digital transformation

Thinking Like a Tech Company: Interview with Eric Prugh and James Hafen (Part 1)

James Hafen Interview-14

I recently interviewed James Hafen, VP of Product Development at Extra Space Storage. Extra Space has been a PactSafe customer for a long time, and I've always admired the ongoing transformation of their business to go more and more digital. James' leadership style is noteworthy, and I was really eager to hear a little bit more about what they've done, what some of their objectives are, how they've navigated some of the challenges of the pandemic.

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In part 1 of this interview, I talk to James about his entry into the storage space, how Extra Space storage handled the shift to digital product and strategy as a result of the pandemic, and how ESS measures success.

(This interview has been transcribed and edited for clarity and concision.) 

Eric PrughTell us a little bit about your story. I know the role of VP of Product Development at a company like Extra Space is a little rare and unique. I'd love to hear how you landed in that position and a little bit of your backstory.

James Hafen: I've been in storage for about 20, 21 years now, and it's been kind of a strange career path for me. I got a call from a former boss saying, "come do storage." So, I came over and looked at storage, which was as 180 degrees away from tech as you could go. We joined in '99, built a product that pushed the operation software to the cloud - we didn't call it the cloud back then, but it essentially centralized data - and built something that wasn't found in the storage sector.

The irony was we weren't inventing anything new. We were taking things that had been working for a number of years in other spaces and just applying the same principles in storage. To pat myself on the back a little bit, I feel like the technology we brought to bear back in the early 2000s helped Extra Space grow and do things at an efficiency level that other operators couldn't match and changed the dynamics of this industry. I had the fortune to come back to Extra Space in 2018. There was clearly a lot going on and there was motivation towards innovation and technology.

This is a tough industry. This is a tough industry to innovate in and to digitize and to bring technology to bear because it is so analog, because it has been around for a long time, because there's a lot of industry inertia that says, We've always done it this way. Why would we change? We make a lot of money. We have good profit margins. What's the point? But I think Extra Space has demonstrated what the point is. The point is: we can do things better. We can provide a better product, a better experience, a better brand and we do that largely through technology. Technology, and how we acquire customers and manage customers and the experiences now that we're trying to bring to bear as (what I feel is) the leading organization in the storage space.

"There's a lot of industry inertia that says, We've always done it this way. Why would we change? We make a lot of money. We have good profit margins. What's the point? But I think Extra Space has demonstrated what the point is. The point is we can do things better."

- James Hafen, Extra Space Storage

Eric PrughAs you've tried to introduce new technologies and new innovations in your role at Extra Space, where have the struggles been internally and then on the customer side to really change the way that you're doing things? What helped you be successful in driving that?

James Hafen: I think the success starts with our senior management. Our executive team believes in technology and has from the start of this company taking the turn it did in 1999. There has been no lack of interest in making those investments to power technology and digitization across the board.

There's a lot of inertia in this industry to just keep riding the cash cow that has been storage for the 40 or 50 years that we've had storage as a product type in the United States, but it's a very brick and mortar business. And so the resistance is to changing the ship that's done something a certain way for a long time, and figuring out how to not risk revenue streams, not risk customer experience, and do things in a way that alleviates a lot of that risk while we try and change the experience.

We found that customers are hungry for technology in storage. We don't get pushback, broadly speaking, when we introduce new features on the website, new ways of managing and renting your units, whether that's kiosks or websites or call center interactions, or any of the other digital products we're bringing to market. Customers are hungry for it and their expectations in almost every other like business - every other brick and mortar business, every other real estate vertical - exceed what's found in storage today. So the biggest challenge is: how do we get it all done fast enough? It's a resource constraint issue. It's a time constraint issue, but we all get on a plane, a car rent, a hotel room, rent an apartment. All these experiences are now digitized, and even before COVID, [the storage industry was] behind. 

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Eric PrughThat brings me to talking about the pandemic. We recently talked a little bit about how developing the key objectives for 2020 probably changed in early March. How did those priorities change? What shifted in your objectives and what you were prioritizing as things started to get bad in the U.S.?

James Hafen: Time means everything, right? Some of the digital experiences that we accelerated on in 2020 were on the roadmap as things we needed to execute on. We had just finished a major revamping of our entire operating platform that we use as a point of sale at the stores. We were lucky that this was mostly done as we started the year. Otherwise, it could have been an impediment for us. Instead, we were able to shift, focus very quickly on enhancing and emphasizing the online rental experience. We pressed the pedal very hard on rapid rental, which is our online leasing product, got that out the door. We've had fantastic results since that was released.

It has been a very busy year, but we're like every other company that had to accelerate on digital strategy and products. It has been one of those years where there's a lot of silver linings that were brought around from the urgency of a situation to make your business survive in something like a pandemic.

Eric Prugh: How have you measured the success of the rollout and what are you looking at as a product development team to improve the business metrics in that experience, as well what you look at internally on how you're measuring the productivity of your team?

James Hafen: We, of course, tie everything into the highest level of business metrics. What we chase as a company, we chase as a product team. And so we're looking at how we're growing the company, how we're improving NOI [Net Operating Income] and FFO [Funds From Operation] numbers for Wall Street. It's all about how we're delivering value for the shareholder and growing the company. We're also watching core metrics like, what does demand look like? Where are we getting our customers? What's it costing us to get those customers? That becomes one of the key metrics we have to keep our eye on: what does that CX score look like? How are customers reacting to this?

Related Content: How to Improve Customer Experience Without Increasing Risk

I think a lot of companies are being given a pass for these experiences that we've pivoted to deliver to enable business during COVID. But the real story [will be] how successful we are in fine-tuning these processes and evolving them so that a year from now, or three years from now, what's passably acceptable to a consumer today will evolve to continue providing the highest level of customer experience possible. We can't chase some of these digital experiences in a vacuum and assume that they're not going to have some negative effects somewhere if we're not delivering the right experience, in the right way, with the right communication, and making it simply dead easy to transact with Extra Space. We were watching CX almost as much as we watch any other metrics.

Eric PrughI think that's an amazing insight, and one that not delivering a physical experience I wouldn't have considered is the customer experience giving you a pass. I think that's really interesting, and something we all have to keep an eye on as we evolve and things normalize.


Keep an eye out for part 2 of the interview! In the mean time, read up on Clickwrap Transaction Platforms and how they can help your business get to the next level of transacting like Extra Space Storage!


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