DO MORE Webinar: Navigating The Supply Crunch In The Self-storage Industry
Host: Matt Beal
Let’s jump into today’s webinar. So if you guys can kind of recall back to a month ago, for those that attended our first webinar, we discussed the most impactful forces that we’re facing as a storage industry. And what we’ve been talking about is kind of how we can position ourselves to address each one of those. And so at Storable, one of our primary goals is to help navigate, or help operators navigate the self-storage industry. And ultimately, we believe that this is a really critical component in that strategy.
So we believe that we’re uniquely positioned to help provide that information, to provide that guidance, needed to navigate things like macroeconomic forces, things that are happening to other kinds of similar industries to the storage industry. And we also talk a lot about what specifically is happening in the storage industry, again, so that we can discuss what you can do as an operator to position yourself for success in the coming six months, 12 months, 18 months, etc. So we’re thinking about the long term here.
And so we kinda think that we are uniquely qualified to tell this story for three main reasons.
One is the breadth of our client base. So, at this point, we work with over half of all of the storage operators in the US, and we have a lot of conversations with those clients. And it gives us a unique view, a very broad view, into how various operators and managers think about the industry – both small and large operators.
We also have in-depth industry expertise. So, with a whole bunch of our legacy brands that make up Storable, such as SiteLink, and StorageEDGE, and SpareFoot – when you start to think about how many years we have been in this industry and how much expertise there is, we have a whole bunch of marketing, operational, and data-driven expertise that we want to share with the industry.
Then, lastly, is the volume of relationships, and this is the one that gets me the most excited. Which is the idea that we have really strong relationships with various industry associations and other vendors in the industry. And so, when you combine that plus all of our client relationships, we have a really unique vantage point that we like to be able to kind of aggregate and then share out with you guys.
And so, we believe that the value in these webinars is going to come from conversations with various operators, and we’re really excited to be included in that. Again, today, we have some Q&A, but we do have some roundtable discussions and some other stuff coming up in the next few weeks that we are equally as excited about.
But, I do want to start with a quick introduction of myself. So, my name is Matthew Beal, and I’m a Product Marketing Manager here at Storable. And I’ve been in technology through a variety of, some other companies, over a combination of a little bit over 10 years now. But, specifically, I’ve been in the storage industry for five. And so, as part of my job, as a Product Marketing Manager, I work closely with our clients, and with some industry associations, etc. But ultimately, to understand, what are your business challenges? How are you thinking about the things that are impacting our industry? And ultimately, ensure that Storable technology actually helps you address those things. We don’t want to just build technology for the sake of building technology. We want to do it so that it’ll help you guys solve key business challenges.
And so, this kind of content, these webinars, these conversations with our clients, are really what gets me excited and gets me going. So, I’m very passionate about this kinda thing, and, you know, excited to be discussing it with you here today.
So, I want to start with some context. Again, this is kind of a quick review of what we discussed a month ago, but what I want to start with is: What are the four market forces that we are currently tracking here at Storable?
You know, as I mentioned before, we have very regular conversations with operators, vendors, industry associations, etc. That ultimately kind of informs all the different things we’re hearing from people to understand how other folks are thinking about the industry. And what came out of that is the four main categories of things that we heard.
One is this concept of tenant shift to digital. And so, there’s a number of indicators that consumers are, tenants are, prospective tenants are, preferring or even expecting, digital forms of engagement with their business. And so, this is something that is likely to be one of the longest-lasting impacts of the health crisis on our industry. We saw a lot of people switch over to things like Zoom in our personal lives, And then, in the storage industry, we saw things like online movements, and auto payments, you know, self-service, tenant tools, those kinds of things, to generate some traction. So, we’re not discussing that today, but we will be having a subsequent webinar in the next couple of months on this topic because we think this is a very critical key, an important one.
What we are discussing today is this concept of the supply crunch, and so, what I mean by the supply crunch is this concept that we don’t have enough available supply in the industry to meet the current tenant demands. And so, for folks that have been in the industry since 2015, you’re very familiar with this. We’ve been through this recently, right. And so, we have kind of a playbook that we can call back to and just kind of remember back and talk to some operators who had been in that space to understand.
