digital transformation

Thinking Like a Tech Company: Interview with James Hafen of Extra Space Storage Part 2

James Hafen Interview-14

In part two of the interview, James and I discuss more metrics of success, industry trends he is keeping an eye on, and how PactSafe has helped them achieve their goals.

This interview was recorded over Zoom, transcribed, and edited for concision. 

Check out Part 1 of Thinking Like a Tech Company: Interview with James Hafen and Eric Prugh

Eric Prugh: I know that when introducing digital experiences, the efficiency and time to complete tasks as you go through workflows online is something that you potentially look at. Any other metrics specific to the digital experience that you're looking at that are of note?

James Hafen: We're really concerned about the entire experience. The things that we watch specifically as a company right now pertain to  revenue drivers for the company. We want to make sure that there's no drop off, no cart abandonment rate that exceeds what [it would be] through a normal reservation path. Things like protection plans, which is a big revenue driver for us at Extra Space, was one of the bigger risk points we worried about about going to a digital experience. We knew that selling the protection plan was an emotional sell at the store when you're across the desk from a store manager. If we eliminated that, were we going to see a significant drop in and a critical revenue stream for the company? We've kept a very close eye on that metric, and I'm not sure I can tell you why it's remained high, but we've maintained protection plan penetration rates at the stores through rapid rental at almost the same levels as what we saw with the in-store experience.

There's some psychology behind that. I don't think we fully understand yet, but that's something we watch closely, as well as what's the take rate on other products and services outside of just the rental of the storage space itself.

Eric PrughAs you think about the next few years, what are some trends that you're observing inside or outside of your industry, that you're taking note of and potentially planning for in the future?

James Hafen: Hospitality is one space that we watch for how they enable great experiences. So we've watched companies like Hilton, who we have admiration for, especially the way they've empowered the digital journey for their customers and transformed. The move to what we call concierge or full service storage is something we watch very closely. There've been a couple of companies that have come in around the fringes of our business that do things like full service moving and other amenities services on top of simply storing your stuff in a space at one of our properties. I think that trend is inevitable in how we operate our business. There's ways of solving that that we need to tackle through partnerships and ancillary services. Maybe even blending into the gig economy model for providing those services, like how Grub Hub has now made every restaurant a delivery restaurant.

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The payment space, I think, is really important too. We're just getting challenged on how to accept payments, how to do it efficiently and how to do it in ways that accommodate models of payments that we weren't thinking about five and ten years ago, like Venmo and Zelle and PayPal. Those options have to be on the table, especially as it moves to transaction-less payments.

So, really, transforming has been about making [businesses that are] analog and brick and mortar into something that can approximate what we watch at other companies - like Hilton and Kroger and the way they digitized the grocery store experience or Domino's and this multi-channel approach. I think Domino's has something like 25 ways to order a pizza, everything from a mobile website to talking to your Alexa device. They've made it so easy to order a pizza that they become a default vendor for people who are looking for pizza.

Eric Prugh: You've identified a lot of trends that I think are super important, and you mentioned partnerships. You've seen companies like Wayfair partnering with Handy to get furniture assembled when it's delivered. One of the trends that I've seen that's been especially helpful with all the context-switching that COVID requires: you've got kids at home all the time so you're working from home, and you're going from your phone to your computer. It's just that ability to keep context across devices, maintain the identity, the customer history, all that stuff, and keeping it in context, wherever the customer is. And doing that on top of a lot of the kinds of physical challenges that you have to think through as things continue to evolve.

So you've talked a lot about online rapid rental and how it's evolved and how you're looking to improve the metrics. What are some of the changes that you're looking to make in improving that experience for your customer?

James Hafen: As we developed rapid rental, we've really got what you’d call a MVP product out there today. And it's immensely successful even at its MVP iteration, but there's some obvious low-hanging fruit that we need to work on.

One is around the navigation process: getting people onto the property and helping them navigate to their units easily. The other is around the lease itself. The lease is complicated. We have, as another factor in our industry inertia, very complicated lease documents that have lots of addendum and lots of [legal] ridsers based on different products and services and options. It's a little bit sad that our lease process feels more like a mortgage application as opposed to what you'd expect renting a hotel room or renting a car - doing something transactional without even seeing a piece of paper or putting my name down on an agreement.

 

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This is where PactSafe has been a partner for us. We've been able to easily implement our leases through PactSafe and the MVP version of Rapid Rental, and then simplifying that lease into almost a checkbox style approach to leasing. That’s up next as a critical priority, and frankly has the potential of lowering the time people are in that rental journey by number of minutes, which is significant. I think that the current process today takes in excess of 7 or 8 minutes, on average, and shaving two, three minutes off that process by simplifying the lease could have a critical impact on what our conversion rates look like. We know there's a cart abandonment rate there that we can chase and improve, and it's clearly on the radar for one of the things we'll improve as we go forward.

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