Measuring performance is crucial to any business’s success. This usually comes down to monitoring a set of metrics, data, benchmarks, etc., on a regular basis. The challenge often comes in determining the level of importance and the appropriate frequency of monitoring each metric. As a simple example, it is clearly important to monitor revenue generated from a retail store, but analyzing how many boxes or rolls of tape are sold daily might be overkill. Tracking weekly revenue from all retail sales, or getting more granular, by product, monthly, will likely give you the perspective you need to determine performance without sacrificing the ability to react quickly.
By determining a cadence and data set you want to monitor regularly, you can easily establish a core set of indicators that contribute to your business’s overall success. You’ve likely heard the term key performance indicators or KPIs before. These KPIs are a measurement of performance that helps businesses meet a set goal or objective. These KPIs help you drive organizational improvements without getting lost in the details. Measuring KPIs reduces the complex nature of a business’s overall performance to a small, manageable number of key indicators. In turn, the results provide enough insight to allow self-storage owners and operators to adjust their operational goals accordingly and ultimately maximize their bottom line.
Whether you’ve established a set of KPI’s you’re already tracking or just getting started, we’ve outlined some tips and reminders on best practices to help you ensure you’re making the most of those efforts.
What Can KPIs Track?
Think of KPIs as measurable metrics that you can accurately benchmark. It’s very important to note that KPIs need to be actionable metrics that will allow you to measure your performance and not just data points you monitor (Example – Number of delinquent tenants month-over-month). Just as every unique business has its own specific goals, KPI’s will vary from portfolio to portfolio and facility to facility. The best approach is to start small and expand or get more granular as needed, reviewing your KPI selection regularly.
Beginning with the number of delinquent tenants, I may eventually want to dive deeper into my various software platforms to determine:
• Are delinquent tenants more likely to pay outstanding dues after attempting to visit the site or a phone and email campaign? This would lead an operation to ensure that there is an onsite employee ready to help someone, in addition to a user-friendly payment method.
• Are certain months more likely to yield delinquent tenants? If so, an operator may want to increase the number of communications in that time period.
• Which unit type is more likely to yield a delinquent tenant, and should I vet renters of that type more thoroughly in the future?
Why Are KPI Targets Important?
You may experience an organic long-term increase in revenue, but without KPIs, you may miss components that contribute to an even larger increase in revenue or decrease in profitability. KPI tracking helps your organization focus on more manageable goals and gets employees in a rhythm of thinking critically about daily operations.
- Site managers may focus more on physical occupancy for an individual facility and work to improve conversion rates, filling up their property.
- Regional managers may focus more on economic occupancy as they take geographical pricing trends from across a region into account. With a larger perspective of competition and multiple facilities, they may be more well equipped to determine the appropriate pricing of different unit types.
- An employee-focused on acquisitions can monitor both of these KPIs as they determine new target properties and areas (regions with high economic and physical occupancy)
Don’t Track Everything!
Good KPIs are unique to every business, as every business has a different set of objectives. Unfortunately, there is often a disconnect between whether something can be measured and whether it should be measured. While your organization has many moving parts integral to its operations and performance, it is neither possible nor efficient to track and respond to everything. This may also mean that certain KPIs are monitored after strategic initiatives or, more important at different times of the year.
- For example, if an operation implements mobile access control, they will likely want to track the level of adoption as a KPI after deployment. As they run educational campaigns and improve adoption, this KPI may decrease in importance and instead is monitored less regularly or less granularly.
While multiple metrics may apply, only a select few will be impactful enough to actually improve performance. While the KPIs you choose to measure need to be true indicators of performance, they should also have some additional characteristics that will signal their effectiveness. To determine a KPIs efficacity, measure it against the following characteristics:
Consistency: Can this KPI be measured consistently? Will different data points support what this KPI is telling me?
Completeness: Will measuring this KPI provide you with enough information to draw a conclusion? Can this metric be easily quantified?
Traceability: Can you drill down into your data and see a history of progress? It is paramount that any changes in historical trends can be analyzed. Without the ability to determine when edits were made and by whom, you cannot successfully determine what led to the outcomes.
Timeliness: Can you measure this data point in a timely manner? To effectively track changes, you should consider the time period in which the KPI will be measured and determine if it meets your needs.
Accuracy: Is the data point being measured exact? The goal is to continually increase the accuracy of your data, even as your datasets grow. It’s critical to ensure that your data contains no mistakes or gaps.
Control: Are you able to drive a change to this metric, or is it out of your control?
While you should keep it simple, basing your choice of KPIs on simplicity rather than strategy won’t accomplish anything either. For example, are you counting the number of customers that walk through the front door of your facility every day because it will help your organization achieve an objective, or simply because it’s trackable? Every KPI you choose to measure should be assessed on how it relates to your overall goals.
Another common mistake made by self-storage businesses is measuring KPIs because they’ve always been measured. If it’s not helping grow your bottom line, it most likely does not need to be measured. For example, if you only measure monthly visitors to your website because it’s something you’ve always measured, you may be missing out on an opportunity for growth, such as implementing an online reservation system.
Not knowing how to measure your success means that you have no clear understanding of how to grow your self-storage business. Incorporating KPI metrics into your overall management system does not only enable you to see how your self-storage business is currently performing, but also provides actionable insights for improvement. Using KPI metrics does not only enable you to see how your self-storage business is performing but also provides actionable insights for improvement. Now more than ever, it’s crucial to take advantage of what KPIs can offer to maximize the value of your portfolio.