Article

Locking in storage customers

For Washington-based Shurgard Storage Centers, kiosks represent an opportunity to attract customers any time of the day, and the early results of a test program appear promising.

February 19, 2002

If you are in the market for a car, then you usually have a good idea when the lot is open. If it is the middle of the night, a sales representative will be hard to find. In the middle of the day, on the other hand, you will find enough salesmen to start a football team.

But if you are in the market to rent space from a storage facility, you could drop by at any time of day and risk not seeing anyone.

Many storage facilities only have one person in the office at a time. If that person is at the other end of the lot clearing out space or helping another customer, you might not see them. The end result is usually a trip to another storage facility, and lost business for the lot and its absentee employee.

For Seattle-based Shurgard Storage Centers Inc. (NYSE:SHU), capturing the customer who might otherwise get away is the aim of an ongoing kiosk initiative. The first unit was deployed in December of 2000 in Seattle. The company added 11 more kiosks this past spring and a 13th will be deployed in January in Desert Sky, Ariz.

"We were looking for a way of capturing (customer) business during that time when the manager's not available," said Bill Ward, who coordinates Shurgard's kiosk program. "Essentially, we want to offer them the opportunity to rent storage and not go to the competitor down the street."

Ward said the project began by asking store managers what their customers want to know. He also drew on his own experience from two years working in Shurgard stores.

"The biggest thing is leading them through the process," he said. "What they need Â… how much they can put in Â… the kiosk application takes them right through that."

What customers see

Each kiosk is located outside on the storage center grounds. Unlike each center's office, the kiosks operate 24 hours a day, 7 days a week, tying into the center's computer-based store management system. Customers can access information about storage space, pricing, and availability from the kiosk.

So far, Ward says that the company has been pleased with the early deployment. The test program has allowed customers and employees to see what works and what needs to be improved. Ward says the kiosks, manufactured by Cypress, Calif.-based Touchvision Inc.">TouchVision Inc., have undergone few modifications since the first model was placed in Seattle. The only significant change was to the software, which was also developed by TouchVision. Ward said it needed to be altered to enlarge the size of the numbers and the letters on the touch screen.

"I found it easy to use, but I had to remember that for people using the kiosks, it would be the first time they've run into it," he said.

The kiosks feature a card reader, which allows current customers to pay storage fees at the kiosk if they cannot drop off a monthly payment during regular business hours, and a phone that connects users to Shurgard's customer-service department.

Ward said the phones are another way to keep the customer or potential customer from walking away.

"The customer may or may not be intimidated by the machinery," he said. "They can talk directly to a customer service representative if they want to."

Ward said the test run has encouraged the company that kiosks can help them capture a larger share of the market.

"I think this test period has been very successful," he said. "We're in a business where somehow you have to make that connection with the customer."

What's next?

Ward declined to give numbers on the expected cost of the deployment and how much Shurgard has budgeted for the project. On the advice of independent auditors, Shurgard recently readjusted its financial statements from 1998 through 2000 because of the original accounting treatment of four development joint ventures. Net income dropped each year, including 2000 when the readjusted net income was $32.3 million, down $20.4 million over the original figure.

"The accounting revisions have no effect on the company's favorable business prospects," Harrell Beck, Shurgard chief financial officer, said in the company's adjusted financial report on Dec. 4.

While there are plans to eventually roll out the kiosks to all of the company's more than 375 storage locations in the United States and Europe, Ward said that will not happen in 2002.

The company instead plans more changes to the kiosk software. The new software will feature an application that would allow it to network with other centers and other moving- and storage-related businesses. The new system would offer more flexibility and open up additional markets. For example, a couple moving to another part of the country could rent storage space in their new locale before moving.

Ward said the he expected the company's networking project to be completed by late 2002. He added that the company would also like to set up partnerships with other businesses, such as home improvement centers.

"It will allow us to move away from the store itself," he said. "They can feed customers to Shurgard because they come into contact with customers that need storage."