Numerous self storage companies use promotions and incentives to entice customers to store with them. This can be a very useful tool when selling self storage and normally lasts for a short period of time in order to increase lease-up and occupancy.
One of the main issues with incentives and promotions is that if all the competition starts to copy each other at the same time then there is no differentiation between each of the competitors. Therefore, for example, the price of self storage in Liverpool will become devalued. If everyone continues to discount on an ongoing basis then this will lead to a spiral of decline in the price.
Therefore before introducing discounts and promotions, it is essential to have a clear pricing policy. This will be driven by a number of factors but the principal ones will be what the competition are currently doing as well as the current position in terms of the lifecycle and growth of the specific store. There is little point in just using discounts and promotions if your store is full and all that you’re doing is managing the churn, however, if you have a new store which is empty then it makes complete sense to use discounts and promotions to accelerate lease-up of the store.
Much of this should be driven based on the estimated length of stay of the customer and the discount. However it is “dressed-up”, it must enable you to see an automatic rent review during the lifetime stay of the customer.
Another important point is to look very carefully at the average length of stay of customers. There is a great danger of providing discount schemes which never actually get to the rack rate because they are too long and the customer has vacated prior to the automatic rent review occurring. This situation can be protected against by adding various terms and conditions to the discount or promotion, however, this then becomes potentially unattractive for the customer and defeats the purpose.
In summary, the essential element to look at is the average length of stay and really understand your customer’s requirement as well understanding where you store is in its lifecycle and what the competition is doing in terms of price. However, do not fall into the trap of just discounting across the board on an ongoing basis because if you do you will devalue your store.