I want to share something extremely important with you today. Really…
I’m not just saying that so you’ll read this post either. The message I have today is crucial for anybody in the self storage business during these hellacious economic times.
I wasn’t around during the stock market crash or great depression so I’m happy to say that what we’re going through today and will likely go through in the not-so-distant future is about as tough as I’ve known it to be.
I know I should pay attention when my Canadian friends and clients call to rub in the fact that their “loonie” (Canadian Dollar) is now worth more than one of mine. I tell them they should get back to drinking beer and watching hockey or I’ll call their mounted police…eh?Â
In all seriousness, I love Canada and Canadians. I’ve never met a Canadian I don’t like.
But I digress…Â
I want to tell you a story that is near and dear to my heart. It has nothing to do with self storage directly but will lead me to my point which has everything to do with you…the self storage operator.
Those who know me well know that my family owns a glass business. Auto glass, windows, shower doors, etc.
My great grandfather, William Taylor Naylor, started the business and now my father runs the show. We have 7 retail locations in Utah and Idaho, a distribution facility and a manufacturing division. It’s a nice business.
I’m not involved in the business other than some occasional marketing consulting. I’m not cut out to work in the family business. Those of you who have worked in a family business know what I’m talking about.
A big part of being in the glass business is selling windows. As the real estate and development market heats up, so does our business.
When construction takes a downturn…so do our sales.
If you have a manufacturing facility (which we do) these downturns dry up our profits faster than you can imagine. I’ll never forget the nights I spent with my Dad when he had to do the seasonal layoffs the next day. The poor guy took it so personally. I can feel the anxiety now as I write this to you.
After the entertainment budget, labor was one of the first things he’d cut.
And you’ll never guess what went next…
MARKETING!
Now, as a young buck, I didn’t think much of that horrific mistake.
But as I started studying marketing and advertising, I began to realize that my Dad was making a colossal mistake cutting the marketing budget during the tough times.
Today, it seems like a no brainer to me. Hopefully it does to you too.
After all, if you have confidence in your marketing program and the sales it brings you, you realize that when sales and profits are down, you should SPEND MORE on marketing…not LESS.
But, you see, my dad didn’t have confidence in his marketing and see it the way I do. He and most business owners see marketing as something you put out there to build a brand and boost your ego. Very few businesspeople understand that sales are directly attributed to those efforts.
So, I ask you a question dear self storage operator…
Are you confident enough in your marketing program to spend more on it when times are tough?
If you’re not…well, you know the answer.
Here’s where this becomes relevant to you…
It’s no secret that our economy is getting tough. The financial market is not pretty.
I listened to a CD that Storage Investment Advisors and Beacon Realty Capital put out after the Fall SSA show in Vegas and the financial market was of significant concern.
If you have investors in your self storage business, it’s likely that you’re feeling some heat.
This doesn’t even factor worsening cap rates, the declining effectiveness of Yellow Pages or falling occupancies due to increased competition.
I’m not a dooms day kind of guy so I’ll quit talking about the negative. But just know tougher times are ahead in the self storage business.
So what will you do?
If you’re smart, you’ll increase your spending on marketing and advertising. I’m not talking about recklessly spending on ads just to say you’re doing more. I’m talking about smart, strategic marketing that you have 100% confidence in. Now, I realize that sounds ridiculously biased coming from a marketing guy, but it’s the truth.
One of my mentors, John Forde, sent me a very timely email on this very subject. Here are a few facts that you’ll find intriguing:
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In April 1927, the Harvard Business Review found companies that advertised most during recessions had the biggest sales increases.
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 Companies that had higher sales and net income during the recession of 1974-75 didn’t touch ad budgets. What’s more, they also beat non-advertisers in the two years after the recession ended.
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According to McGraw-Hill, companies that increased ad budgets during the 1981 recession trounced competitors not just during the downturn, but for three years following.
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 Kellogg pushed their ads through the Great Depression. Post didn’t. Guess who dominated the cereal market for the next 50 years. Can you say Corn Flakes?
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 Stanley Tools launched its biggest ad campaign during the 1974 recession. Their consumer product division took off. They grew at twice the rate of competitors every year thereafter.
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Chevy pushed car sales in 1975. Ford scaled back by 14%, afraid of higher gasoline prices. Chevy picked up 2% of the auto market. It took Ford five years to regain the lost ground.
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In recessions of 1949, ‘54, ‘58, and ‘61, companies tracked for ad spending cutbacks saw sales and profits fall off. Those who kept ad budgets, saw profits increase… and kept an edge in the years that followed.
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Consumer spending has increased during every post- WW II recession, according to The American Association of Advertising Agencies.
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Coca Cola increased their worldwide marketing budget $350 million for 2001. Net income went up ~22%. Â
I realize you’re not a Fortune 500 company with a multi-million/billion dollar budget, but the bottom line is that consumers still need storage during tough times. And, since most of your competitors will quit advertising or cut back, your market will have a lot more mental bandwidth to accept your message.
As 2007 comes to a close, I recommend creating a healthy budget for 2008.Â
After you’ve done that, create an innovative, centralized marketing strategy to support that budget. Do not assume that the old tricks work anymore. Question everything when creating your strategy and make certain that you spend time and money on innovation and marketing.
The days of “good curb appeal” for a marketing strategy are over.
I’m planning on putting on another FREE Teleseminar on this subject with a well-known expert in this industry to help you budget and plan for a thriving 2008 instead of the starving year that pessimists are calling for.
If you’d like to listen in on this, please send a note to info@storagemarketingsolutions.com with “Teleseminar” in the subject line. If enough of you are interested, I’ll make it happen later this month or very early 2008.
To higher occupancy and profits (even in tough times)…
Derek M. Naylor
President
Storage Marketing Solutions
800.941.4805
P.S. Here’s another snippet about my Dad and Grandfather that I think some of you will appreciate. When my Grandfather handed the business over to my Dad, he gave him an audio recording of “The Strangest Secret” by Earl Nightingale. That recording is supposedly what set up the billion dollar personal development industry we have now.
Anyway, about 20 years later when the business was slow and my Dad was stressed, I sent him the same recording. I had no idea at the time that he had even heard of it, let alone that my Grandfather had given it to him at that landmark time in his life. Pretty cool!
Click here to view a short video about “The Strangest Secret”. I think you’ll enjoy it. It takes a few moments to load so please be patient…it’s worth the wait. Be sure to turn up your speakers.
Happy Holidays!