Unbundling the Self Storage Sale: How to Boost Revenue & Give Customers More Choice

Don't give people too many choices at once because that can block the booking. But you should just keep it simple. Even if you are giving choices, keep it simple. And I think we all want to avoid gotcha fees. You know, the consumers can feel the difference between adding value and trying to be punished.

Hello, everyone. Welcome to Self Storage Explained. I'm here today with Gavin.

Hello, David.

And we're here to talk about unbundling the self storage sale. You gave a very interesting talk at Fidessa this year in Dublin.

Thank you.

Yeah, there was a lot of interest in it afterwards. A lot of people coming up to the stand asking us, you know, about some of the topics and ideas that you covered, ideas that you covered in the talk. For anyone who didn't catch the talk, what do you mean by unbundling the self storage seal?

Well, unbundling is about taking the seal and splitting it into parts and letting the customer just pay for the parts that they want and they value.

Interesting.

So it's not about tricking people or anything else, just about giving people transparency about what they want to get and giving them the choice to have it or not have it.

Okay, interesting. So how's the self storage sales model traditionally been bundled then? If we're talking about unbundling and what do you see changing?

What we see a lot of time with our customers and industry as a whole is there's often just a price for self storage and then you might add on insurance, but usually that's it. Now, some people might have tried a little bit more for different access times, that sort of stuff. But in general in the industry, what we see is you pay a price and everything's bundled together. So that might include access hours, how many times you access the place where your unit is. It's all just kind of bundled into one price. We've also seen the good, better, best pricing, where sometimes you can pick a unit by the door or one of the better units. So it's not like we've never seen attempts at this, but we just haven't seen it kind of ruled out across the industry and done at scale and done the way that you'd expect this to actually work. So I think whenever we've talked about it in the past as an industry, we've talked about it splitting things up and charging extra for this, that and the other. But it hasn't really happened yet at scale. And I was talking last week about how I think that can change what needs to change for it to become a much more normal part of the way the industry sells self storage and use that to help drive revenue by. I think revenue can be driven by about 20%, if we get this right.

Interesting. And is there any particular industry or vertical that inspired you to explore this topic? What was the inspiration for the talk?

Well, I suppose we've all seen the past 20 years, the way you book a flight's changed. So you used to book a flight and it came with your airfare plus your seat, plus a meal, plus drinks, 20 kilogram bag. Now, obviously that's generally not the case. You'll just get your airfare and then it's extra to pick a seat, extra to get on first, extra to check in a bag. There's all these extra. So it's about breaking it down and, and giving. And it's one of the reasons that people can. You can go away for a weekend and pay £20 or £50 for a flight because you're choosing not to bring a 20 kilogram bag. You're choosing, I'll just take any seat. And that's giving me or people who book those flights. It's giving you the opportunity to fly it in a way that we couldn't do 25 years ago. You couldn't. I remember flying to Edinburgh, I think, when I was 16 or 17, to go and check out the university, and the only people were BA, and it was probably. It was probably 150, 200 quid at the time to do that, to go, to go over to Edinburgh. And now, you know, I can probably get back in Fort Edinburgh for 50 quid.

Yep. So that's an interesting point I think, that you touched on. It's like, it's. It's not about trying to extract more out of people, it's actually about giving people choice.

Yes.

Putting control into the hands of the consumer. How do you balance that choice, though, with giving customers choice? By keeping the experience kind of simple.

