Why “Good, Better, Best Pricing” is Transforming The Self Storage Industry

by Alden Chang

The self storage industry is becoming increasingly competitive with each passing year. Whether you’re a small facility owner or REIT, competing in today’s market is challenging for everyone. There are many ways to combat the competition, however, and staying up to date with competitive pricing is one of them. In the economic downturn of 2008, many smaller facility owners struggled to maintain high occupancy levels. In hindsight, REITs such as Life Storage, Public Storage, and Extra Space were not only maintaining occupancy, but they were thriving.

How You Can Compete More Effectively with the REIT’s

For years now, big-box REITs have been using analytics to drive their competitive pricing strategy. With “Value Pricing“, your facility can compete much more effectively against the REIT’s as well as your other competitors, because Value Pricing provides you with critical demand and pricing data to help your facility better price and fill units. And, the recent integration of Veritec Solutions into The Storage Group’s (TSG) 3-D Value Pricing Map™ allows facility owners to do just that even better than before.

Technology That Helps Facilities

The new 3-D Value Pricing Map™ operates with TSG’s premium online rental tool ClickandStor® 3.0, which you can learn more about here. This new feature is very similar to the online ticket purchasing process available with live stadium events, such as concerts and professional sports games. Veritec Solutions’ Value Pricing approach gives facility owners dynamic pricing rates that reflect the relative convenience of available units. This sets Veritec Solutions apart from the competition by giving facilities the ability to market units to the customer with value pricing markers (good, better, best unit profile) to drive business more effectively online and increase revenue. Veritec Solutions, in coordination with The Storage Group, recently announced a new 3-D Value Pricing Map™.

This new technology creates a 3-D rendering of a facility layout, and units are assigned their level of desirability, (i.e., good, better, best). With Veritec Solution’s suggested pricing and daily reports, facility owners can adjust their pricing to compete in their local market and provide their customers with options that best fit their rental needs. For facilities using Value Pricing, this new integration provides a more advanced and user-friendly way of integrating both pricing and facility maps into the enhanced rental experience. In a time where the customer experience is more important than ever before, and competition is at an all-time high, adopting a 3-D Value Pricing Map™ can help your facility upsell units.

How To Increase ROI with an End-User Focused Experience

With the integration of Veritec Solutions’ expert data into the 3-D Value Pricing Map™, facility owners can now implement pricing strategies that are customized to their facility and their market, increasing profitability. This cutting edge technology is the first of its kind in the self-storage industry. This integration was developed with the idea that facility owners can streamline the customer rental process while creating additional ROI.

The Storage Group’s 3-D Value Pricing Map™ is end-user focused, designed to help customers feel like they’re in control by selecting a unit that meets both their needs and budget. With a visual experience, facility websites can help engage potential customers by showing them where security and convenience are best. For example, facilities can charge customers more for a unit that is near the leasing office or fewer turns from an elevator, an upcharge that many customers will pay because they value the ease of access or close proximity to the front of the facility.

Why Refining The Customer Process Is Vital

Without a great customer experience, facilities can flail and struggle to stay profitable. In the digital age, one of the best things you can do for potential customers is to have a rental process that is clear and easy to navigate. Bad experiences mean that people are more likely to leave negative customer reviews on Google or Yelp, creating a cycle that can be difficult to break.

For customers that don’t want to blindly rent a unit based on size and cost alone, having an interactive facility map puts the power back in their hands. Having that superior customer experience can really help a facility shine, increasing positive customer reviews, which can help potential customers choose you over the competition. We’ve all had a bad customer experience, but your facility shouldn’t be one of them.

When your facility works on refining the customer process, consider the things customers value in their rental experience. By prioritizing the customer experience, you can help your facility thrive and compete with even the most popular facilities in your area.

The Result of The “Good, Better, Best” Model

Typically, when a facility adopts Value Pricing, it can expect to see overall revenue from move-ins increase 4 – 9 percent. For facilities trying to maximize revenue and occupancy, this can yield a huge increase in profitability! At many facilities across the United States and in other countries, customer upgrade rates of 30 – 35% are common.

Many facilities see an increase of more than $2,000/month in incremental revenue from Value Pricing. Coming in at over $24,000 annually in increased revenue, this can help pay for site maintenance, upgrades, or just create more money in your pocket!

Value Pricing works because it provides options – gone are the days of thinking that there is “one” perfect price for a unit. In a time where digital marketing has made it possible for self storage companies with smaller portfolios to compete at the same level as REITs and companies with larger portfolios, it’s vital that units are appropriately priced. With Veritec Solution’s Value Pricing and The Storage Group’s 3-D Value Pricing Map™, there’s never been a better time to start optimizing your rentals and improving your customer experience.

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VRMS Integration with The Storage Group’s New 3-D Value Pricing Map™

by Alden Chang

We are happy to announce our Veritec Revenue Management System (VRMS) integration into The Storage Group’s (TSG) new 3-D Value Pricing Map™. 3-D Value Pricing Map™ operates with TSG’s premium online rental tool ClickandStor®. This cutting edge technology is the first of its kind for the self-storage industry. The Veritec Solutions integration of data with TSG’s state-of-the-art 3-D Value Pricing Map™ provides facility owners with additional revenue optimization and streamlines the customer rental process.

“Veritec Solutions has always been an end-user focused firm. We are a business to business company whose underlying motive is driven by creating a streamlined rental experience for self storage customers. The most successful revenue management programs are the programs that best integrate customer service aspects,” said Dr. Warren Lieberman, President, Veritec Solutions. “Developing a pricing solution with a tiered program that provides a well-understood, comprehensive user interface is our goal,” said Lieberman.

