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  • Operations & Revenue

    Ignoring everything that is happening with COVID, we have a location in the Northwest of the US, and since taking the facility over a few years ago, the unit occupancy has been a bit shakey. Revenue on the other hand has month after month gone up because we have introduced, Admin Fees (move in and transfer), phone payment fee, late fees and other delinquency charges, protection plan, and of course rate increases. The staff have done a great job of combating all the issues with taking over a new store, as well as some much needed, and very good looking upgrades to the office (gutted and remolded), new gate (it's big and intimidating), new gate entry system with mobile app, new website with payments + online rentals, call center, extended office hours, and the addition of U-Haul rentals. The manager there has been with us just a few months short of the time of purchase, so she's been through a lot of changes. What I would like to hear from everyone, so that I can show her this thread, is your thoughts on our operations so that she can see that what we do is more standard than us pulling policy out of where the sun don't shine . We were all going to go to the trade shows this year, but we all know what happened.

    Standard Rates: For the longest time, our standard rates were lower than the area because the unit occupancy was really low and we had a lot of units empty. As we became fuller, rates began to reflect the average of the area and when we hot 95%, what we did was who ever had the highest rate for the unit size, that became our standard rate and then yes we do have managed / push rates when a unit occupancy hits 90% + full. So in some cases our standard rates are higher than the area, but we are also fuller than the area. Thoughts?

    Protection Plan: We introduced this in our notification to customers that we are the new owners that our lease required coverage and we'll accept private coverage to cover the unit, but if none was provided we would enroll them in the plan to meet the requirements of the lease, as expected, customers felt this was an increase, but at the end of the day we sat at about 75% enrolled in our plan, below our 89% at other sites. As time goes on, the big problem we have is enrolling new customers at this site to the plan, what are your thoughts and practices to increase participation in your plans?

    Rate Increases: This is our biggest area that is hard to explain and have staff understand and how to defend the changes. What we did was split the site in 1/9th (we plan on doing increases every 9 months) and started with the lowest paying VS the standard rate. So we knew that the first few would be rough because the lowest paying ALWAYS complain the loudest. The first round was easier because we could justify the changes over all the improvements, many the customers applauded at the improvements. But with rounds 2+ they are complaining and the manager is having issues with them herself as some feel we are gouging, because we can change at anytime. Thoughts on how to combat customer complaints and manager responses.

    What are your thoughts and practices?
    Thanks!

  • #2
    Rate increases are always going to cause complaints. We offer to either a. split the difference, or b. push the increase back a month or two. Make sure that the new rate is still below the street rate, then tell them that your expenses go up, taxes, utilities and just like any business the costs get passed on. After awhile they'll settle down-you need to realize that the last owners probably didn't do any-so there are going to be growing pains. If they go to a reit it's like every 6 months.

    As to the protection plan. I just say, (make sure website/Sparefoot etc shows it) that we require insurance. They can purchase ours or provide the declaration page for their own. Make sure they know it's non negotiable. If they're fussing about paying extra, then tell them to bring in their own and they don't have to pay extra. (mention it in any calls so they can bring their with them and avoid having to wait)

    We also offer a 'free month' of insurance in case they forget, but remind them that they have to being in their proof before we cancel ours. It's for their protection. Also, it makes it easier if there is a disaster/theft etc.

    Tell your manager that there will be whining, just be empathetic but firm. They can suggest that the tenant moves to a smaller unit to save money if cost is truly an issue as well.
    Even duct-tape can't fix stupid. But it can muffle the noises.