Today, we’ll be doing a deep dive and understanding what some of those kinds of key things are that you can do in response to them to the supply crunch, but over the coming weeks or the coming months, we will also be having some follow-up webinars, where we’ll be having some operators on for a roundtable. So, we can learn from people that were around in 2015, and how they were able to achieve success and manage through that kind of thing.
The other one is labor shortages. And so, this is another one, lingering kind of from the health crisis, although there have been some key kinds of positive indicators coming out of this camp lately. But the idea is that labor in a variety of ways has affected the self-storage industry. One of those ways is by affecting the supply chain of construction costs. So we’ve seen, you know, lumber and steel and all that, raise prices really high over the last six to nine months. But we’ve also just seen some operators that are struggling to hire managers, and so there’s a variety of reasons for that. But it’s definitely one impacting our industry.
Then, lastly, is this concept of gross via M&A. And what I mean by M&A is mergers and acquisitions. So historically, you know, especially when construction costs are high, we see – and when we’re in a supply crunch where there’s not enough supply to meet demand – we see operators respond by building facilities. But, because of the construction costs being as high as they are, instead, we’ve seen larger operators grow by M&A – mergers and acquisitions. So, they’re purchasing large swaths of facilities, and they’re just adding them to their existing portfolio so that they can continue to grow their bottom line.
But as I mentioned before, today’s conversation is going to be on the supply crunch. So I want to start with just a high-level overview of how we’ve seen this play out in the industry.
So the easiest data point that we can point to whenever it comes to this, is occupancy. Because if there’s not enough supply, and there’s plenty of demand, we would expect occupancy percentages to be very, very high. And as you can see here, we’ve seen, in 2019 and 2020, a pretty consistent growth of occupancy there, excluding the summer months, where they kinda met in the middle, 2020 was well over 2019. But in 2021, we have seen it just kind of blow out of proportions, it is significantly higher. And so this is for a couple of reasons.
Well, one is, again, just the concept that there’s not enough supply for the demand. But I think the more interesting thing that I’d add, is that it’s compounded by this idea that we were expecting a lot of folks that moved in during the health crisis to have moved out of their storage unit by now. That’s kind of a typical thing we would see in this situation, but that has not been the case. And so, when you combine the fact that we had record demand last year, those folks didn’t move out, and now we’re seeing another year of record demand on top of that, which plays out in the way you see here, where we are seeing really, really high occupancy percentages.
And so, you know, traditionally, operators have kind of thought about, we’ve had the luxury I should say since 2015 after we’ve come out of the life supply crunch, we’ve had the luxury of just thinking about the simple, you know, the concept of occupancy is a way for us to grow. Because if you can just continue growing occupancy and optimizing a few other parts of your offering, then you’re probably growing your bottom line. But what do you do whenever you’re well over 90%, for example? Well, then you have to think about your business in a very different way. So we’ll get to that here in just a moment.
The other thing I wanted to flag is that, as occupancy rates rise, you would expect operators to start raising their prices on both their existing tenants and their new tenants. And what you’re seeing here is exactly that. So, 2020 and 2019, we’re kind of, I would say, neck and neck there. They kinda fought a little bit, but, generally speaking, they stayed about consistent. But in 2021, we’ve seen operators just continue to raise their rates month over month, over month, over month. And yet, the occupancy percentages are rising at the same rate. So what has traditionally been the playbook is also not really affecting occupancy.
So this is an effective tool. This is something we encourage our operators to do, but it’s just interesting to see that even in this situation, it is such a powerful supply crunch that as you’re raising these rates, occupancy is not moving down. And so that’s continued to be the pace.
It is worth noting – I don’t have a slide on this, but this has come up in conversation a couple of times in our previous webinars – but, you know, again, we would expect operators in this kind of situation to start building new facilities, right? It’s very logical. But unfortunately, because of these rising supply costs, or the construction costs, we haven’t seen nearly as much as that. And so it’s going to be interesting to kind of see how that ends up playing out over the coming months, and, frankly, over the year, maybe even 18 months before we see some substantial change.
