While rent is the primary revenue driver, self-storage owners can significantly increase sales and profitability by strategically implementing a variety of strategies focusing on value-added services, optimizing operations, marketing, and enhancing the customer experience.
Here’s a breakdown of key areas to focus on:
1. Ancillary Services and Retail Sales
- Offer tenant insurance or protection plans: This provides a valuable service to tenants while generating commissions for the facility. Many renters aren’t aware that their homeowners’ or renters’ insurance may not fully cover stored items, making this a crucial offering. Tenant protection plans can generate, on average, $6 – 8 per tenant in profits
- Stock and sell moving and packing supplies: Boxes, tape, bubble wrap, and locks are essential items for most renters, creating a natural opportunity for additional revenue. Consider bundle deals for various unit sizes and needs. Materials sales can generate several thousand per year in incremental sales
- Providing truck or trailer rentals can be lucrative, but it comes with additional manpower requirements and requires some excess land to operate. This can add from $800 – 2,500/month in incremental revenue for an average-sized facility
- Explore other ancillary revenue streams: This could include mailbox and package receiving services, wine storage, vault storage, gun storage, or even cell tower or billboard leases. The specific offerings should be tailored to the local market and customer needs. In the right location, these could generate significant incremental income
- Adjust and implement fees strategically: Late fees, administrative fees, clean-up fees, and technology fees can contribute to the bottom line, but ensure they are legally compliant and clearly communicated to avoid customer dissatisfaction
2. Optimizing Operations and Efficiency
- Invest in management software: This is crucial for tracking rentals, units, collections, pricing, and revenue, and can enable features like dynamic pricing models. their services
- Focus on tenant retention: Providing a positive customer experience, offering loyalty programs, and streamlining the rental process can reduce turnover and its associated costs. Long-term tenants should be your most valuable asset – they are self-storage gold!
- Optimize unit mix: Analyzing market demand and competitor offerings helps ensure the facility has the right balance of unit sizes and types (e.g., climate-controlled, drive-up) to maximize per-square-foot revenue. Many of the REITs and larger operators will offer “virtual units” based on demand – this could involve combining side-by-side units into a larger-sized unit (for example, take 2 5×5 units combined into a 5×10 to suit market demand)
- Streamline the rental process: Offering online reservations and rentals, clear information on unit availability and pricing, and online payment options enhances convenience and attracts tenants
- Invest in facility maintenance and upgrades: A well-maintained facility with modern amenities like LED lighting and enhanced security systems improves curb appeal, customer satisfaction, and potentially allows for higher rental rates
- Implement cost-saving measures: Regularly review expenses, negotiate with vendors, and explore options like outsourcing HR or utilizing call centers to reduce operational costs
3. Targeted Marketing and Customer Acquisition
- Build a strong online presence: A user-friendly, mobile-optimized website with clear information, photos, and online rental/payment options is essential
- Utilize Search Engine Optimization (SEO): Optimizing the website for relevant keywords (especially local terms like “self storage near me”) and building local citations improves online visibility and organic search rankings
- Leverage Google My Business and other online directories: Claiming and optimizing these listings is crucial for local search results and helps attract nearby customers
- Run targeted digital advertising campaigns: Pay-per-click (PPC) ads on Google and Bing, and social media advertising can effectively reach potential tenants based on demographics, location, and interests
- Focus on local marketing and community involvement: Grassroots marketing, partnerships with local businesses (real estate agents, movers), sponsoring local events, and participating in community activities can boost brand recognition and attract customers
- Implement referral and loyalty programs: Rewarding existing customers for referrals and incentivizing renewals can increase customer acquisition and retention
- Generate and manage online reviews: Encourage satisfied customers to leave reviews on platforms like Google and Yelp, and respond professionally to all feedback
4. Enhancing Customer Experience
- Prioritize exceptional customer service: Friendly, knowledgeable, and responsive staff who actively listen to customer needs build loyalty and encourage referrals
- Offer convenient communication options: Be accessible via phone, email, text, online chat, and social media to meet customer preferences
- Provide value-added services and resources: Beyond rentals, offering amenities like free Wi-Fi, moving resources, or recommendations for local service providers can create a more positive experience
- Maintain a clean and secure facility: Regular maintenance, robust security measures, and attention to details like lighting and signage enhance customer trust and satisfaction. By adopting a holistic approach that incorporates these strategies, self-storage owners can move beyond simply increasing rent to create a thriving business that optimizes profitability and fosters long-term growth. As a self-storage broker, I like to remind owners that every $1 in incremental income (from increased revenue or reduced expenses) on a monthly basis represents over $200 in market value!
About the Author:
Tom de Jong is Principal and Founding member of the De Jong Self Storage Team I COLLIERS and was an original founding member of the Colliers Self Storage Group within Colliers with 18 years of dedicated self-storage brokerage experience and over $2 billion in self-storage sales. The team helps investors buy, sell and build self-storage assets nationwide. Tom can be reached at (408)724-0337 or tom.dejong@colliers.com