    WA State

    Comment


    • #3
      Congrats on getting that Revenue up. To the manager: everything that is being done, rate increases, insurance, admin fees etc. are all standard storage business procedures. I have been in storage for 16 years and no matter what storage facility or company I have worked for, its all the same across the board. I am sorry your dealing with irate customers, as a storage manager I feel your pain as we all have dealt with customers for these exact reasons. If your customer comes in or calls and they are upset or yelling, allow them to finish what they complaining about, do not interrupt them to correct them or talk over them or anything. Let them vent, sometimes people need to feel like they are being heard. Once they calm down, always speak in a calm, soft voice and say, how you understand their frustrations and you are there to help them understand how storage procedures and practices work. Start with rate increases and state you understand the frustration of having the rate go up, just like any utility company, rent, mortgage, etc. they all have increases as the cost to run a business increases. One ex: is at my current facility, we are brand new and our rates are slightly higher than our competitors, when a customer comments on the higher rates I explain.... that I understand our rates are slightly higher, but the facility is brand new, we have over 30 cameras, alarms on all the unit doors (throw in any extras you offer; we have a coffee station for tenants, free wifi etc.) So when they say the rate is too high, you can say well the rate includes more than just the unit, you get all these extras (list them out loud to the tenant) like awesome security cameras, this wonderful state of the art gate system etc. Also if you shop your competitors, keep it updated weekly and printed out for easy reference so when they complain about the price, you can say, that you assure them that any storage facility near you (usually within 5 miles) is similar in the rate and again point out any perks your facility has to offer (Like us, we are the only facility in town that has alarms on units). If they still are rambling on about the rates, ask them if they would be able to down size, perhaps there are things in their units they've been meaning to throw out, give away, donate leaving them with less space needed and saving a few dollars a month. With the admin fee, this is straight up standard storage procedure, I usually call it the set up fee instead of admin fee, I start off right away while giving rates and state, we do not charge security deposits but we have a one time non refundable set up fee. If they ask what a set up fee is, explain it as a fee all storage companies charged to set them up in our management software and gate software etc. allowing them to do online payments and so forth... I could go on and on, but a that point it would turn into a book....lol

      Comment


      • #4
        Originally posted by KrisinWA View Post
        Rate increases are always going to cause complaints. We offer to either a. split the difference, or b. push the increase back a month or two. Make sure that the new rate is still below the street rate, then tell them that your expenses go up, taxes, utilities and just like any business the costs get passed on. After awhile they'll settle down-you need to realize that the last owners probably didn't do any-so there are going to be growing pains. If they go to a reit it's like every 6 months.

        As to the protection plan. I just say, (make sure website/Sparefoot etc shows it) that we require insurance. They can purchase ours or provide the declaration page for their own. Make sure they know it's non negotiable. If they're fussing about paying extra, then tell them to bring in their own and they don't have to pay extra. (mention it in any calls so they can bring their with them and avoid having to wait)

        We also offer a 'free month' of insurance in case they forget, but remind them that they have to being in their proof before we cancel ours. It's for their protection. Also, it makes it easier if there is a disaster/theft etc.

        Tell your manager that there will be whining, just be empathetic but firm. They can suggest that the tenant moves to a smaller unit to save money if cost is truly an issue as well.
        Yes to all of this! The most pushback I get is for the insurance requirements. I would say 6 out of 10 rentals complain about it.I simply let them know it is clearly advertised on our website and other media platforms, is non negotiable, and really is for their own benefit. If it costs them nothing at the time of move in because we waived the first months fee, then that gives them a whole month to look around for a better option with a different insurance company. Worse case scenario is the pay an extra $9 a month.
        It can be hard to manage a facility when you are friends with the customers. You can be friendly but you have to maintain that distinction of business vs friendships. Be friendly, but firm. Dont take it personally if the tenant is attacking you for a decision that wasnt yours. Do what you can to make them happy within reason, like Kris mentioned, delay the increase by a month, or split the difference for a few months. If they wont accept your compromise then that is on them. Just smile, be kind, explain the increase the best way you can and leave it at that. You dont owe them apologies or allegiance.
        You Laugh, I laugh. You cry, I cry. You take my coffee...may God have mercy on your soul....