So you might be asking the very natural question, so if, you know, just raising rates and focusing on occupancy isn’t enough to continue growing your business. How do you make sure that you have a playbook? How do you have a clear set of guidelines and things that you maybe aren’t doing today, that you should be doing to continue growing, and to continue having success in the face of this supply crunch? Because frankly, we have reason to believe this is not going to be resolved anytime soon. It takes time to build facilities, It takes time to, you know, create a new supply. There doesn’t seem to be any sort of down-taking demand, even up until this past month. So, you know, you have to think about it differently.
And so as a north star, kind of going forward, as opposed to just thinking about your business on an occupancy guideline, we’re recommending more granular measurements. And so by doing so, you’re gonna start to see some new opportunities that open up. If you’re thinking about it just one step down. And so you can either think about your business, on a revenue per tenant, revenue per square foot, or revenue per unit model. And so we’re not gonna spend a lot of time talking about the specific differences between those three, although they do exist. There are different ways that operators think about their businesses.
Some folks even look at all three of these on a regular basis to make up their mind. But ultimately, what I want you to take away from this is, instead of thinking about occupancy entirely, we need to be thinking about it on a per fill-in-the-blank basis. For the sake of today’s webinar, I’m just going to keep it simple and think about it on the revenue per tenant. I think that’s the easiest one to wrap our heads around, you know, it’s ultimately one customer, how can we provide more services to that one customer. But today’s webinar is all about diving into opportunities for exactly that.
And so, as we’ve had conversations again, with operators that have been through this, we’ve talked to some industry associations, etc., There’s kind of three main opportunities that are what I would call low hanging fruit, very obvious things that you should be doing, that that can help grow your business in these high occupancy strategies.
So, the first one is Revenue Management. And this one is actually known as a few different things in the industry. You might hear some different terms, but it all ultimately means the same thing. The other more common one you might even hear is field management. But the idea behind it is very simple. And so it’s the idea that if you’re above a certain percentage of occupancy, you probably want to make sure that you’re continuing to raise your prices on both your existing tenants and your street rates because people are telling you they’re willing to pay that. That’s why your facility is at such a high occupancy.
The reverse is also true. If you were happening to, you know, drop into 70% occupancy, it probably means you’re charging too much compared to your competitors. And so, it’s an opportunity for you to consider dropping the rates. A little bit less applicable in this and the supply crunch, but it’s still worth flagging.
The second is Tenant Insurance. And so this is a huge opportunity for operators to kind of fortify their revenue at the tenant level. It is a unique offering that you offer per tenant. And so that’s very straightforward, very obvious. But what’s so important about tenant insurance, what’s great about it is that it does that, it helps you continue to build your business. While providing an incredibly valuable service for your tenants, right? And it also helps you reduce risk at your facility. There’s a whole bunch of other benefits, so we’ll dive deeper into that in a moment.
Lastly, is this concept of Sales Add-Ons. Another one that’s just kind of an obvious per tenant thing that if you’re not doing already, you should be considering. And so, you know, what we mean here is attaching things like retail merchandise, such as boxes, or locks, etc., to each sale. Because ultimately, if you are selling these things per tenant, you are increasing the amount of money that you’re capturing for each of those, it does have the obvious downside of being a one-time transaction versus some of these other ones that are kind of a recurring thing, but it is still important for us to be considering.
So, first up, I want to jump into Revenue Management.
So, this is obviously one of the most commonly implemented tools that are available to you to be able to drive value at the pertinent levels, revenue management. And so, as I mentioned before, yield management is another phrase that you might hear, but I will say this is one of the most commonly misunderstood concepts. What we find, many people just think of revenue management as a way to just strictly raise rates in your tenants. And so, that generates a lot of bad taste in people’s mouths, especially for a lot of the smaller operators to think of their business at the community level, which makes sense, and we fully support that. And so, the common refrain is essentially, well, I don’t want to just always raise prices on my existing tenants. And so, it’s not really as simple as that.