But doing it right. So, like. So one of the. One of the things that also, like, we. I did a bit research before the talk and find that one third of Ryanair's revenue. So two thirds, two thirds are airfare, one third is ancillaries. So think about, like, their airfare revenue and then 50 additional for ancillaries. So, like bags and seats and all this stuff that people didn't used to charge for. So this is. This can be a massive revenue driver for an industry. So that was the first thing. It's really worth trying to figure this out. And then how do you get it? How do you get the balance, right? So you don't want to annoy people. So this isn't about building something that pisses people off, it's about building something that gives people the choice. So one of the. There are differences between flights and hotels and self storage, flight. Most people, almost everyone knows what a flight means, knows picking a seat, all those things, what it means, you know, it's like booking a hotel. It's much more commonly used service. Self storage is often people are using for the first time. So it's much more, much, much more of an unknown. So this is. There's a couple of things that we focused on really last week was about why has unbonding not really happened yet in this industry? And there are three reasons. The first reason is that it doesn't work if it's offline. So it only works online. It has to be presented. Can you imagine trying to book a ran air flight on the phone? Too much choice. It has to be presented in a way that's easy to see the difference and easy to make a choice. So that's the first thing. It has to be online. And a lot of UK and European self storage businesses don't yet facilitate full online bookings. So that has held it back a little bit. The second thing is, and this is the thing I think that's different to what anyone's talked about in this industry before, is if you want to successfully unbundle in an industry like self storage, you've got to break the unbundling down, not just at the point of sale, but over time. So you've got to offer people value at the right time. And what that does is it stops people from getting maybe overly confused or overly hit with too much choice at the time of booking. Get the booking for the unit and the insurance, get that booking and push the other things. Like let's say you want to sell 247 access or a unit next to the door. When's the best time to ask somebody to upgrade to that? It's not a month in advance of their move in, it's actually the morning of the move in when they're contemplating getting stuff out of the van and moving it all over to the unit. So it's about. It's not just about get it online and break it up over time and hit people at the right time. So like it's. It's an experience I suppose I've had over the past year to have noticed myself. I will sometimes pay for a better seat on the plane, but I only do it the Day before the. Or the morning of the flight. I don't do it a month in advance. I just do it the morning off. Because I'm thinking, like, I'm about to get on this plane, I'll pay you eight quid to make sure I am not sitting in the middle seat in between two massive rugby players. Yep, exactly. I've noticed also, like, when I'm going to hotel, which is happening increasingly, like, and I get an offer the day before, like, I will sometimes, like, oh, actually maybe for an extra £20, I might upgrade to a nicer room, maybe. But I wouldn't. When I'm booking it three weeks early, I'm just thinking, what's the cheapest hotel I can find in London on that night? I'll book that.

Yep.

But then you're think, no, it's only an extra 20 quid. Yeah, it's not too bad.

Timing is important. And a lot of the time people will just pick the cheapest front or book, you know, the book, the bare necessities. And then when it gets closer to the time, plans change. Happens to me. I'm traveling next week and someone's asked me to bring a big bag home of stuff, you know, oh, can you collect this and bring this home? Now I have to check a bag I wasn't gonna have. That wasn't the case when I booked the flight. So I think that's a really important point is the. Is the timing is important. It's not just what you're. What you're offering as a service or an upsell. It's. It's the. When you offer it, I think it's important you also hear that rule as well as you need to offer somebody something a few times before they actually, you know, decide to. To go ahead and, and, you know, close the sale. I think that that stands true as well.

