And I’d say, well, there’s another element that I add to what I just highlighted, which is the mix of the tenant base. So we had success in moving in a meaningful number of new customers last year above and beyond the prior year. Those customers tend to get higher frequency of increase earlier on in their tenancy and that’s contributing to performance this year of our ECRI program. And so I think there’s a multitude of different components there. Cost to replace is certainly an important one. But as we look at the year this year, we think overall contribution will be relatively consistent.
Daniel Tricarico: Maybe a less convoluted follow-up. Could you share how you bucket the demand segments for the business, maybe to give us a better understanding of the current picture? Is the general like job and home mover 30% or 40% of demand and then the longer term business customer 20% and then another cohort the balance? Any color you could share from any of your internal data would be great.
Tom Boyle: So I anticipate that overall demand contribution this year is really similar to last year. And the way we’ve bucketed the contribution to move-ins last year was about 15% of customers that are coming to us because of an existing home sale related move and that was down from about 20% in a more typical year. So a relatively modest contribution. Customers that are moving and they’re renters, either single family or multifamily renters, tend to make up a larger percentage, call it, between 40%, 45% of the tenant base. And then you’ve got another group that we’ve consistently spoke of that’s been elevated post 2020 and that’s customers that have run out of space at home, that’s been a consistently outpunching prepandemic levels and is likely to be more like 15%, 20%.
And then as you go beyond that, I’d call it other. There’s a whole host of interesting use cases as well as commercial tenants that will make up the rest. And so we continue to see good, obviously, mov-in activity at our stores and as Joe mentioned, we’ve been encouraged by that activity year-to-date.
Operator: Our next question comes from Juan Sanabria with BMO Capital Markets.
Juan Sanabria: Just on the acquisition front, could you remind us how much is assumed or baked into guidance for presumably accretion from the acquisition volume highlighted in guidance? And then kind of as a subset of that question, how are you guys thinking about Canada? I know the family — the Hughes family has some assets there. Does that prohibit you from potentially getting involved there or is there any time that the family may be looking for one reason or another to monetize their stake?
Joe Russell: So to again, point to 2024 guidance on acquisitions, we’ve pegged $500 million. Obviously, at this point in the year, it’s going to be more back ended. But some of commentary, Juan, earlier in the call relative to what we’re likely to see with a range of different motivations from sellers, we’ve got, I think, good perception into ways that we can get to that kind of acquisition volume as we sit here today. The Canada question, to your point around the Hughes family and their ownership and platform in that market, it does not impede our ability to go into that market itself. So there are no conflicts on either side for either party to continue to look at a range of investments in that market. So with that, no commentary relative to what the future may play out, but there are no constraints on our part.
Juan Sanabria: And then just a question on labor and FTEs. You guys, in your Investor Day, which is now a couple of years back, hit your targets in cutting down, I think, workforce utilization or cost associated about a quarter from prior levels. I guess where are you in further abilities to reduce FTEs or payroll costs? And could you just give us maybe a sense of kind of how the industry has changed in terms of FTEs per store maybe five years ago to where you are now to where you ultimately think can end up going?
Joe Russell: I can speak to that in certainly our own platform. So the goals that we pointed to in our Investor Day presentation were achieved plus or minus a couple of years ago, so we were very pleased with the opportunity that we saw to optimize labor hours with many of the tools that supported that, particularly tied to our digital platform. What has played out from, again, the last two years through today and then even going forward, there’s actually more to achieve. That comes from the continued improvement in our operating model, the digital tools that we’re using not only for one type of day-to-day demand that comes in and out of a property, which is tied to move-in activity but its overall customer support. We’ve rolled out a PS app that now we have about 1.5 million customers tied to.
So that’s direct account management that takes the burden off of property labor hours, very efficient for the customer as well. So it’s a win-win in terms of not only time savings on our end of the spectrum but efficiency and consistency from a customer standpoint. We continue to look at very different and robust digital tools and optimization tools that give us the amount of clarity and trajectory that we’re going to likely see with continued reduction in FTA hours. I think we’re doing that in a very different way than the industry has done. You can look at some metrics that you can benchmark our performance to others. So Tom already mentioned that about two thirds of our customers now transact with us digitally. That’s far and excess of not only what the industry is achieving but what level of accelerated performance we’re getting from that channel and that level of interaction with customers directly.
So a lot of good things that we’re continuing to tackle on that front. With the amount of data that we have, we continue to look at different ways of continuing to optimize and bolt on more, again, opportunities to not only drive down labor hours, but as importantly, maintain or increase customer satisfaction levels. So a lot of good things that we’re continuing to invest in there and very confident about the trajectory we’re on.
Operator: Our next question is from Ronald Kamdem with Morgan Stanley.
Ronald Kamdem: Just two quick ones. One is just on Southern California. If you could just provide just updated thoughts, it’s still one of your best performing markets. What’s sort of the prospect of that starting to reaccelerate as you’re sort of going forward and how is fundamentals trending on the ground?
Tom Boyle: So Southern California continues to be a strong market for us, both Los Angeles as well as San Diego. During the quarter, we were impacted by some storm activity and state of emergency restrictions that impacted the quarter’s financial performance for a couple of months. But those markets continue to see strong customer activity and we have confidence in those markets heading through the rest of the year.
