Using the Commodity Price Downturn Window to Grow and Strengthen Your Business
October 9, 2019
While the downturn in prices of recycled materials affects all information destruction companies, some are feeling them more than others. Service providers – both on the electronics side and paper side – who priced the service and focused their value proposition on the value of the recyclable commodity are most affected; some dramatically. I know because I get the calls. Service providers who exercised the discipline by positioning their valued proposition on data security, compliance, and brand-protection are still feeling it, but not as severely. I talk to these guys and gals too, usually sharing how lucky they were to stay out of the commodity pricing wars.
Anyway, here we are. Recycled paper and metal prices are down and could stay there. The question – the only question – is, what do we do now.
I propose all service providers look at this situation as an opportunity. First, there are those who were already taking the security, compliance, brand-protection, and value route. Those less affected by commodity downturns. To these I say, take a minute for self-congratulation, but then get back to work.
There are a lot fewer competitors pricing on recyclable value right now. Then there are those who are learning or relearning that pricing on recyclable value is risky… even reckless. To them I say, you have a choice; keep riding the fickle wave of commodity pricing or grow a business based on solid, recurring service revenue. Sure, commodity swings will still impact the bottom line, but it won’t be a crisis. But no matter where you are on this issue, one thing is indisputable. Now is the perfect time to focus on service revenue predicated on security and compliance. If commodity pricing were high or very high, making the switch (or continuing the push) to a service revenue model would be very difficult. Your message would be drowned out by all others. The time to convert your business model to service revenue model is a whole lot easier with those other voices ringing hollow (or not at all). This commodity downturn is a bummer, but it also might be that window of opportunity you needed to change your pricing model and value proposition… and convert once and for all to a service revenue platform.
Once you’ve done it, you’re not done. Once you have a customer paying for your service model it is not over. It’s never over. You must continually remind them that you offer a security, compliance service worthy of paying a reasonable price and that when others come along offering less, it’s because it is an inferior, unacceptable proposition. But they have to be coming to your church before you can convert them to a loyal believer.