NAID Briefing: Breaking the Addiction to Scrap Values

Bob Johnson

As a result of sustained high scrap values during the last four or five years, some data destruction service providers have become overly dependent on that revenue. I maintain that this practice is very much like an addiction, and, like all addictions, very troubling consequences come with it.

Think about it: Operators feel a lot better when scrap prices are padding their bottom lines very much like addicts feel good on their drugs of choice. But, when the party is over, which is inevitable for both, the feeling turns to demoralization and despair.

Addicts also rely on their habits as a crutch. High scrap values make it a lot easier to compete. After all, you don’t have to sell security or standards when high scrap values allow you to cut your competitors’ prices.

Being in a state of denial also is a symptom of addiction. An addict’s condition prevents him or her from seeing the truth about his or her behavior.

In a way, relying on high scrap value also is a form of denial. If we’re being honest with ourselves, price slashing based on high scrap revenue is not sales; there are a lot of other names for it, but sales is not one of them. And, of course, trying to build a lasting business based on a historically unstable revenue source is denial with a capital “D.” It is only a matter of time until the house of cards crumbles.

To be fair, scrap values have been high for longer than normal; the old normal, that is.

Still, the abrupt scrap devaluation in 2008 and the current downturn should remind us that the only way to build lasting success in the secure destruction industry is by finding and creating customers who value professionalism, security and vendor qualifications.

Of course, it is not all bad news. As with most challenges, there is a silver lining.

First, the problem is self-correcting. Service providers who remain overly dependent on scrap values over the long haul will struggle and fold.

Second, there is plenty of help. The upcoming NAID conference is full of sessions and training aimed specifically at this issue. Jeffrey Gitomer’s 3.5-hour workshop specifically targets it. It is the thread that runs through the entire event. Beyond that, NAID has a long list of programs, training and tools to help.

Scrap revenue will always be an important revenue stream for secure destruction service providers, but it is suicide to make it the most important.

Bob Johnson is CEO of the National Association for Information Destruction. He can be reached at rjohnson@naidonline.org.