Mini-Storage Messenger – August 14, 2016
When walking into a community bank recently, a sign in their foyer caught my attention. Its message promoted their mission statement which I thought was representative of today’s banking industry as a whole: “Our Mission: To be the first choice in banking…One Customer…One Relationship…and One Community at a Time.”
You can apply this “one customer, one relationship, one community” philosophy to practically any business, including self storage. It may seem difficult to equate relationships and personal connections with renting storage units, but by incorporating a strong philosophy of positive communications and networking with customers, vendors and colleagues, you will add real economic value to your storage property.
With the proliferation of the Internet and online search engines, developing relationships has taken on new dimensions. For the most part, gone are the days when business was conducted solely face to face. But what we’ve all learned is that growing online use allows consumers to be better — and more quickly — informed about a storage facility’s services, amenities, operating philosophies and prices.
It’s true that being a successful self-storage operator is much more than simply taking unit rental orders and that you can’t compete on price alone. Regardless of whether your relationships are face-to-face or online, your customers expect more from your company than simply being the low-cost provider. They want a relationship at some level. And it’s up to you and your team to create a brand reputation that reinforces a relationship-oriented culture.
One Customer…One Relationship…One Community at a Time
Positive impressions about your storage facility can be established through some simple actions consistently applied throughout a customer’s or vendor’s experience with your company. For example:
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Running your operations with a high level of integrity
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Being honest and respectful
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Being polite and courteous
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Caring for others’ needs and interests
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Being a good listener
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Being fair
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Offering timely service and response
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Providing leadership and guidance
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Being accountable for your actions and decisions
Adopting these behaviors is the first step to establishing a positive code of conduct that sends a powerful message to customers and business associates. As a result:
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Customers will look beyond unit price when deciding whether to rent from you
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You will build loyalty that results in longer-term customer relationships and referrals
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You will obtain better vendor service and pricing
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Lenders will be more eager to support your property with favorable financing
From there, you can expect to create stronger revenues and achieve greater expense savings that will improve your bottom-line results…all because you adopted a few simple actions.
One Customer….At a Time
There is no shortage of books, training courses, manuals and motivational speakers offering advice on how to improve self-storage customer service, from how to engage with a potential customer during their first inquiry, to signing the rental agreement, assigning a unit, collecting rent, making pricing adjustments, and much more.
Oftentimes, the first customer question you’ll receive at your facility or call center is: “So how much is your 10×10?” Signing up the rental and obtaining your asking, or street, rent is based on how you respond to this inquiry. If the answer is just a price, then your storage unit becomes simply a commodity and your revenue stream will be compromised, not to mention you will be unable to optimize rental conversions.
Instead, at every communication juncture, customers should feel a positive experience. The benefits of those experiences come over time and can be measured in overall collections. If a customer feels as though they are important, being treated fairly, and the storage units are meeting their needs, then positive results will happen, such as customers who rent longer, provide referrals, accept ancillary services like tenant insurance, and accept ongoing price adjustments with little pushback.
Creating strong customer relationships and communications from your initial point of contact is only part of a relationship-driven culture. Other facets of your business, including employee and vendor relationships, should follow suit as well.
One Business…At a Time
Employee relationships must center on mutual respect and motivating your staff to achieve excellence regardless of their organizational role or your operational size. When your team feels as though they are appreciated and receiving appropriate professional guidance, then you are likely to have more loyal and caring employees who transfer their positive attitudes to customer and vendor relationships.
With employees, it’s also critical to provide market-competitive compensation plans. Staff loyalty does not derive from employees believing they are grossly underpaid. Simultaneously, excessive employee compensation is not the answer either as it can lead to organizational complacency. Our industry has several proven incentive pay models that can serve as benchmarks for a competitive compensation program.
With many vendors vying for your business, your facility’s ownership and management must also actively communicate with these providers in a professional manner. As a result, you’ll create better relationships. And with better relationships come more competitive pricing options, faster and better vendor responses, and additional services beyond your expectations.
You can apply these same principles to establishing lender relationships. This is incredibly important in today’s financial environment as banks and other lenders look to sponsorship as the primary factor in considering whether to accept you as a loan risk, as well as the financial products and services they’ll offer you. You should establish relationships within the lending organization who either have direct authorization to make loan decisions or who have immediate access to decision makers. With local and regional banks continuing to provide attractive fixed and variable rate alternatives on storage properties, you’ll find they are looking to expand their lending platform to new customers and are eager to provide financing to customers whose relationships they value.
Mortgage brokerage firms can also influence lenders. As brokers, we strive to provide lenders with accurate, organized and complete information for them to make thoughtful credit decisions. Lenders are more likely to offer aggressive terms and negotiate on deal points when they have formed trusting business relationships. With longstanding relationships that offer access to a variety of lending sources, mortgage brokers play a vital role in expanding your lender and banking base. It’s our job to support and grow your relationships, connect you with financing options and present your operations in the best light.
Commercial mortgage-backed securities (CMBS), or securitized lenders, are particularly driven by relationships with mortgage brokers because their infrastructure does not feature a loan originator base that can reach property owners on a large scale. Thus, they rely on brokers to bring qualified loan prospects to them. Also, because CMBS loans require different documentation and processing than bank loans, an experienced mortgage broker will be able to generate aggressive financing quotes on a transaction’s front end, and provide efficiency and guidance when processing and closing the loan. Many of the storage industry’s largest operators seek CMBS loans because they offer long-term, fixed rate, non-recourse financing options at 75% loan-to-value ratios on stabilized properties. A CMBS loan usually tends to start at a minimum of $2 Million.
One Community…At a Time
Your facility’s location is important because it provides visibility and access to the physical property. One of the best ways to obtain additional visibility is through being active in your local communities. It’s always important to create relationships with local politicians, government agencies, philanthropic organizations, schools and business groups such as Chambers of Commerce.
In addition, there are many ways of reaching out to your neighbors (that is, your potential customers, vendors and even lenders) through sponsorships, donations and actively participating in community events. National statistics show that one in ten households will rent a self-storage unit and they are likely coming from within a three-to-five mile radius of that facility.
Lessons Learned
The storage industry can learn from the mission statement of that bank I recently visited: Build your business through the power of relationships because doing so will help your business thrive and grow.
If you look at some of the storage industry’s top operators, you’ll see their success is highly driven by their brand reputations established over years, as well as their layers of customer and business relationships. Building a business based on the power of relationships is a dynamic economic tool, and one you cannot ignore regardless of your property’s size or location.
With more than 20 years of experience as a national self-storage mortgage broker and advisor, Neal Gussis is a Principal at CCM Commercial Mortgage, where he specializes in securing debt and equity for self-storage owners nationwide. Based in Chicago, he can be reached at 224-938-9419 or ngussis@CCMCommercialMortgage.com.