If your facility does not have an online marketing strategy, there's a good chance you are already behind. At this point, most storage operators have some sort of web presence. Many storage companies have a website for their facilities, use pay per click advertising, and are listed on a few storage directories. While there are many components to running a successful online marketing campaign, in this article we're going to focus on third party reservation services that help you generate more tenants. You might hear these types of services referred to as self storage aggregators, self storage directories, self storage search engines, etc. These companies help you attract more tenants by driving storage consumers to their websites through various marketing efforts. There are many different websites that provide this service and each one has its own unique model and pricing structure. My company, SpareFoot.com, is one of the vendors in this space. Others include SelfStorage.com (operated by SpareFoot), SelfStorageFinders, USStorageSearch and StorageFront. It is my opinion that every storage operator should sign up for as many third party websites as they can find, provided each one delivers a positive return on investment (ROI). In many cases, our clients use more than one of these services in order to maximize their online presence.
Before we look at specific models, I want to explain how you should calculate the dollar amount you are willing to spend per rental. This number will help you decide which third party websites are delivering a positive ROI. The figure will be unique for every storage facility, so I'm going to give you a formula. First, you will need to find the average length of stay for tenants at your property and the average monthly rent across all your units. You can most likely find this information in your management software. Once you have these numbers, multiply them together to determine the average lifetime value of each tenant. For example, if your average monthly rent is $100 and your average length of stay is 10 months (100x10=$1,000) then each tenant who signs a lease at your facility is worth $1,000 on average. Of course there are some that stay two months, but there are also some that stay 5 years which is why you should work off of the average. Once you've calculated your average lifetime value, you can determine how much you are willing to pay for each new rental based on the assumption that he/ she will be worth that much. Since tenants sourced from third parties are incremental business you wouldn't have had otherwise, some would argue that you could pay as much as 50% of the lifetime value since you will still be profitable on that customer. Let's be conservative and say you are willing to pay 10%. In the example above this means you should be willing to pay a vendor $100 for each new tenant they source.
As I mentioned before, third party reservation services come in many shapes and sizes. The first model we'll look at is the monthly fee. Some vendors will charge you a flat monthly fee per facility to be listed on their website. This model works if you are extremely vigilant about tracking the source of every single new rental at your facility. At the end of each month, you will need to calculate how many new rentals were generated by that vendor (not calls, quotes or clicks, but actual rentals) and divide the total dollar amount you are paying that vendor by the total number of rentals. This number will tell you how much you are paying per rental to be listed on that site. For example, say you have 5 properties and vendor X charges you $69/month per facility to be listed on their site-this means you are paying $345/ month total. When you check how many rentals were generated by that site across all your properties, you find there were two. $345 divided by 2 is $172.50-that's how much you are paying vendor x per rental. $172.50 is a lot of money to be paying per rental in most markets, so this vendor is an example of one you might want to cut from your online strategy. However, if this vendor generated 10 rentals per month, your cost per rental would only be $34.50 which is a fantastic deal. My point is that you have to track results from any vendor that charges you a monthly fee with vigilance because forgetting about it and blindly paying every month could realistically cost you thousands of dollars.
The other model that vendors in the reservation services category utilize is pay per rental which is the model we use at SpareFoot.com. This model allows you to pay only when a rental is generated. These providers generally charge at least $75 per rental, but at the same time you pay nothing if no rentals are generated. Unlike monthly fees, you don't need to watch these services quite so carefully because if they are not performing, you won't pay anything. There are a few other benefits to this model including aligned incentives-the vendor doesn't make any money unless you do. This means you benefit from any initiatives the vendor invests in to grow its own revenue (which should be all of their initiatives). A good example of this is my company SpareFoot.com where we've invested a significant amount of time and money to make more of our reservations turn into rentals (we call this the move-in rate). Each of our storage operator clients benefit from our investment since more rentals means more money for them.
Ultimately, the savvy storage operator should advertise with every single website that generates tenants at a cost per rental with positive ROI. If you don't get yourself in front of those tenants, your competition will!