ahead and force my product into a different plan that therefore meets the demand?
Or maybe the reason you're vacant is you just have the wrong pricing. Maybe you haven't done an in-depth study enough of the market. It's a competitive world out there. More competitive in some markets than others. But when's the last time you really called all the competition? And how do you do that effectively? While you simply Google up self storage, whatever market you're in and then you pick up the phone and you call, like you're a customer, to all those various facilities and find out what their true pricing is and what specials they have. And in so doing, you'll see how you fit in.
Maybe you set your pricing years ago and in the interim there's been more built, competition and went up and you're no longer competitive. Or maybe your pricing is okay but everyone else has some kind of move in special you don't. So sometimes your vacancy falls back to pricing. And again, that's your fault. You need to get a better handle on what the pricing is.
Maybe the problem is you have insufficient marketing. Maybe you just aren't getting enough phone calls. Maybe you just aren't making it happen. So what can that lead to? Well, it leads to needing further marketings. Well, how do you know if your marketing's weak and you're not getting enough calls? Take control of that phone line. Port that through a system like Who's Calling. It will record and track every call coming in. It'll tell you the phone number of everyone who did call in and then it records what they said and you can hear what your manager is saying to the customer. If you're not getting enough calls, it'll be very obvious because you will not have that many incoming calls, so therefore, you know you need to ramp up your marketing much more aggressively.
Or maybe your manager just is no good with customers. Maybe they're no good on the phone and they're no good in person. How can I know that? Well, I can listen to those calls. If I poured it through service, like Who's Calling, I can listen to the calls. I can see what the manager says to try and attract them to come in. And I can now exit interview people. I can call them after the fact. I have their phone numbers captured through Who's Calling and I can say, "Hi. I was just following up to see why you didn't end up renting a unit in our facility," and just see what they say. If they say time and time again, "Well, I met with your manager. They were kind of rude. Or, "The office was closed when they said they'd be open with a sign that said out to lunch," now you're starting to get the real facts you need, to figure out why you've got the vacancy.
Another option would be to hire someone to mystery shop. You can easily hire someone on Craigslist, for example and they probably would go over to your self storage facility for maybe $50 and pretend to be a customer and then give you firsthand knowledge of what happens during the meetings. I mean, you're getting a recording of their calls to the customers but what happens in the face-to-face encounters that make everything happen? Are they doing a good job or doing a bad job? It's worth finding out because that can be the big difference between success and failure.
Maybe your advertising itself just has no firepower. Maybe you're doing sufficient marketing, but you're not doing effective marketing. How do you solve that? Well, test new things out. Look at what your competition is doing. If you see an idea that you think is good, there's no law that says you can't adopt it. Nothing illegal in copying what somebody else is doing. So look at your peers and how they're marketing and when you see things that look like it might be a good idea, try those out. Test it. See if it makes your phone ring more. See if it makes your occupancy goes up and if it does, then adopt that as part of your strategy.
A lot of moms and pops aren't very good with newfangled methods of advertising. They don't try to get things out there enough online. They don't seem to have good websites. They don't understand social media or the importance of social media reviews. If that's you, it's time to get into the 21st century. You've got to make sure your advertising today is in line with customer expectations.
Now you can still do fine using old fashioned methods if you're aggressive. People suggest that 75% of leads today come from things such as social media and online marketing, but then only 25% of your actual closings come from that, whereas the old fashioned methods like a sign out front, maybe a direct mail piece, those will bring in 25% potential customers but with a 75% closing ratio. So don't just disregard one or the other. Don't say, "Well, I'm going to be totally focused on new forms of marketing," or "No, I don't want to mess with the new things. I like the old methods." Both of them are good but you need to be doing both, otherwise you're missing out on a big slew of customers.
And maybe your competitors are causing you problems because they're offering ridiculous specials. You maybe like not to adopt those. Or you might find a way to morph that into something else. If someone is offering a special of rent for a year and you get six months free, you probably don't want to adopt that. That may not work for you at all.
Sometimes customers make specials that are very misguided and if you copy those, you're really not going to get anywhere financially. So instead, come up with specials that you think would be effective yet still make economic sense. You can spot those. Sometimes people are just trying to give away the farm to get a customer in the door. There's no purpose in that. You're in the money making business. So instead come up with specials, things that bring somebody in the door but you can make money with. Don't give away tons and tons of free months. Instead, find more selective ways to get somebody to come in the door.
What are some examples? Well, you can have some kind of prize giveaway raffle. You can have a little spinning wheel in the office. Sign up today. We'll spin the wheel and see what you can win. Might not be worth as much money as that multi-month free giveaway but then again, it might be more fun for the customer to go ahead and take the spin on the dice. You never know what they might win.
So be creative. Be experimental. Wear a white lab coat. Don't just look at vacant units and say, "Gee, Oh, woe is me. I've got these vacant units. I don't know what to do." That's a very defeatist attitude. Instead, take action. Think about why things are vacant. Analyze them. Try and come up with creative solutions. Test your hunches. See if they work. And if they, you do work, then you've unlocked the mystery of why you do have vacancy.
And once you unlock that mystery, you're in great shape because obviously if you're trying to maximize the net income of your self storage facility, higher occupancy is definitely one of the keys.
This is Frank Rolfe, the Self Storage University Podcast. Hope you enjoyed this. Talk to you again soon.