Revenue Management – Step 2: Prospect Management
Prospect Management involves pricing the customer along with the storage unit. This takes a great deal of salesmanship and may not be easy for all managers to accomplish, but if you can do it right, you can add a lot of money to your bottom line. To begin understanding prospect management, you need to answer the following questions:
Who – Who is the prospect?
Is the prospect a businessman who has a company account and can handle a higher price? Is he a college student on a budget?
When – When will they begin storing items, and how long will they stay?
If the prospect is starting right away, urgency is high and she may tolerate a higher price. If she isn’t starting for 3 months, she may have some time to price shop and would be less likely to pay a premium.
What – What will they be storing?
Is he storing Grandma’s antiques, and you have the only climate-controlled facility with great security? Talk up your amenities and quote that higher price with confidence.
Why – Why are they storing?
Are you renting to a businessman who needs to store items while he is out of the country for a year?
Once you understand a little bit about the prospect, you can decide what unit to place them in. Just as all prospects can handle a different price, each unit can be priced differently. Not all 10x10s are equal. Here are two stories to illustrate my point:
Sally is a college student on a budget. She needs to start storing right away because she is going off to college in another state. She is going to store her childhood items for the next few years until she finishes school and settles down. We are going to rent Sally a 10×10 in the back corner of the building. Sally doesn’t need access to her unit for a few years, so she doesn’t need an easily accessible unit near the front. If we give Sally a price that is slightly lower than the street rate, she will be happy, and so will we.
Robert is a sales rep with a corporate account. He needs storage for his sales materials because he is out of room at his house. He is going access his unit weekly, at the very least, to keep enough materials in his car as he makes his sales calls. We are going to rent Robert a 10×10 right near the front door with prime access. Robert will happily pay higher than street rate for a prime unit, and we can potentially sell him 24 hour access to his unit, as well. He wants a unit that is easily accessible as he will be visiting our facility quite often.
This type of dynamic pricing works best if you have a range of prices for each unit instead of a set price. It is more work on the manager to price the customer instead of looking at the computer and quoting the price, but you can pay them on commission to give extra incentive on closing each deal at a rate that is pleasing to all parties involved.
Want to develop a rock solid revenue management program that you can feel confident about? Check out my course “Price With Confidence: Self Storage Revenue Management”
Check out Revenue management – Part 3: Rate increases
Did you miss the first installment? Click here to read Revenue management – Part 1: Renting your units for what they’re worth