Online Payments In Self Storage: A Brief Window Of Opportunity!
The limited use of modern technologies by incumbent operators has created the biggest opportunity in global self storage. Early adopters of new technologies will build a huge advantage over local competitors, cut costs, increase margins, and grow their businesses.
Every business is now a technology business. Whether it’s the way we book flights and hotels, how we do our grocery shopping, or how we buy (almost) anything, technology has dramatically changed every consumer industry. In many cases, incumbents have been forced into a life or death competitive fight as new tech-focused entrants have found ways to step change the business model. The challenge faced by incumbents, and why it’s often too late by the time they realize how much trouble they’re in, is well documented by Clay Christensen in The Innovators Dilemma.
The self storage industry is no different. Up until recently, complacency due to high profit margins (61% EBITDA at Big Yellow, 56% at SafeStore) has allowed much of the self storage industry to delay adopting the advantages — to both the customer and the business — of modern technologies. From online rentals and automated payments to self check-in and smart entry systems, technology adoption by incumbents has been relatively slow compared with other industries.
All of this is about to change. Firstly, a tougher economic environment and increased competition is going to create a need for operational efficiencies (aka cost cutting). Secondly, new technologies are becoming available that will make it easy for any operator to start using cutting edge software (online reservations, recurring payments and automated billing) and hardware (smart entry doors) that will combine to make automated, unmanned self storage facilities the new normal.
What are operators doing today?
When I decided to open my first self storage facility in 2019, one of the first decisions I made was to automate it as far as possible. That meant letting customers rent online, using smart entry systems to allow customers to check in without staff being on site, and building systems to take care of everything else from recurring billing, automated payments, and accounting integrations. However, there was no readily available solution that made it easy to do this, so I had to build a lot of it myself.
But this approach is not yet common in the industry. As part of looking at what others do, I reviewed dozens of self storage operator websites and found massive differences between quality, functionality, and features of their rental and payments process. In the chart below, I have laid out how a variety of operators currently perform across two important metrics:
- Pricing Transparency — how open are they with prices? Are they available on the website? Are they hidden behind an email/telephone collection? Or, are they shown openly to anyone visiting the site?
- Transaction Facilitation — how easy do the operators make it for a customer to place a reservation on the site? Can they book a unit at all? Can they enter their payment details? Can they choose a move-in date and get instant confirmation that the unit is booked and all payments are now set up?
Why your facility should adopt online bookings and payments now
Sales will increase for a bunch of reasons.
Firstly, letting customers reserve and pay online makes their life easier. Forcing prospects to fill in a form and wait for a call back—or requiring a visit to your facility before being able to book—stops them from proceeding at the exact moment when they are most likely to complete the transaction. When they are on your site looking for prices for a specific room size, they are ready to pay. How frustrating would it be if you had to call your airline to make a reservation once you saw the prices online?
Make life easier for your customers, help them succeed and they will reward you with more business.
Secondly, while your funnel shape will change — by eliminating the quote stage and taking people straight to booking — the important thing is how many people come out the other end. You can stop worrying about how many quotes you have provided (quotes don’t pay the bills!) and focus instead on the metric that matters — how many people rent. When it’s easy for customers to rent, the number of rentals you receive will increase.
Thirdly, when people rent online they are not going to ask for discounts or negotiate on price. Sure, some people will still phone and ask, but it’ll be a fraction of the percentage of people asking today.
Finally, online rentals and payments are available to customers 24/7. 15% of our bookings at StoreStuff are made between 9pm and 7am, times when we would not be available to answer phone calls. How much business might you have missed out on due to your process being inaccessible for up to half of every day?
Time and money savings
Many operators carry out a time-heavy quote process, requiring customers to submit an online form along with an email or phone number. A member of staff will then call or email the prospect with information — typically anytime from 5 minutes (Dean Booty’s target time) to 1 day later. The customer then has to respond to that and a discussion invariably occurs that takes up time and effort on both sides.