What we’re really trying to figure out here is, how can we discover the optimal market rates that your tenants are willing to pay for your units, right? And so whether that means that you need to raise prices or lower prices, it’s all just about simple economics and figuring out how much people are willing to pay, and therefore, how can you continue to provide that valuable service to each of your tenants.
And so this can be done manually. And a lot of people do it manually. They just kind of look at the prices, maybe they’re googling their competitor’s websites to figure out what they’re charging there. They’re raising them a little and dropping them a little? The problem is there are two kinds of problems with that. One is, it is a time-consuming process for you to do that on a regular basis, it just takes a lot, a lot of time.
But two and I would argue maybe, more importantly, is that it’s very error-prone. By doing that on a very regular basis, you’re leaving the opportunity for you to accidentally adjust too far. Maybe you forget about it, and you don’t come back to it, and you don’t ever get it changed. And now someone’s moving in, and it turns out the price that they’re thinking they’re paying is not really what you think they should be paying, And it creates kind of a bad customer experience.
And so, we’re not gonna get into the technology side of this too much today, in terms of what the options are available. But what I would just say is there is a wide variety of technology solutions available to you to help manage this in an automatic way, so that your business just continues to grow, while you’re focusing on the more important things. The less manual labor and you can provide optimal customer experiences, and you can be communicating with them, clean the facility, etc. There’s a wide variety of things that you much rather be spending your time doing.
But I do want to dive a little quick into how this revenue management works.
So, first off, for the sake of just a simple exercise here, let’s assume that your facility is sitting at, let’s call it, 85% occupancy. Something that you might see during, like, a normal time, not during a supply crunch, right? That’s a little low for what we’re seeing nowadays. But for the sake of simple math, let’s say that, you know, one of your units you’re charging $100 a month for. So, the natural question is, how would you react if your occupancy, for example, dropped from 85% to 75%?
Well, again, we discussed this a moment ago, but that’s a pretty good indicator, that you’re charging too much for your services, that people aren’t willing to pay that $100, and that’s why your occupancy is considering continuing to drop. And so, in that situation, an operator might utilize revenue management, which would automatically recognize these things. And it would change your prices from 100 to 90 without you ever doing anything, Which would then encourage people to come to move into your facility at a better rate, and they’d be, you know, coming to you, instead of your competitors.
But the opposite example holds true, as well. So, like, this is more applicable now to where we’re at in a supply crunch. So if you’re sitting at 85% occupancy, and you’re charging $100 for a unit. And you move up to 95% occupancy, for example. Well, that’s a pretty good indicator that you’re charging significantly less than what that unit can command out there on the market. And so, in that situation, we would recommend that you increase your street rates up to $110, for example. Again, just simple math, just arbitrary numbers, right. There are a variety of ways that you can calculate this and determine the amount you would charge for the unit. But the point is that you have an opportunity to capture more dollars every single month for that unit. And so what this is going to naturally do is, it is going to result in some folks potentially leaving your units. But again, that then allows you to capture somebody new to come in at that new $110 rate. Because that’s ultimately what the market demands.
One thing I would note, too, that we always recommend for operators, is that you never want to be 100% occupied on any of your units. And so that’s an important distinction of not just looking at occupancy at your whole facility, but at a unit by unit level. And that’s important because you’re able to then use that extra unit to be able to determine just how much you can charge for that. So you always want to be able to test and continue understanding what you command, and then determine what you can do for your existing clients. And so, that’s the last concept I want to cover, is that, especially during the supply crunch, when you’re already, potentially at 95% occupancy, it’s important to think about the kind of effects it has on your business.
So, let’s say that a year ago you had someone move in at 75% occupancy at $90 because – maybe a year ago is a bad example, because we all saw a great demand a year ago from COVID too – but let’s say two years ago, but now that same unit commands $110. Well, it’s really important that you’re also adjusting your existing rates to be able to match. And so whether or not you want to do that and just one big fell swoop. Or if you want to do that, more realistically as like a 5% increase every couple of months up until they get to that point, so that way it’s not as jarring of an experience for that client. It is important that you are starting to move the needle in that direction.
