A New Look At Customer Service

What’s Driving The Consumer Experience Revolution?

A Stanford research study found that businesses can charge approximately 10 percent more for their goods and services simply by providing better customer service. The same study also found that customer loyalty is actually increased when a consumer has a problem with an enterprise and the problem is resolved to their satisfaction. Customer service has become the watchword in today’s successful business practices; however, customer service is not always easy to render.

Where does self storage fit in this scheme of customer expectations? Self storage is learning the same lessons learned by many other businesses in America: that customer service is the primary differentiator between a consumer’s choice between facility A and facility B.

As the receptivity to self storage progresses, consumers are now developing a taste for our product that they experience the first time they rent from a self storage facility. When they repeat their rental experience in another area, they bring expectations to that experience. Consumers are now beginning to report that they have used self storage before. These customers are therefore beginning to expect certain amenities, services, and treatment, based on their prior experiences.

All Customers Are Not Alike
Most customer service proponents say they will give superior service to all of their customers. Although this sounds great in theory, it is difficult in practice. Companies are learning that we must not treat all customers alike because all customers are not alike. Some are loyal, pay on time, and put their trust in us. Others are indifferent about their possessions and cause us to expend a great deal of our managerial time chasing them down to pay their rent. Thus, many customers simply are not as profitable because they cost us money and consume a disproportionate share of our time.

A large banking institution divides their customers every month based on actual profitability. What this organization discovered is that the top two groups, representing 16 percent of their customers, contributed 105 percent of the bank’s profits. The bottom 84 percent reduced the bank’s profits by five percent, with the bottom 28 percent eroding profits by a total of 22 percent. This situation is true in thousands of industries and not just in financial services.

The generally held consensus in self storage is that we rent to everyone and every customer is valuable. However, we, like too many other industries, tend to forget our loyal customers and allocate too much time to the problem customers. What we really need to do is to provide super services to the top tier customers so that we can retain them. They are the lifeblood of the enterprise.

The Customer Service Revolution
Marketing and customer service tend are closely linked in self storage due to the nature and size of our facilities. Other businesses often see marketing and customer service as two different functions. While this mindset has been prevalent for many years, American business is changing.

Marketing and customer service have some different goals and methods; however, the ultimate goal is the same—getting and keeping customers.

American business has discovered the value of loyal customers: they buy more, buy more often, are cheaper to serve, have higher retention rates, and are more profitable than newly acquired customers. This is also true for self storage. Happy customers stay longer, refer their friends, pay on time and are more profitable than newly acquired customers. Excellent customer service is the most important method for improving customer loyalty and retention.

Storage managers are the front line troops in the battle to win customer loyalty. To provide good customer service, managers must be empowered with information and the authority to make decisions and to act in the customer’s behalf. There is nothing more frustrating for a customer than dealing with a “manager” who cannot make an “on-the-spot” decision but defers any action to some higher authority. For self storage managers to be effective they must have decision-making authority.

What can customer service accomplish? One large company did an experiment that proves the value of customer service and relationship management. The company was a profitable manufacturer of building products. Their customers were 45,000 large building contractors, sophisticated purchasers of goods and services. Their traditional methods: publish an annual catalog, mail it out, and wait for the phone to ring. Does this sound like your self storage facility?

A management consulting firm suggested an experiment. They took 1,200 customers and divided them into two equal groups with 600 in a test group and 600 in a control group. The control group was treated exactly as all of their other customers: the company waited for the phone to ring and were very nice to them when they called. Once again, does this sound familiar?

For the test group, however, the company used outbound relationship building. They assigned one customer service specialist and one building products engineer for the six-month test. These two people called every decision maker, influencer, and products user they could find in the 600 test companies. They did not try to sell. They did not offer discounts. They tried friendship and providing information.

They asked about customers needs. They followed up on bids and quotes. They scheduled product trainings. Customers were reminded of pricing specials. They were given product comparison information. Lastly, they were given new product information and samples. What was the difference between the purchases made by the control group and the test group after six months?

The test group placed 12 percent more orders than they had in the previous six months. The control placed made 18 percent fewer orders. The test group placed 14 percent larger orders; the control group placed 14 percent smaller orders than before. In total, the test group bought products worth $2.6 million more than did the control group during the six-month period. The total cost of the test was about $50,000.