        Comment


        • #5
          Originally posted by evansr View Post

          Standard Rates: For the longest time, our standard rates were lower than the area because the unit occupancy was really low and we had a lot of units empty. As we became fuller, rates began to reflect the average of the area and when we hot 95%, what we did was who ever had the highest rate for the unit size, that became our standard rate and then yes we do have managed / push rates when a unit occupancy hits 90% + full. So in some cases our standard rates are higher than the area, but we are also fuller than the area. Thoughts?

          Protection Plan: We introduced this in our notification to customers that we are the new owners that our lease required coverage and we'll accept private coverage to cover the unit, but if none was provided we would enroll them in the plan to meet the requirements of the lease, as expected, customers felt this was an increase, but at the end of the day we sat at about 75% enrolled in our plan, below our 89% at other sites. As time goes on, the big problem we have is enrolling new customers at this site to the plan, what are your thoughts and practices to increase participation in your plans?

          Rate Increases: This is our biggest area that is hard to explain and have staff understand and how to defend the changes. What we did was split the site in 1/9th (we plan on doing increases every 9 months) and started with the lowest paying VS the standard rate. So we knew that the first few would be rough because the lowest paying ALWAYS complain the loudest. The first round was easier because we could justify the changes over all the improvements, many the customers applauded at the improvements. But with rounds 2+ they are complaining and the manager is having issues with them herself as some feel we are gouging, because we can change at anytime. Thoughts on how to combat customer complaints and manager responses.

          What are your thoughts and practices?
          I just wanted to say that I think that using the forums as laser-guided learning tool for your team is a great idea. I really like what Stacie, WC, and Krisin already mentioned and I had a few thoughts on these as well:

          Standard Rates: It's great that you're already managing your rates by occupancy saturation. Outside of what's already been mentioned in this thread, one thing that might be worth considering as well is Veritech's value pricing model as well, which allows you to price units of the same size at a higher rate in a more desirable location. I think it's a great tool and it has been documented to increase move in revenues up to 10%.

          Protection Plan: No one thinks that they're going to need a protection plan until they're kicking themselves for not getting a protection plan. They're putting these items in storage because they are important enough to keep them, but unfortunately disasters and theft happen. Rain damage, earthquakes, heck I would ask them to Google "self storage facility fire" and see that while owners and operators do their best to minimize potential risk for their tenants, man make plans and god laughs.

          Rate increases: It was smart doing the first round of rate increases along with some facility improvements; I'm pretty sure I read that in Marc Goodin's book "Crushing the Competition: 101 Self Storage Marketing Tips For The Fastest Way To Huge Profits" (it's a good read by the way). Another thing that has been working really well with our users is automatically applying individual rate changes over time. I usually suggest setting these depending on your average tenant cycle, but the average longevity of a tenant is around 10 months so we'll just stick with that. So basically you can setup a rate increase that automatically generates a rate increase notification at 8 months notifying the tenant that the new rate will be applied on the 9th. This is helpful because you can test without affecting a large number of your customers and when they inevitably do complain, it's a single customer vs. 1/9th of your property. In this scenario, I would usually see operators have follow up recurring increases after something like 11 months after that and just set a cap on it so it doesn't go overboard.

          Good luck!
          Kevin Kerr
          Storage Commander Cloud Software
          k[email protected]
          Direct - 951.867.4732

          Comment


          • #6
            Rate increases every 9 months? I've averaged rate increases every 9 YEARS over the 35 years I've been in business!