And so, revenue management, again, this is a concept that you could do manually, but there are technology solutions available to manage all of these things automatically behind the scenes, while you’re focusing on things like buying conversations and providing that. And this is by far, the most effective way, in our opinion, to be able to continue growing your bottom line. And most importantly, it requires little to no effort for you, especially if you’re using a technology solution behind it.
So, the next concept I want to discuss is Tenant Insurance. So, as I mentioned before, this is a really powerful way, yes, to create recurring incremental revenue, but, most importantly, to provide a valuable service for your tenants. And so, you know, it fits really, really squarely into this conversation, thinking about the revenue per tenant model. But the value in these kinds of programs really comes from execution.
So, one thing that we’ve heard from our operators, you know about tenant insurance, is one of the things that we hear gets pushback. It’s just that, they maybe aren’t getting the penetration rates that they thought they were going to get. Just because you’re offering it doesn’t mean that people are just going to purchase it. So, it’s really important that you have a healthy tenant insurance program. In our opinion, we see that as kind of three main components that you need to be focused on to be able to hit the penetration rates that you’re targeting.
Number one is this concept of Manager Training. So, if your manager does not buy into the value of insurance, and if they don’t know how to clearly respond to objections to, you know, common concerns about insurance, then how, you know, how likely do you think your customer is to also see the value?
This is our opinion, one of the easiest and fastest ways that people kind of start to fail on their penetration rates here. And so it’s really important that whoever you pick as your tenant insurance provider, has a solid educational portion of their offering. So that they can help you, and your team, train your managers so they feel confident articulating the value. And then, most importantly, also overcoming objections on that, because as we know, insurance definitely will have some significant objections.
Number two is Expiration Tracking. Most operators do a really good job of tracking policies upfront. So when you move in, do you have a homeowner’s policy? Do you want to purchase one of our policies? And this whole thing is pretty well done. What is not well done, is what happens when those policies expire? I mean if it’s a store policy, you probably have something in place. But what happens if they provide a homeowner’s policy, for example, that expires? Do you just let that person continue to stay without insurance? Like that’s probably not a great experience. And so it’s important that you have some sort of either process or technology in place that will help you track that, so you can outbound to those customers and ensure that you either get an updated policy to make sure that both your tenant and your risk remains low. Or you can sell them on one of your own policies, and so going back to the supply crunch, this is another good way to continue to increase that penetration rate and sell them one of your own store policies a little bit later down the road.
Then lastly, Performance Reporting. So, you know, what gets measured gets managed. It really is as simple as that. So if you don’t have really solid reporting into – who at your facility does have a policy, who doesn’t, when they’re going to expire, understanding what your opportunity is – then you’re probably not going to improve very much on this. It’s also very key that you understand kinda which managers are doing well, which locations are doing well if you own multiple locations across your portfolio. And it helps you kind of identify where you have opportunities to double down on your training or to double down on the tracking that we discussed a moment ago, and make sure that everyone’s on the right policies and procedures to deliver on that.
And so lastly, this one will be pretty quick, but I do want to discuss sales add-ons because I do want to get to your questions here in just a moment. So if you do have any questions that have come up, with just one last reminder, please get those in right now and we will get into them here in just a second.
But the last thing, kind of the most traditional way of thinking about revenue per tenant, is this concept of sales add-ons. And so if you’re not offering valuable products to the tenants that move, that is kind of related to their storage experience, you definitely should. This is a huge opportunity for operators. And so we kind of recommend that you put yourself into your tenant’s shoes, to make that call, and to understand what you should and what shouldn’t be offering.
And so the first and most obvious unit is a Unit Lock. And, I don’t think I need to spend a lot of time here, I mean most facilities require that you have a lock on your unit. And while, yes, they could bring their own lock in, it’s also important to note that, it’s not something that they’re gonna want to go drive down the street and have to go buy a lock. Especially if the convenience of you just having it there in-store is there. So this can be a really substantial revenue driver for businesses, especially those at scale.
