How To Uncover Invaluable Information
At Extra Space Storage, our data science team spends the majority of its day immersed in customer data. That’s not a surprising statement, but there’s a reason we have an entire team dedicated to data. To compete in any business today, it’s necessary to have lots of data and know how to use it.
Gaining an understanding of customers through data can help transform a self-storage facility that’s barely making it into one that’s thriving. Using customer data effectively means that decisions on advertising, pricing, promotions, and even brand colors aren’t just guesses, they’re informed choices.
In the storage industry, there’s no room for successful operators, owners, or investors to sit still. Things are always changing, so storage strategies must change as well. Storage professionals can’t assume that something they thought to be true about their customers six months ago is still true today. The only way to know whether you’re still on the right track is to investigate what the current data tells you.
Customer Data Sources
Before digging more deeply into how to use customer data, it’s important to understand the various sources, or touchpoints, for collecting data. Storage facility websites can be the biggest source of customer data. At Extra Space Storage, we receive several thousand clicks on our website every day and collect data for each click that’s made. We track what time the click was made, on what page, and whether that web visit resulted in a reservation. We can also track website visitors across multiple visits and days. Our website is continually optimized to increase the conversion rate. Without website data, that wouldn’t be possible.
Phone calls are another great source for customer data. At the Extra Space Storage call center, we collect data on the thousands of calls we receive each day. One of the most important features of this system is our ability to link a caller’s website visit to their call. We know what actions the caller took on the company website before and after the call was made.
Customer surveys are also a crucial source of information for us. We collect survey data before, during, and after a customer rents with us. No time is a bad time to know what customers think!
Data surrounding paid online advertising is a vital source of information. Whether you use the more advanced Google DoubleClick, or Google Display Network for Adwords, you can gain knowledge about search terms that website visitors use, and which ones lead to clicks on your own ads. A large part of our marketing budget goes toward online paid advertising, so it makes sense to make it as effective as possible.
Google Analytics is another rich source of data for the storage industry. The free tool provides detailed reporting and analytics for website visits. It can be used to help improve SEO, and gain more free website visits organically. At Extra Space Storage, we use the paid version, Google Analytics Premium, which is useful for larger companies with bigger marketing budgets. Google Analytics Premium allows for more precise SEO reporting, as well as support directly from a Google account manager.
Storage inventory data, such as unit sizes, prices, and occupancy rates, is readily available, but is possibly the most important data we have. The information feeds into our pricing system, which generates new rates for all of our properties on a daily basis.
Basic customer data is important too. When a customer moves in, storage managers collect standard information, such as name and address. From this information, facility operators can glean additional facts, such as how far customers drive to arrive at the facility.
Finally, don’t forget about demographic data. It’s recommended for the areas where facilities are currently located, or may be located in the future. Demographic data includes information such as median household income and population size within a few miles of the facility.
At Extra Space Storage, our information technology (IT) team gathers everything we need and stores it for the data scientists. We actually have more data than we’ll ever be able to use! We collect data on customers, reservations, rental history, unit sizes and rates, calls to the call center, website visits, organic search and paid search, other advertising, and more. Everything goes into one secure central location that’s organized and easy to access.
Collect Large Amounts Of Data
Because there are more than 1,400 Extra Space Storage facilities, we’re able to gather a large amount of new data in a short amount of time. This means we can run many tests and make improvements continually throughout the year. For the self-storage industry, it’s unique to have this much data. A smaller storage business with only 20 or so facilities won’t have the volume of data necessary to conduct testing on the same scale.
Acting quickly is also important in testing, as conditions are always changing. For property owners with fewer facilities, a lack of data can make it much more challenging to run tests quickly and obtain accurate results. The large amount of data we have is a big advantage for our partners who may only have a few facilities but are able to reap the benefits of the testing that happens on all of the Extra Space Storage facilities.
Conduct Frequent Testing
At Extra Space Storage, we run tests continually throughout the year. When we’ve completed one test, we have another one ready to start. Tests also run concurrently. At any given time, we run several tests in both marketing and revenue management. There’s no rest from tests! As a data scientist specializing in storage, I have a very strong understanding of the testing process and how to use it to grow revenue. I’m not alone. Everyone on the Extra Space Storage data science team has a graduate degree in math, statistics, or engineering. Looking at storage data is all we do. With our dedicated team, we’ve developed highly sophisticated models, which we continually improve through testing.
Here’s a basic example of how we run tests in revenue management. First, we review past data and look for patterns in customer behavior with respect to price and promotion. Based on this, we develop a hypothesis around a new strategy we would like to test. We test these new strategies or methods on a subset of our stores, and after sufficient time has passed, we compare the performance of the test groups to the rest of our facilities. If our new strategy proves successful, we move forward with it for the rest of the company. If not, we scrap it and move on to the next test. Although not 100 percent of our tests result in wins in terms of revenue growth, we gain knowledge from every test we run.
In addition to tests involving pricing, Extra Space Storage runs tests on essentially every point of interaction with the customer, including the company website, paid search (Google ads), organic searches, our call center, video advertising, and customer experience. The respective teams in marketing and revenue management do all this in-house.