There's a third thing as well. Yeah, just the, the third thing that I think the reason hasn't happened yet is because if you've got, like, if you're taking a thousand bookings a year or 10,000 bookings a year, 20,000 or 50,000, whatever, and that sort of. If you're in that sort of range, you're not taking enough bookings to be able to test these things out. Because Ran Ernestijet, like, their checkout flows have changed massively over 20 years. They'll change massively probably over a year. Like, they mightn't structurally change, but there'll be lots of things changing all the time. And that's not Just them trying stuff, like not just, oh, let's just change stuff, that's them running tests. Because they're getting millions of bookings every year, they're able to run tests and they're able to use those tests to try an A B test or an abc, whatever, over and over and over and over and over again over 20 years to get themselves to the point where they've got the best chance of getting people to pick stuff. And so a one or two or three side operator trying these things. I'm not saying don't give them a go, but it's very hard to iterate towards the best solution if you don't have lots of data. So I think the third key thing is you need to be a massive, massive operator. And this is the advantage for massive operators. Like with hundreds and hundreds of sites or millions of bookings a year, maybe you get away with half a million bookings a year or you're using a software product. So this is why I think as we get to the point where we're part of a second generation of software products in this industry, where it's not just about entering subscriptions, raising invoices and managing your site, it's actually about doing all that stuff really well. But also how do we grow your revenue? How do we help you build a better business, which is our focus for our customers? The only way really we can do this across the whole industry is if a platform like ours starts to think, right, well, here, this is our focus. We're investing a lot of money in this now. We're going to iterate and focus on improving these checkouts for all of our customers. We'll take 100,000 bookings, probably more this year, hopefully about a quarter of a million next year. We're getting to the point now where we have enough data to run these tests and actually say to our customers, look, you don't need to go and do the work. We know if you send a text to somebody five seconds after they've buzzed the gate open for the first time, we know five seconds later, if you hit them with a text saying, do you want a unit by the front door? It's an extra £4.50amonth or a week, whatever it might be. And we know the exact wording. This is the best way to get that upsell to work for people. We can tell you we've done this now across, we've tested 500 different ways. This is the one that's winning. Just turn it on. That's I Think the third reason that it hasn't happened yet, nobody's really taken this on and that's what we want to take on now. We want to bring this approach to our customers and help them to grow the revenue. Because I genuinely think this is the key to 20% revenue growth, if you get it right. It's also. That's on a per seal basis. It also has additional benefits. So as we get into more competitive environment in the UK and Europe, more and more sites you kind of want. Because Self storage is a 99.9% gross margin business, unless your site is completely full, like you have space for more revenue. So you want to kind of capture, like let's say you could sell your unit for £100, you can sell for £300. You want to get the £300, of course, but you probably want the 100 as well. This is a way of breaking up the price that people are prepared to pay and getting the people who don't want to pay very much to pay 100 pounds and still be a customer. You put them at the back in a unit and that's fine. They're happy with that, you're happy with that. The ones who are prepared to pay £300amonth, you've got product for them too. So it's about differentiating your product and ultimately getting more revenue and more customers. So it's, I think it's the key to unlocking the whole thing in the industry and moving us away from this concept, which has been, I think, a fair assumption in the past, where the best way for me to get sales here is to have a quote process on the website and have my staff do the sale over the phone. I think I've heard that argument a lot and I think there is some data to support that in certain circumstances. But what like what we've always believed, I think is the best way to ultimately get a sale should be on the web, on the web, on your mobile phone or on some sort of a digital experience, because you can use these sort of approaches and it's this sort of approach that will, I think, get lots more customers and ultimately help operators to compete in a more competitive environment.

Very interesting. So technology's role is key.

Yes.

And whether that's your software platform or gathering data over time, you think that's the main reason this hasn't been tackled at scale yet, because we're still approaching that maturity level as an industry. Are there any other examples you could think of where offering the right. Offer the right product, the Right. Time could make a difference.

Yeah, well, we ran through a bunch of these last week and we've talked about this, so two of us loads as well. So the one about beeping the gate or typing in your code at the gate for the first time and getting something five seconds later, I think that's a really, really interesting one about a unit near the do because that's the time you're most likely to upgrade. But a few other things that we talked about. You know, let's say, you know, the customer's moving house because they've filled it in a form when they're booking, maybe a week after they've moved in, send them an email saying, look, we know plans can change. Like I've moved house, you've moved house. Plans can change with houses. And let's say you've got a one month notice period. Maybe you send them an email and say, look, we know plans change. It might be sooner, it might be later, you never know. For an extra £3 50 a week you can remove your notice period.

Yep.