The next is a little bit more creative, which is just that, you know, why would people keep Moving and Packing Supplies stocked at their own home? The reality is, we’ve done a lot of surveying with customers as part of the SpareFoot marketplace. We’ve served over four million tenants that have rented storage units through us there. And we survey them and ask, Why do you need storage?, among some other questions. Just to see what’s driving them onto our website. And ultimately, moving is consistently one of the top two answers that we get, every single month.
And, so, if you’re not providing things that are going to be helpful to them during this life stage, then you’re missing out on a big opportunity there. So, even if they don’t necessarily need it to move into your facility, they might be just trying to move from house to house, and they might as well grab it while they’re in your facility instead of going down the street. So things like boxes, whether it’s traditional boxes, wardrobe boxes, or wrapping paper, bubble wrap, etc. There are so many different things that you can be offering there that can help you drive again, revenue per tenant.
Then lastly, as though specifically for your storage experience, there are Storage Supplies too. So, you know, mattress covers – if you leave a mattress too long in a storage unit without being covered up, that can definitely cause damage to it. Same with art, especially if they’re not in a climate-controlled unit, for example. I mean, they should be if they’re storing valuable art, but you know that. Or things like blankets to be able to cover TVs or valuable electronics, that kind of thing. But again, ultimately, all of these things, just ladder up to, why are my tenants needing storage from me?, and what can I provide to help them throughout that entire experience?. It’s a value-added for them, and it’s a revenue driver for you.
The last objection I would cover here is, a lot of times when we talked operators about that, they’re like, well, yeah, it’s obvious, and this makes sense. But the reason I don’t personally invest at least heavily in this is because of the idea of big-box retailers like Wal-Mart, Home Depot, Lowe’s, they just have crazy better margins than I could ever possibly get, right? Whether they’re getting just reduced costs on these items or whatnot, or just being at scale. But I think that one thing just to flag is, I think a lot of operators severely underestimate the value of convenience to the tenant. So, if you look, for example, at some of the biggest operators out in the space, and so I’ll just pick on Public Storage, for example, every single one of their stores is stocked with this stuff. They wouldn’t be doing this if that wasn’t a value add to them. And sure that they get a better economy at scale to them, than a smaller operator would, but ultimately, it’s about that convenience.
It’s about the fact that if I’m forced to make a decision and I have to pay an extra $10, for example, for a set of stuff I’m buying from you, or I have to contemplate going 15 minutes down the road and 15 minutes back, and I’m already moving, and I’m sweating, and it’s a stressful day, I’m probably just gonna pay the extra $10. So, that’s just an important thing to keep in mind. But as you extrapolate these things over scale and over a period of a year, it’s a really valuable addition.
Then, the last concept, I just wanna give you a quick little bonus. And so, today’s presentation is focused on the incremental revenue, the new revenue opportunities that you have. But there is another side of this coin too, which is that if you want to continue growing your bottom line, you can reduce your operational costs, too.
And so, last month we talked about how kinda tenants are preferring, or are expecting digital forms of engagement. And so the benefit of those digital forms of engagement is that you’re reducing the amount of face time that you have to spend with each of these customers as well.
And so there’s a few different things that I just want to cover briefly, and the first is Tenant Self-Service Tools. So again, if your tenants are spending time taking up your manager on the phone, making payments, all this kind of thing – that’s one less thing that your manager could be doing to provide value back to your facility. Or make sure that they’re right there, ready and available, to sell tenant insurance to a new prospect, that kind of thing. And so it’s important that you’re reducing that operational burden.
Two is Tenant Communication. So the same idea, you’d need to make sure that you’re communicating with your tenants, and you can do this in an automated fashion. So, instead of relying on a person to do it, you can use things like automated email, or automated text messaging, all these kinds of things, to make sure that they have exactly what they need to be able to move in. And, if you’ve made changes to your facility, that they’re aware of it without ever having to take up you, or your manager’s, time.