The Storage Group’s 3-D Value Pricing Map™ provides a real-time, 3-dimensional and interactive view of a facility layout and pricing options. 3-D Value Pricing Map™ gives prospective customers an opportunity to select and immediately rent or reserve a unit that best meets their match between price and amenities. Customers may prefer to be close to the facility’s office, on the first floor, closer to an elevator, entry door, security camera, or any other amenity that an operator identifies. Veritec Solutions’ tiered pricing system reflects the changes in the desirability of a unit based on a variety of factors to create a pricing system that optimizes unit marketability to the customer while aiding in facility profitability.

“3-D Value Pricing Map™ improves the experience for the end-user while simultaneously helping facility owners upsell units. TSG is excited to help facilities compete against REITs and other big-box competitors by providing them the most advanced pricing software in the market,” said Steve Lucas, CEO, The Storage Group. “We’re proud to integrate with Veritec Solutions as the provider of the tiered pricing for our 3-D Value Pricing Map™. We only partner with the top companies in the industry, and we find that Veritec Solutions is a constant innovator in optimizing the way facilities increase profitability,” said Lucas.

Veritec Solutions gives facility owners dynamic pricing rates. This sets Veritec Solutions apart from the competition by giving facilities the ability to market units to the customer with value pricing markers (good, better, best unit profile) to drive business more effectively online and increase revenue. This new feature is very similar to the online ticket purchasing process available with live stadium events, such as concerts and professional sports games. By providing more knowledge to help the decision-making process for the customer, this improves buyer confidence with online transactions. By incorporating Veritec Solutions in the online rental tool 3-D Value Pricing Map™, facility owners are able to implement pricing strategies that are customized to their facility and their market, increasing profitability.

About Veritec Solutions

Veritec Solutions helps Self Storage operators earn greater revenues and profits through Revenue Management and Pricing Analytics. Self Storage operators can subscribe to Veritec’s Self Storage Revenue Management System (fully integrated with multiple Property Management Systems) to obtain guidance on setting starting/web rates for new move-ins, rent increases for current customers, and implementing Value Pricing/Convenience Pricing which is Veritec’s dynamic and automated software for enabling higher rents to be obtained for more convenient and available units within each unit group. Veritec also provides Revenue Management and Pricing consulting support to Self Storage companies. For more information visit www.veritecsolutions.com or call +1-650-620-0000.

About The Storage Group

The Storage Group provides cutting-edge products and services that ensure success and improved customer experiences through technology, marketing, and consulting. TSG services include Website Development, Search Engine Optimization, Pay-Per-Click Advertising, Reputation Management, Software Development and more. The Storage Group first introduced the self-storage industry to online rentals in 2011 with ClickandStor®. The Storage Group optimizes web presence, boosts occupancy rates, and produces higher returns on investment. To learn more about The Storage Group, please visit: www.storageinternetmarketing.com or call 1+407-392-2328.

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Brewing Up A Storm or Just Making Waves?

by Alden Chang

More than you might imagine, recent financial headlines have focused on the Yield Curve inversion. Several months back, we wrote about that very topic, the signs of such an inversion, and what that meant. Past recessions over the last 60 years have always been preceded by an inverted yield curve. (That’s when the 2-year U.S. Treasury yield is higher than the 10-year one.) However, an inverted yield curve does not always presage a recession.

The storm clouds.

There were a few days at the end of August where the 2-year U.S. Treasury yield to the 10-year yield inverted. That’s what made the headlines. In fact, if you look at the 3-month yield to the 10-year, that curve has been mostly inverted since late May.

Another key indicator is the Purchasing Managers’ Index (PMI®) for manufacturing and service sectors. According to the Institute for Supply Management® Manufacturing Business Survey Committee: “The August PMI® registered 49.1 percent, a decrease of 2.1 percentage points from the July reading of 51.2 percent…Comments from the panel reflect a notable decrease in business confidence.” Such a contraction was the first time in three years.

Now to the economists. According to the National Association for Business Economics August 2019 Survey, 72% of economists think a recession will begin on or before 2021, and about half (38%) predict a recession in 2020.

Making waves.

The other headline is consumer spending. Despite a slowing GDP, April through June consumer spending grew the fastest since late 2014. And consumer spending constitutes roughly two-thirds of GDP.

Looking at the Consumer Confidence Index, it is still high for August at 135.1. That is just slightly lower than in July at 135.8. In fact, the Index is at the third highest level since October 2000.

For a real-time read on the labor market, the U.S. Department of Labor’s initial unemployment claims for the week ending August 29th comes in at 215,000, which keeps the four-week moving average of this series at 40-year lows.

Finally, investor confidence continues unabated, despite stock market volatility and trade tensions. All the major U.S. stock indices have double-digit growths since the beginning of 2019.

Regardless of how you interpret the economic data, your data-driven pricing strategies should largely be the same.

For the self-storage operator, it’s also the local economic and competitive conditions that count. For example, if you are in a popular millennial market where there is significant new storage supply, then you will likely face more intense economic and competitive pressure. Conversely, in lower penetration markets, you may have more flexibility.

A well-defined pricing strategy and methodology—integrated into your regular business processes—should help guide you through rough and calm waters. If you don’t have any in place, now is a good time to do so. Enabling revenue management software and systems makes it that much easier, but adopting a systematic pricing process is the most important first step that you can take.

 

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