“If you build it, they will come,” might have been good advice in Field of Dreams, but unless you have a self storage facility in a pristine location with no competition, your units will not magically fill up with new tenants.
You’re going to need to market your business to grow, and do that effectively, you need a marketing budget.
Planning marketing costs is complicated, and not every self storage owner has the knowledge to accurately build a marketing budget. Don’t worry: we’ve got you covered.
In this post, we’ll explain why marketing budgets matter in self storage, the most important factors in building a budget, and how to reverse engineer a plan based on exactly what your facility needs.
Self storage is a commodity, so tenants have options in most markets. If you aren’t promoting your facility, you’re going to lose customers to your competition. Just look how many options appear when I search “self storage near me”:
Digital marketing in particular has become a reliable source of new customers for self storage owners. Like in the example above, people typically start looking for self storage with a Google search, and the facilities that appear first are the ones that win.
That’s not to say traditional marketing is extinct. There are still a significant number of tenants who find facilities from signage, word of mouth, and other non-digital channels.
Suffice it to say: if you want to get new tenants, increase brand awareness, and grow your business, you need to invest in marketing.
But the question remains: how much should you spend?
Before you start building out a budget in a spreadsheet, consider your marketing mix. The unique dynamics of your local market and your facility’s place in it will affect how you allocate resources to your budget.
The Three P’s of Self Storage Marketing is a simple framework for planning your strategy.
You need to win in one of these areas or even the best marketing in the history of self storage marketing won’t drive results.
For example, if your units are expensive relative to other street rates and you’re further away from the city center, marketing isn’t going to magically bring you a ton of new customers.
Street rates are the prices listed on a self storage facility’s site. In commodity markets like self storage, pricing matters a lot. The cheaper your prices are, the easier it is to convert window shoppers into customers.
Of course, you don’t want to decrease prices so much that you tank your profitability. Pricing units is a delicate balance, and it changes all the time. To make your marketing effective, aim to be competitive with other options in the local market, and you’ll be alright.
In this context, “Place” can mean two things:
A. Where is the physical location of your facility?
Being centrally located is a significant advantage. People want self storage to be convenient, and the closer you are to a main highway or town center, the easier it is for tenants to access their possessions.
On the flip side, being far away from a main thoroughfare or densely populated areas might mean you need to spend more on marketing to acquire new tenants.
B. How crowded is your local market?
Is your market saturated with competitors? Then you’ll need to allocate more budget to spend on marketing—particularly if you’re using digital channels like Google Ads.
The logic is simple: It costs more to stand out in a crowded market. If you’re in a less saturated market, then your marketing costs will be lower.
Promos are a fundamental part of self storage marketing. They’re excellent ways to overcome shortcomings in Price and Place, or just incentivize potential customers to commit to your facility.
Like pricing, promotions can turn into a race to the bottom, so be sure to keep your incentives reasonable to avoid losing too much revenue in the short term.
These three factors will have a substantial impact on how much you’ll need to spend to acquire new tenants. Price and Promotion are within your control, but you need to wield them wisely to ensure the ROI on your marketing spend is healthy.
Now it’s time to put your numbers in a spreadsheet and build a marketing budget. At this stage, there’s one big question: How many units do you need to rent?
Naturally, that depends on your current occupancy rate and your occupancy goal. It may seem counterintuitive, but 100 percent occupancy is not ideal. If you’re totally booked, your rents aren’t high enough, and you’re leaving money on the table.
To maximize your revenue, aim for high 80s or low 90s occupancy with periodic rent increases. Learn more about how to balance occupancy and optimize revenue in this post.
Once you figure out your occupancy goal, there are two ways to create a self storage marketing budget:
Allocate a percentage of your annual revenue to marketing. For self-storage businesses, this typically ranges from 5% to 10%. So if your annual revenue is $500,000, your marketing budget would be between $25,000 and $50,000.
This method keeps your marketing spend proportional to your business size and revenue. It also provides enough resources to invest in multiple channels and reach more of your audience.
There are scenarios where you want to spend more than 10% on marketing. If you’re in a competitive market or your facility has low occupancy (less than 80%) investing 15% to 20% of facility revenue in marketing might be the best course of action.
If you’re early in the lease up phase, then you might need to spend more than 20% on revenue to accelerate tenant acquisition and stabilize occupancy.
If you want to get as detailed as possible with your budgeting, use Customer Lifetime Value (LTV) to set your budget.
LTV calculates the total amount of revenue that the average customer generates for a business over their entire relationship with said business.
Let's plug some numbers in to this equation.
LTV can vary based on customer type, because some customers bring in more revenue than others. For example, tenants who rent climate controlled units will be more valuable than those who don’t.
For the purpose of this guide, let’s use one LTV number for all your customers. Now, multiply your LTV metric by the number of units you want to rent in the next few months, and you’ll arrive at a marketing budget tailored to the needs of your facility.
Again with the numbers:
Average Customer LTV: $1,200
Number of Units to Rent in 3 Months: 25
Quarterly Marketing Budget: $30,000
Many digital marketers use LTV to calculate spend because it paints a clear picture of what you can expect to earn from new customers, which informs how much you can spend to acquire them.
Marketing isn’t a magic bullet. Some tactics work better in certain markets than others. (Here’s a handy self storage marketing guide if you need to read up on your options.)
Consequently, you should approach marketing with a scientific perspective: You have to test different channels to see what works best. The biggest marketing mistake self storage owners commit is to keep investing in tactics that don’t work.
To know if you’re spending your budget wisely, you need to continuously measure the ROI of your marketing. This is easier said than done.
Some channels make it simple. It’s relatively straightforward to track the ROI of Google Ads because the platform provides robust analytics. However, it’s more challenging to track the return on signage.
One solution is to ask leads how they found you, like Outbrain does on this form:
Attribution can be complex, so it’s often easier to measure the ROI of your marketing at a high level. Every month, look at your total spend and compare it to the net new revenue you generated in the same period.
This approach gives you a high level view of your marketing’s effectiveness. And that allows you to make determinations about your budget moving forward.
Self storage marketing has a lot of moving parts, and it’s easy to get overwhelmed. However, if you build a budget and stick to it, you can bring order to the chaos, track what works, and spend your money effectively to grow your business.