Gain Customer Feedback
There’s no reason to run from customer feedback. In fact, it’s extremely important to embrace it. Even bad feedback can be good. While data scientists can analyze customer data and make inferences about customers, there’s no way to truly find out what a customer is thinking without directly asking. Once customer feedback is collected, it becomes even more powerful in the hands of a data scientist.
If the feedback from customer surveys tells you that your customers aren’t responding to something about your storage business, you can change it. Yet, it doesn’t end there. Even after that change, it’s necessary to keep surveying customers to collect more data. Just as the world around us continues to change, so do customer habits, needs, priorities, and opinions.
Customer surveys present opportunities to not only gain feedback about the customer experience at your storage facility by asking about curb appeal, cleanliness, and customer service, but also to find out how the customer found you, what the customer thinks of your website, and what might convince the customer to come back to you again in the future. Perhaps the best time to make sure you gain this valuable customer feedback is during move-in, while the customer is standing there right in front of you. At Extra Space Storage, we survey every customer at move-in time.
We use many different customer surveys, including on-site move-in surveys, as well as emailed surveys during the rental and at the time of move-out. We ask about customer satisfaction with the site, store manager, unit, and overall experience. While the survey response rate isn’t 100 percent, Extra Space Storage has hundreds of thousands of current customers, so even a smallpercentage of customers responding provide a big pool of responses from which to draw conclusions.
Use Data To Predict Customer Behavior and Forecast Rentals
For forecasting rentals, there’s no better tool than historical and current occupancy data. At Extra Space Storage, we have developed sophisticated pricing systems that rely on that data to generate new rates every day. With so many different unit types available, making inferences about pricing can get tricky. However, owning and managing a large number of properties makes it possible for us to aggregate similar data points across the company and generate prices that we believe will result in receiving the maximum revenue possible.
Digging into rental data may also help you to attract that customer who won’t move out after just one month of receiving a first-month-free offer. When you look at your data history for particular properties, you may see trends among different facilities that show where customers are more likely to stay for very short or very long periods of time. Knowing that, you can adjust price and promotions to incentivize a customer who’s more likely to stay longer.
Segment Customers By Behaviors
When you combine your website data with reservation and rental data, you’re on the right track to better cater to the needs of customers. When a customer visits the Extra Space Storage website, we learn about their location, how many pages they’ve clicked through, and how many times they’ve returned to the website. We can put this together and determine what we think are the important characteristics of the customer, and decide how to best respond to their needs.
For example, you can use website data to learn more about the urgency of a customer’s storage needs. A potential customer who is rushing to move into a unit might visit the website one time, reserve immediately, then decide to move in that same day. That says something about the customer versus someone who visits the website multiple times and moves in a week later.
The customer who has more time to make multiple visits is perhaps shopping around and less committed to the reservation. These customers in varying situations may respond differently to different promotions, pricing strategies, and communication from the store managers. With this knowledge, it’s also possible to be more sensitive to the needs of customers and improve their overall experience.
Reduce Cost Per Acquisition
At Extra Space Storage, we place a huge emphasis on reducing the cost per acquisition (CPA) of new customers. Due to system improvements, our paid search CPA continues to decrease year over year. Most of our marketing budget goes to paid search ads, so we pay very close attention to this data.
We ask: How many people clicked on this ad? How much did it cost for the click? How many people immediately left the website after clicking on the ad? How many reservations were made? How many rentals did we receive? How long did those customers stay with us?
Getting the answers to these questions can help you find the value of a customer acquired from paid search. When you receive too many clicks that don’t result in rentals, your CPA increases. When you focus on the right data, you can reduce the amount you’re paying for clicks that don’t result in conversions. At Extra Space Storage, we have developed our own paid search bidding system, which, among other things, optimizes for conversion rate, reducing spending on clicks that go nowhere.
Leverage Data To Grow Business
When you think of storage, it’s easy to think mainly in terms of the value of the facility–things like total square footage and rent per square foot. That’s reasonable, but it’s also essential to think about the value of the customer. The only way to leverage data to grow a business is to always keep the customer in mind.
At Extra Space Storage, one of our goals is to grow our share of high lifetime value customers. We pay attention to how much customers pay and how long they stay with us. We use price and promotion as a lever to increase our share of these high lifetime value customers. We can look back on several years of data to see where our best customers are coming from. Is it mobile or desktop, paid or organic search, or the website or the call center? We then use this information to target our best customers, which minimizes CPA and increases revenue.
Look To the Future Of Personalization
It seems that nearly everything today is becoming much more customizable, and that certainly can be a good thing. Keeping up with the move toward greater personalization for storage customers means, of course, also keeping a sharp eye on customer data.
While it’s not possible to customize storage units for each customer, it’s possible to personalize the storage experience for different types of customers. With the right data, you can recognize different behaviors of your customers. At Extra Space Storage, we’re working toward segmenting customers based on these behaviors, and tailoring the experience for the customer on the website, as well as with emails and call center and store contact.
As we move forward in the self-storage industry together, it’s exciting to note how we’re gaining increasing control to use data not only to grow revenue, but also to make the storage experience more helpful and personalized for all customers.
Katie Dodds is a data scientist for customer acquisitions at Extra Space Storage, Inc.