There is a lesson to be learned here for self storage as well. Are we guilty of only giving our delinquent tenants time and attention? How often do we check in with our existing customers to see if they are happy? Do we ask our customers for referrals? Do we help them move more items into storage? Everyone responds to friendship and relationship building. More often than not, however, we forget our loyal, longstanding customers because we never hear much from them. The reality is that self storage is a relationship marketing business. The more positive contact you have with your customers, the more loyal they become.

Building On Customer Service
Ninety-five percent of all business leaders believe that the next competitive differential is customer service. Individual door alarms, surveillance cameras, free move-in trucks, payonline Web sites, etc., are all vital components for competing in any self storage market. The problem with amenities is that they quickly become commodities. The Internet and Web sites have leveled the playing field. On the Internet, every company is the size of the computer screen. To fill a facility and keep it full, the most effective strategy is to enhance the customer experience. Customers will seek out, pay a premium, and stay with those who provide superior customer experiences.

Eighty percent of companies believe they deliver a superior customer experience. Only eight percent of their customers agree. This remarkable statistic from Bain & Company, reported in the Harvard Business Review, reveals that companies simply don’t understand customer experiences. Most focus their research and customer feedback on narrow product- or service-related features.

The key is to focus on the entire customer experience. In self storage, we tend to be good at delivering customer service at the time of move-in. It is during the tenancy that customer service tends to wane. This is partially due to the sheer volume of transactions that we process, coupled with the task of keeping the rent collected.

The secret to good customer service is to keep the consumer happy from the day they arrive until the day they leave. Most companies lose 50 percent of their satisfied customers. Satisfaction no longer guarantees longterm customer loyalty.

A deeper emotional bond is needed to create long-term loyalty. Self storage tends to foster greater emotional bonds than most other businesses. These bonds are formed when customers experience authentic relationships with your company.

Customers need a personal connection to companies at every interaction; this is especially true for self storage. After all, we are storing their worldly possessions in most cases. Often, we are one of the first businesses they patronize when they arrive to a community. Customers want to feel unique. Storage facilities that focus on making the customer feel special and routinely reinforce this feeling tend to keep satisfied customers longer.

Only four percent of unhappy customers ever complain; 90 percent of non-complainers just go elsewhere. Anyone who has ever experienced poor service knows how easy it is to simply never go back. Given a choice between complaining and going elsewhere, few people will choose confrontation. It is critical to give customers an open forum in which to voice their problems, concerns, or complaints.

One way this can be done is by designing your Web site to allow customers to give a review of the facility. Some self storage owners will place signage on the office door that asks customers to call with compliments and complaints. E-mail addresses are a great way to ask customers who leave the facility if they were satisfied with their experience. The critical question to ask a departing customer is, “What could we have done to make your self storage experience better?”

The average economic value of a customer is six to 10 times their initial purchase. And it costs six times as much to attract a new customer as it does to save an existing one. Mass marketing doesn’t work well anymore. Customer decisions are much more personal; after all, they have dozens of choices in most communities.

Our goal in self storage should be to stop customer defections, in other words, to get customers to stay longer. We should also encourage our customers to refer us to their friends and families. Referrals are one of the most effective yet least utilized forms of self storage marketing.

Commit To Customer Service
Providing good customer service involves a great deal of devotion and commitment. Customers want to feel special, unique, and wanted. Every facility can offer a discount, free move-in truck, warm cookies, and a sophisticated Web site. Only those committed to customer service can make the customer feel wanted and appreciated. If amenities alone kept self storage facilities full, the new, modern facilities would all be full and the older facilities would be empty. The reality is that while amenities are great to have, customers choose their storage facilities based on emotions. In other words, they store their belongings where they like the people they are dealing with.

Good customer service is not just nice to have. It is highly profitable and it works. This is especially true for highly competitive markets. Think about how you embark on any purchase. All things being equal, most of tend to buy from that person or company that makes us feel as if they want our business. They respect us, they serve us, and we are willing to pay a little more for good service!

Tom Litton is Principal of Litton Property Management based in Lodi, California, and is a frequent contributor to Self Storage Now.