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Oftentimes, things change around us and we fail to notice.
Sometimes we notice the changes but fail to respond to them. In
any strategic plan, you are required to look at your existing plan
and what is happening; then, update the plan based on the current
conditions. We know that! But do we actually make advantageous
Is Your Business Evolving with the Market?
In the 1980’s and into the 2000s, offsite records storage evolved
into a well-run records management platform. New entrants were
growing and evolving. In that time, the offsite storage industry grew
from a couple hundred service providers to more than 500.
As time went on, new entrants became more adept and their
service offerings became more desirable. The larger players
decided growth could be better achieved by acquisition (rather
than changing their model on security, pricing and service). This
dramatically changed the Industry.
Eventually, old-line records storage companies began disappearing
from the world landscape faster than new providers could replace
them. The independent offsite media storage provider became an
Now, let’s look at the secure destruction industry. Shredding offered
the customer an ideal way to lower storage costs. Customers first
shortened retention schedules, allowing them to shred an entire
year of records with no risk! Many records storage companies back
in the day did not see secure destruction as a business. Many of
them missed the opportunity to evolve and reap the most profits.
They left the door open for others to pursue it.
Then, the shredding industry entered its Golden Age. The number
of NAID members exploded! Wonderful marketing from NAID (e.g.
security, Identity Theft Protection) coupled with reduced operating
costs, created by reducing box storage inventories, made secure
data destruction lucrative. Of course, numerous records storage
companies eventually did join the party, but for too many it was
only after the industry was saturated.
Nature Abhors a Vacuum!! So Does the CFO!
The offsite storage industry operators failed to calculate the
factors driving the market. They operated as if they were in a
vacuum. While clients were seeking to reduce expenses and
wanting to cut box storage wherever they could, providers
implemented permanent removal fees that penalized the customer
for attempting to move or shred the records that reached their
destruction date – what some call Hostage Fees.
As consolidation continued, clients also felt destabilized by the
disappearance of their hand-selected vendors. Unfortunately,
clients, unhappy with their new vendor, could not seek a
replacement; Hostage Fees had destroyed their mobility.
The clients lost their freedom to control their own records in both
life-cycle and location. What had been intended to create “account
stickiness” in the end damaged the whole business model and
opened the door to technological competitors.
Change is Constant: It’s How You Respond
Expanding market-share requires more sophistication by the
vendor; a failure to expand capabilities can lose the client.
J. J. Tuttle, a renowned marketing research expert, counseled
savings banks that as clients avail themselves of more services,
NAID is open to all points of view on industry issues. In the following commentary, Hugh Smith, President of FIRELOCK Fireproof Modular
Vaults, LLC, describes how important it is to respond quickly as markets change.
Evolve or Go Extinct
By Hugh Smith