24 Apr 2019
There is one number to rule them all, one number to guide them, and one number to bring them down the path of success. When you are armed with this number, nearly every business decisions made can find its roots within it. This number is one that should be recalled immediately and without hesitation. However, the probability of actually knowing this number is close to zero.
The question I ask you is, what is the average customer lifetime value of one customer at your facility? This number is the golden standard number at your facility. Many operators do not know this number because it takes work to find it.
Find the average length of stay of your customers. Every software has a different reporting method to discover this. Take every customer that termed for the last year and note their length of stay. Add all the days stayed divided by the number of customers, that will give you an average stay in days. Then divide that number by 12. That's the average months a customer stays. For this example, the average customer stay is 10 months.
The second number is the average unit price. Find the gross potential of your facility and divide that by the number of units. In this example, the site has 400 units and therefore a gross potential of $42,000. The average unit price equals $105.
Multiply the average price by average stay and for this example, it's $1,050. If you wanted to get really specific, you could take this number further and factor monthly expenses.
In this example, the average customer lifetime value of one customer is $1,050.
Begin to segment your new customers to discover what avenue yields the most rentals. For example, your monthly SEO budget is $1,000. How many actual customers does that yield per month? Are you paying too much? Not enough? Or, you decide your efforts should focus on a facility Facebook account. Calculate how many hours you spend versus how many rentals. What are the results of the effort?
As a side disclaimer, I firmly believe there is a time and place for everything. Nevertheless, depending what stage your business is in, that should dictate where your efforts should go.
Armed with this information, you can now make a more educated decision on how your marketing dollars are spent.
If 60% of customers come from one avenue, would it make more sense to increase your marketing spend, or spread it into the remaining percentage? Honestly, I have seen it go both ways. The difference is when a decision needs to be made, the results can be measured and accounted for.
Another way this number can be used is for staff motivation and to create the sense of urgency. As the daily humdrum of self storage life unfolds, it is simple to lose perspective and not be on your “A game” for an incoming phone call or tour.
What better way to instill the value of a customer than training your staff to realize that each new phone call or every tour has a total value of $1,050. The results that are created from this shift in thinking will immediately produce long lasting results.
Of course, this number is an average. Customers will stay longer and shorter. Notwithstanding, this number is a point of reference. I would encourage you to come up with creative ways to use this number. What is the effectiveness of a month free discount? Do those customers stay longer? Or, what are ways in which you can extend those 10 months? Are there any? If your answer is no, I would suggest you be more innovative.
The more access you have to numbers and data like this, the better and more profitable your business decisions will be.
This data point is one more arrow in your quiver. Now that you are equipped with it, you will discover a multitude of places where it can be implemented. Be creative, be smart, and always be on the lookout for ways to move your business by the inches.