Then lastly, is Task Management. So we hear a lot from operators that they spend more time trying to figure out what they should be doing. Especially as their business continues to grow and grow and they’re at high occupancy. Then they do, actually doing stuff, and delivering value. And so this is another kind of technology-based solution that we just recommend is that if you’re manually managing your to-do list, you’re probably already behind the eight ball. There are a lot of facility management software products out there, for example, that will use triggers and so it’s like if somebody becomes delinquent, it will give you a task list to call out on this person and do a collections call. So instead of going to figure out who is all delinquent, all you have to do is just look over there, and there’s a new bullet point, and you just call that person. It makes your life much easier and allows you to focus on driving revenue back to your facility instead of reducing your operational burden costs.
And so just, in summary, I’ll be quick here, because I want to get to Q&A.
Revenue Management: Really great opportunity for you to make sure you’re charging the right amounts for your units and you’re getting what the market demands.
Number two is Tenant Insurance: Making sure that you’re getting that incremental revenue while providing a really valuable service for your tenants.
And lastly Sales Ad-Ons: These are just things that, hey your tenants are coming to you during a tough time, they’re moving, their storing, or whatever. It’s not always fun on that day. Make it really easy and convenient for them to get what they need from your facility while generating an incremental revenue stream.
And so Alex, I’d like to open the floor to just a couple of questions here. Did we have anything come in?
(Alex) Hi Matt. It looks like we have one that has come in so far. Just a reminder, if you do have questions you can ask those via the questions panel on the GotoWebinar control area.
The question that we have right now, is what are you guys seeing as the typical margin on Sales Add-Ons?
(Matthew) Yeah, I actually don’t have a good read on that. That is a really great question. What I can do is, I can get a feel for – I have some contacts I can reach out to and can get some information maybe about you and your business, and what part of the country you’re at, what scale you are, and we can see if we can track some of that down for you.
The reason I don’t have a good read on that is that, while we do have, at our facility management software level, we can kind of see what you guys are charging, we don’t know what the costs are, and what you guys are necessarily paying for. So, I don’t have a good read on the margins, but I’m glad to connect you with someone that can maybe help you get a good read of that.
(Alex) All right, thanks, Matt! Let’s see, we’ve got one question, really quick, that’s a general one, that I can answer for everybody: Will there be a recording available later?, and the short answer is yes. After the webinar is completed, we will email out a recording to everyone who attended, registered, so that they can circle back and watch at their leisure.
Um, the next question, Matt, is: If your facility is behind in rental rate increases, how often would you raise the rate to reach the current rates?
(Matthew) Yeah, that’s a really great question, because it ultimately impacts the customer experience. And so, when I talk to operators about this – revenue management is tough because a lot of people think about it in very different ways. What I will say, the most common way I’ve heard this addressed is typically based on where they are in the country. And I know that sounds a little strange. But, for example, in New York City, a lot of the time, self-storage facilities aren’t necessarily thinking of themselves as part of the community in a way that a rural facility would. Where you very much know every single member of that town and you kinda know who their sons and daughters are and who’s on the football team, etc. And in those situations, we’ve seen people be very conservative in the rural situation. Where, it’s like, maybe you wait, and every three months, you do a 2% raise, and so it’s going to take you quite a while before you ever get up to what your street rates would be. But that’s a decision that makes sense to them. Because they, again, don’t want to cause any disruption in the industry or the community, and they feel like this is just something that they’re more friends than necessarily just seeing them as customers.
By contrast, we see a lot of people in bigger cities, where they feel like they can get a little bit more aggressive about that because they feel more like a commodity than they do a kind of a community-based service. And so, at those times, we’ve even seen they’ll raise their rates by 10% or 15%, and they’ll do it again the next month. That’s an extreme example, but they would, they would be willing to do so. And so, it’s ultimately a decision that each operator needs to get a feel for. Also, the other thing I would encourage you to do is look at how your competitors are addressing that. So, you know, if you’re concerned that maybe you’re going to come across looking like a money grab, but you know you need to do it, and you think that none of your competitors are going to do it, then maybe you go a little bit more conservative. Or the opposite holds true. If you see that they’re starting to charge significantly more, then maybe you can get a little bit more aggressive, knowing that that’s just kind of the expected experience around you. So, yeah.