            Comment


            • #7
              Originally posted by twotoejoe View Post
              Rate increases every 9 months? I've averaged rate increases every 9 YEARS over the 35 years I've been in business!
              Well, I was saying that the initial increase was after 9 months and recurring 11 months afterwards. This example was taken exactly from what one of our users does and yes, it definitely seems a bit aggressive but it works for him.
              Kevin Kerr
              Storage Commander Cloud Software
              k[email protected]
              Direct - 951.867.4732

              Comment


              • #8
                Originally posted by Kevin SC View Post

                Well, I was saying that the initial increase was after 9 months and recurring 11 months afterwards. This example was taken exactly from what one of our users does and yes, it definitely seems a bit aggressive but it works for him.
                Our other sites are in So Cal and we are surrounded by nothing but REIT's, so we just do what they do and works for us. Few actually complain because they have been trained to expect it. But this site is in the Northwest and surrounded by small companies that have websites that just say "call for everything" making getting our rates, even renting easier (we do phone, online, and in-store to make sure we get the rental then and there)
                Thanks!

                Comment


                • #9
                  The following is based off real life situation in the last business I owned. I dont own the storage facility I work at so I can't use them here. Plus I'm not getting paid to make the owners more money, only manage the business (their words, not mine)...??..

                  You're running a business, not a charity (Have used this line many times)
                  The tenants are always free to take their business elsewhere because we fully understand not everyone can afford our service. (Used this many times before too.)

                  I ended up with a service business that had fewer jobs than my competitors but I was making more money than they were making plus I had lower expenses.

                  In person i'm not as cold as this post sounds but I'm only trying to get the points across

                  - Higher rates = better tenants (this is not 100% true but its true)
                  - Not all customers are other keeping
                  - You're not renting a storage space, you're giving the customers a secure space (THE MOST SECURE SPACE IN THE AREA) to store their valuables
                  - You're selling that "security" via cameras, resident manager, fences, access codes, etc...
                  - You're selling the cleanest facility in the area without saying a word as long as you keep it clean and landscaped properly
                  - A professional website will sell units more than you could ever imagine
                  - Have shirts/hats/uniform for employees and even as gifts to customers. Let EVERYONE know who you are, your phone number and website. Have a professional design a logo to set you apart from the competitors
                  - Strive to be the most expensive facility in town by having and selling higher quality services. You may end up with fewer tenants but you will be making more money

                  Everyone seems to get wrapped up getting to 100% occupied but when you crunch the numbers its better to have the highest rates and lower occupancy. Ideally you want only one tenant paying $100,000 month vs 600 tenants (80%ish occupied) with a total of $600k monthly revenue. One tenant is easier to manage, fewer expenses related to moving higher in/out, etc.... Granted thats not possible so you need to find the middle ground.

                  I'm all in for writing a book if anyone has the skill set to get that done

                  Comment


                  • #10
                    evansr
                    Agree with everything everyone has said. Your right. They are right. The manager is wrong???

                    Recommend you don’t show the Manager this thread

                    I am a trained Kaizen improvement leader. Imagine the following. A $300 mm sales, manufacturing company has always taken 3 days to do their annual physical inventory. Their union, they get paid the same either way. This is a waste of money. Let’s do it in 8 hours. Who can argue with that? Everyone. It’s impossible. Change is always hard.

                    Think about the following two approaches from the manager’s perspective. Your response will tell them whether they are a valued management team member or an hourly employee.

                    1. Are “They” managing the changes or you? Who is the site manager?
                    2. Are they appreciated? The question is not have you shown them appreciation. The question is from their perspective. Do you drop in and leave a list? Do you allow them to show you around, show the accomplishments and take credit for their efforts? How are their families doing? Let’s sit down and have a beer. No I’m not in a hurry this trip. Let’s barbecue.
                    3. Let’s go for a walk. You probably would say okay. After 5 minutes, an hour or 4 hours you would ask or want to know how far we are going. Key is show the “Manager” the road map of changes. I always get tired faster when I don’t know what path I am taking and how far I am going. Then let them work the plan. Who what when where why. Your steering and guiding. Their managing.

                    Dont know your situation. If this is a seasoned manager they should already know the path. If a new manager to storage they are wore out by all the changes and the changes they don’t know about (how far are we walking?).

                    I have stumbled over every comment and recommendation I have noted above and failed. Hopefully I got it right the second time.

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