Online bookings and payments won’t stop phone calls and won’t mean you never have to discuss prices again, but it will eliminate the entire time-consuming quote process and get rid of a significant customer service need as customers will be able to self-serve online.
The best bit? The money saved by eliminating quotes can either be used to reduce your prices — and make your facility even more competitive — or to increase profits. Or some combination of both.
It’s the first step towards business and facility automation
What will self storage facilities look like by 2030? Will they be full of staff collecting proof of ID and manually signing contracts, or will technology be used to streamline all of these processes, eliminating costs and making the business much more competitive? Question for another day — will robots be unloading self-driving lorries into huge unmanned warehouses while scanning and recording every single item?
My bet is that technology will transform the entire industry over the next ten years. If you suspect that may be the case, and if you haven’t already taken steps to stay ahead of the competition, now is the time to start taking action.
First mover advantage in your local market
When it comes to competition, self storage is a local business. If you are the first to adopt modern technologies in your local market, you will be able to capitalize on all the advantages discussed above, helping you succeed at the expense of your competition.
Online rentals and payments can now be set up in ten minutes
Some modern software solutions allow you to build and publish your online store within just ten minutes. That includes live rentals, recurring payments, automated billing and facility management tools.
Why common arguments against online rentals no longer stand up to scrutiny
Common argument #1: We need to explain self storage to people
This is a common refrain, especially from operators with onsite staff and a quote system in place. The thing is, why not focus on explaining self storage to your prospective customers on your website instead of in person? If you have some specific features that help you stand out versus local competitors, call them out clearly on the website. Don’t assume customers are not able to understand it or that they need their hands held explaining what self storage is.
The benefits of explaining your business properly on the website go beyond the time and cost savings of not having to do it in person. Getting it across well on your website means the message is going to be delivered in the same, high quality way every time. You remove the variability associated with human message delivery — different staff members do it differently and people can have bad days.
Common argument #2: Conversions/Sales will drop
How do you know? There are more arguments for sales increasing with the adoption of online booking and payments than there are for a decrease.
We will have some data to definitively put this argument to rest soon (if you’re an operator keen to get involved in an A/B test — contact us now!), and we will update this article when we have it, but until then, find a way to try it out for yourself!
But I’m an existing operator, and my systems work fine!
If you’ve already implemented online rentals, recurring payments, and automated billing, nice one! I’d absolutely love to hear from you to find out how you’ve got on and what technologies you have used.
If not, I refer you to Clay Christensen’s book, The Innovators Dilemma ;)
Okay. I want to offer online bookings and payments. How can I get started?
Last year when I set up my own self storage facility, there was no obvious solution to do this, so I cobbled together bits of technology so I could achieve it. If you want to achieve the same thing, you have two options:
- Hire a tech team / agency. Have them design and build an online bookings and payments system for you. The upsides of this is that you will own the technology and have limited additional ongoing fees. The downsides are that the cost of getting something this complex built will probably end up being the region of at least $64k, but more likely $128k+. If you don’t have a background in technology development, I would strongly recommend staying away from this option because things can go badly wrong and you could waste a ton of cash. Beyond initial development, other likely costs include maintaining the system and dealing with issues which inevitably crop up with software development.
- Use a third party solution, like Stora (confession: I am CEO of Stora). Stora is designed to help your self storage business run itself. Within ten minutes of starting set up, you’ll have a live online reservations platform that your customers can use to rent and pay for units. In the background, it takes care of recurring payments and automated billing (invoicing, etc), as well as facility management and unit allocation. It helps you eliminate lots of the time-consuming and expensive processes that could be holding your business back. Stora works alongside other modern technologies like nokē for smart entry, and hooks into your accounting system and other systems you may already be using.
If you’d like to be one of the first to check out Stora, visit our website and register for early access.
If you have any comments or questions about any of this, or for a chat about self storage or software, get in touch anytime. Thanks for reading!