(Alex) All right. Matt, how are we doing on time? Do we have time for a couple more?
(Matthew) I think we probably have time for one more. And then I will definitely, still, just to be clear, follow up with everyone who submits questions outside of the webinar. But, I also just want to be respectful of everyone’s time. But yeah, let’s take one more.
(Alex) Alright, how about this one: What do you think the main friction points are for customers looking to reserve online instead of through a phone call or walk-in?
(Matthew) Yeah, it’s a good question and it’s one we spend a lot of time thinking about at Storable. I will say, I specialize in our facility management software products, not our website products, which is where our online moving experiences happen. So, take everything I say with a grain of salt there.
But, what I will say is that we’ve seen a lot of – we’ve actually been surprised that there hasn’t been a lot of friction. And, so, what I mean by that is, historically, we’ve kind of created some experiences where maybe people are in augment. They are a supplement and on the move-in experience. So maybe you treat it more as like a high intent lead but ultimately you don’t necessarily close the deal until you get people on the phone. And so over the past year, especially in response to Covid-19, I look to the SpareFoot Marketplace. Where we embedded full online moving experiences for both our SiteLink FMS and our StorEDGE FMS customers. So a tenant renting off of SpareFoot can go ahead and complete their entire online, moving experience straight from the SpareFoot marketplace.
And one of our concerns, just something we wanted to contemplate and make sure that we were doing right by our customers is, well, does that provide a bad experience where maybe they need to know more about the facility? Do they want to talk to a person? An, overwhelmingly the answer was no. So, especially if you’re giving them everything they need to know upfront. And then I would say, most importantly, as long as you are following up with them after the online moving experience to give them the information that they need on move-in day. So, maybe that’s a text message with the gate code and where your facility is, and a couple of landmarks in the area to help them kind of navigate and spot your facility. Then, ultimately, what we found is, especially over the last 18 months, since COVID, is people are overwhelmingly using online move-ins. We’ve seen, I think, a five percentage point jump over what the previous year as compared to walk-in traffic the year prior. So yeah, I think clear expectations are like the direct answer with a whole lot of context, as to kind of how we’ve approached that, and how I think that our operators should be approaching that, too, with designing their own online moving experience.
All right. Well, hey, we definitely appreciate all of you guys joining today. I did want to just through one little quick, last bit of context. And so, again, if anyone else did submit questions, I will be following up with you directly. I’ll probably get you an email later this afternoon with answers to anything else that came in.
But a little bit of context here, so today was our supply crunch deep dive. But in five weeks we are having our supply crunch Operator Roundtable. So this has been a kind of a crowd favorite for quite a while.
What we mean by an Operator Roundtable, is we’re going to be bringing on, probably, two to three operators, who have been around since 2015, and were there during the first supply crunch. And they can give a little bit of context about how they approach that, some of the things they wish they knew going into it, some of the things that they’re doing this time around to be able to position themselves for success. And so we’ll find some savvy operators again with a lot of expertise, a lot of tenures, and we’re going to be coming on and answer your guys’ questions directly. So, please come to that. We’ll be following up with an email on that in the coming weeks, so just be on the lookout.
Then in November, we’re going to start shifting our conversation over to our other hot topic, which is Tenant Shift to Digital. So we’ll be doing another presentation like today, where we can talk more about these digital experiences, and what tenants are preferring, and how we can respond accordingly to ensure that they are set up for the experiences that they are expecting.
But that does conclude today’s webinar. So we very much appreciate you guys showing up. As I said, this is something I’m very passionate about. It is not lost on me that you guys are spending your valuable time with us. Thank you so much.
If you do have any questions that pop up after today’s webinar concludes, please feel free to send it over to [email protected], I manage that email myself, so I will get back to you guys and chase down some answers. If I don’t know the answer, I’ll find someone who does, and we will definitely be able to help you guys out. But other than that, we’re looking forward to seeing you on Friday, October 8th. So, otherwise, just stay safe, stay healthy, and have a great weekend, a great long weekend! All right, take care.