Extra Space Storage continues to be the largest third-party management company in the self-storage sector. We ended 2011 with 185 properties under management, up 16% from the year before. More and more independent owners are turning to Extra Space Storage because of our industry-leading results. Our track record speaks for itself, and most of our management business comes to us by referral.
When third-party owners join our ManagementPlus program, they get all the benefits of the Extra Space Storage brand. They become part of our national footprint, with access to our sophisticated revenue-management systems and our marketing prowess to attract customers online, by phone and on site.
Increasing our scale
When we manage a property, we reflag it under the Extra Space Storage brand. We place our high-caliber employees behind the counter, put our proven revenue management system to work and use our website and call center to drive traffic to the store – all to maximize the customer experience and improve operational results.
In return, we earn a management fee and gain an off-market acquisition pipeline when owners are ready to sell. Perhaps most importantly, our third-party management program gives us greater scale. Having more properties under management grows our base, across which we can allocate expenses, and adds to our marketing strength in our core markets and on the web.
At Extra Space Storage, we have excelled at online marketing – a key draw for owners joining our third-party management program. In a consolidating industry, smaller operators simply don't have the resources to compete, particularly on the Internet. Our national marketing program gives them significantly higher search rankings with more efficient and profitable paid and organic search results.
Winning customers online
In 2011, we reallocated a large portion of our marketing budget from Yellow Pages to online initiatives. Online marketing is the most efficient way to attract and convert customers. By deemphasizing Yellow Page advertising, we have moved our marketing spend to more cost-effective Internet advertising. Our remaining Yellow Page relationships have begun a transition to a pay-per-call model, with costs in line with our online cost per acquisition.
Approximately 65% of our customers touch the Internet at some point in the sales cycle. To reach them, we bid on an average of nine million search terms a day. In response to online advertising inflation, last year we expanded our paid search team and refined our strategies to get the most out of every dollar we spend. Today we have assembled one of the best interactive marketing organizations in the industry.
To strengthen our capabilities, we hired two individuals with advanced degrees in mathematics who are developing a pricing algorithm to enhance our revenue management platform. We continue to look at ways to refine our strategy, so we can target the customers who are most likely to convert, stay with us longer and be more likely to accept rate increases. In turn, we expect to increase our lifetime customer value over time.
Keeping our eye to the future, we have invested in social media platforms, promoting our properties and brand on Twitter and securing over 19,000 "likes" on Facebook. We also launched a new mobile version of our website so customers can easily research and rent a unit straight from their smartphones.
Our marketing strategy is designed to offer the highest return on investment at the lowest cost per customer acquisition – for our third-party owners, joint venture partners and shareholders alike.