Like there's something, I think that is adding value to a customer who might, you know, might value that and might take that and there could be a, there could be a benefit there to you as well. Hopefully revenue growth. What about, you know, asking people after they've moved in, like moved in a big unit, they've only got a thousand pounds of insurance coverage, you know, hit them with a text message or an email saying, you know, you know, we know people in those units tend to have more contents. Just so, you know, it has to be, you know, new for old, you know, make sure you've got enough to get new stuff to replace your contents. Do you want to upgrade from 5,000 or 1,000 to 20,000 pounds of coverage for an extra three pounds a week? Hit them with that. That's something you're actually adding value. There's lots more we could do. And like I talked, I talked about, you know, Michael o' Leary talking about charging people a pound to go to the toilet and ran air flights. So we don't go that far. But you know, things like you can, even with your base price, maybe you only get in twice the day you move in, the day you move out, maybe this extra, then, you know, I want to be able to come in once a month, that's extra advantage. Or maybe five times a month or once a week or three times a week or unlimited. So then your business customers might want, some of them might want unlimited access. So they're paying a Lot more. But they're also, you know, using the facility, you know, using your rollers for doors, using the toilets or that sort of stuff. So you're actually getting value from people who value that service. You could also say, well access is Monday to Friday, 9am to 11am by default. If you want nine to five, that's a bit extra. If you want weekends that's extra 24,7. Again it's just different prices for different people. When I moved like I've only really used self storage properly. Fifteen years ago when I was, I went traveling for four months and I moved stuff in and I was going for four, I was waiting for four months and I knew I'm not coming back here for four months. And I picked a unit up at the back, fifth floor at the back and there was a slanting ceiling and it was fine. Did, did the job. I would have that for me, I would have not wanted to pay extra. But there are people who will. So like I would have taken a 9 to 11am access, Monday to Friday. I, I would have fiddled around it. But it's just a way of, of, of getting the customers who want it lower priced product and the customers want a higher priced product.

Yeah, it's classic.

That's one way done it.

Yeah, it's classic. It's classic needs based segmentation really when you think about it it's like these people need these things. Let's you know, offer them services that are valuable to them. You know in that context I'm the complete opposite. I'm a self storage user and I need access, I need access out of ours. Yeah and I need the closest unit to the doors possible because I'm moving in heavy, heavy things and I don't want to be climbing upstairs or getting lifts. So it's complete opposite of your scenario. So that's a perfect example of people with different needs. It's very interesting. There's a few other things you touched on that I think really look towards the future of some of this bundling or how we offer services. And you talked about automation quite a lot. Like when this thing happens, do this other thing. I think automation and APIs and how data flows from one system to another is another really important part of the technology's role in how we offer these things. So like yeah, and I think that's something that we are thinking quite a lot about and that we've just announced our public API and that's hopefully going to make a lot of these things a lot more possible going forward. So we're looking at both these shifts.

Absolutely. And I think, you know, if, you know, if you're, if you're watching this and thinking oh I might try some of those things. I think there's three things that we always like we think like just be careful not to be careful to avoid. Don't block the initial checkout, don't block the initial booking. So it's one of the things we always need to be careful about in even what we're doing with our advanced checkout. Don't block the booking. Make sure and get it. Don't give people too many choices at once because that can block the booking. But you should just keep it simple. Even if you are giving choices, keep it simple. The third thing is, the third thing is trying to avoid gotcha fees. You know, consumers, customers can feel the difference between something that's kind of adding value and at the right time versus like something that punishes you. So like a pen, a pound to go to the toilet and plane. I imagine actually if I was on the plane and I fancied a couple of drinks I would probably like no, I'm not going to have a drink because I need to go to toilet. So then it's probably would be a net loss for an air to have done that. Probably why they didn't do it because you'd end up like the people, they'd lose all their margin on alcohol drinks.

How would they even operationalize the point for a toilet? Would it be like a, like in London where you know, you go, you.

Have the public toilets.

Is that what they were thinking?

Like I don't know, like a beeper on the user, use your card to get in.

I don't know, smart entry to the toilet.

Yeah, you have to maybe, maybe you have to pair up with a friend going together to save yourself a £50ph. It might be a bit tight but anyway, yeah, the other questions would come out of that. But anyway, very good.

Okay, well the talk was very interesting. Hopefully this gives people some insight if they couldn't make Vanessa of what we talked about or what you talked about and yeah, hopefully we give you some food for thought on how you can unbundle a self storage sale and using store platform. We're going to give you the tools to help start experimenting with these things. So adding extra things at checkout and yeah unbundling the sale.

Thanks. At Stora, our mission is to help our customers build the best self storage businesses. Self Storage explained is here to try and bring you the best from inside and outside dentistry to help you grow your business. If you want to find out about more resources, go to Stora Co to sign up for a demo or find out more. Or you can go to Stora Co Academy for lots more resources, including our financial model and other in depth guides to setting up and growing your business.