7/10/2012 | By Carisa Chappell
Technological advances have some REITs altering the way they do business. From online sales to more detailed customer data, technology is playing an increasingly larger role in the self storage industry, according to Spencer Kirk, chairman and CEO of Extra Space Storage Inc. (NYSE: EXR).
"Success isn't about changing the product we sell, but harnessing the power of technology to keep pace with the changing world we operate in," he says.
After noticing what he called a "massive shift" in the number of customers coming to the company through online searches, Extra Space is mirroring that shift by revising its marketing efforts and budgeting. The storage REIT is spending approximately $25,000 dollars per day on interactive marketing. Kirk says the company has dedicated 42 people to work on Extra Space's online advertising daily.
What used to be a three-mile market around each property has now expanded to the bulk of the company's customers coming from as far as seven miles away thanks to the Internet.
"We are using 'big data' to better understand our customers, their lifetime value, where they come from and how they search for storage to tailor our online efforts," Kirk explains.
One way that the company is adapting to the demands of the marketplace is by bidding on more than 3,000,000 search terms each day. This means it bids against other companies on popular search phrases and terms that are relevant to its target market. Top bidders are placed in higher spots on search engines, which in turn helps increase the amount of traffic visiting a company's site.
"We bid differently depending on the day of the week. Organic search is a constant battle," he says. "We can't afford to simply throw dollars at generic, short-tailed searches and hope to succeed."
Kirk says the company is constantly seeking ways to find out what the next evolution in marketing will be. Extra Space is "heavily invested" in mobile technology, according to Kirk, and the company has seen its rentals originating from its mobile site increase more than 200 percent in the last year.
So far this year, investors appear to be responding favorably to Extra Space's technology program. The company's stock closed at $31.11 on July 9, up 26.9 percent since the start of the year. Through July 9, the self storage sector had gained 12.2 percent in 2012, according to FTSE NAREIT U.S. REIT Index data.
"Using technology to strengthen, grow and dynamically adapt the fundamentals of self storage will be the key to continued growth and success," Kirk says.