The trash handling and recycling company, which had $12.5 billion in revenue last year, created a price-optimization system that uses customized statistical models of the factors that drive market prices and price sensitivity in each of its 25 regions. Through a Web portal, pricing managers can see customers whose contracts are up and the likelihood they’ll accept or reject a price increase.

This is a concept called pricing sensitivity. In plain English it means “If we tell Bob his garbage bill is going up by 20% will he just shrug his shoulders or will he revolt and find a better price?”.

If you haven’t complained recently about service or pricing chances are you’re a good candidate for a price increase. But if you meet some of the following criteria you may be spared…

Pricing managers then apply their judgment on how to proceed. Is the customer in a key market that Waste Management’s trying to break into? Is this a customer who has complained recently about poor service? Is it on an existing truck route, thus cheaper to service?

Waste Management is using software now to figure out “pricing optimization” which means figuring out which customers they can squeeze more profit out of. As a big company even a small increase in pricing for 50% of their customers translates into a nice increase in profits. Pricing excellence is code for “Put rates up as much as possible”.

Waste Management needed the pricing app for several reasons. One is volume. The company provides more than 100,000 service quotes a month, and relying on the experience and instinct of managers is “not a scalable model,” says CIO and senior VP Puneet Bhasin. Also, the company has started a multiyear effort to increase revenue and cut costs, and it’s counting on “pricing excellence” to meet its goals (see Waste Management’s New Model: Garbage In, Profits Out).

Implementing a pricing optimization system can be daunting. One reason is that price can be an emotional issue. If an airline passenger who paid $500 finds that the person next to him paid $250, the $500 traveler isn’t happy.

Waste Management’s services, however, are different because every bid is unique, says Bhasin. Location, type of waste, weight and volume, scrap value, rules on where garbage can be taken, and competing services all go into its calculations.

If you don’t want to find out you’re the lucky customer on the the block making profits for Waste Management while your neighbours have the cut rate deal you might want to have Keystone review your current cost structure and see if you’re flying economy for First Class pricing.

Keystone is Canada’s leading waste consulting and recycling optimization firm. Since 2007 we’ve helped our clients save over 30% on waste and recycling expenses while increasing overall waste diversion.

www.keystonewaste.ca

888-892-1796

One option for higher volume generators is On Site Composting where organic waste is composted or digested at the place of business using specialized equipment. The two primary types of equipment can be classified as wet or dry depending on the type of output they produce. Keystone has put together a brief overview of wet and dry on site composting to provide a starting point for any business considering on site composting.

Click Here to Download On Site Composting Overview

Got a question or would like a review of your recycling and waste management program? Drop us a line at 888-892-1796 or info@keystonewaste.ca

For the  honour roll…..

EcoSafe: A few of our customers have been having difficulty with bag liners on their organic bins that don’t stay put. This means the liner falls into the bin and food waste goes all over the bin. As you can imagine this leads to a smelly, disgusting mess after a few weeks. As the hauler is the one putting the bag liners on we raised this issue with them and they turned to the the supplier, in this case EcoSafe. Ric Mallett from EcoSafe was quick to get in touch with Keystone and immediately starting working to solve the problem. The thing that really impressed me about Ric was his attitude of “We’ll do whatever it takes to solve this problem”. He agreed to meet on site with Keystone the same day to review the issues we were having and started working immediately to find a bin liner that would work. There was no blaming the bin manufacturer, blaming the hauler or blaming anyone, his attitude was “Let’s Solve The Problem”. The icing on the cake was he even came back on a Saturday morning during the Grey Cup parade to do additional measurements and go over the correct way to install the bin liners. That’s customer service and we’ll be using EcoSafe again in the future.

The other shout out for excellent customer service goes to our stellar IT partners that created our RecycleSmart reporting system. Johnathan Briggs at Roebank Publishing/Target Dashboard gives amazing customer service. They have customized feature, made new features, helped us day and night with locked out accounts, data problems and anything we threw their way. The fact that we’re across the ocean (Roebank is based in Scotland) hasn’t hampered the ability of their team to deliver great service. I was blown away when Johnathan was going on vacation he emailed us to say he was going to be away and introduced us to his replacement while he was gone! That’s proactive customer service.

On a bad note in the last month I’ve had the pleasure of dealing with companies who don’t discontinue previous employees email accounts so you email into oblivion for days wondering why you’re geting no response. When you finally figure out that John/Jane no longer works there and get a hold of the right person they berate you for asking for a rush on the information you requested. Wow, ever heard of email forwarding or even the old email bounceback feature? And then there is the equipment suppliers that can’t, won’t and don’t give customer service. It’s not their machine, it’s operator error, we don’t cover that, your warranty just expired, prove it to me first. Guess what, if I have to go through all that hassle I’m likely going to go with a equipment supplier that has a Ric or a Johnathan that steps up to the plate and makes my life easy. When you give poor service you undo the thousands of dollars spent on marketing, sales reps, flashy brochures, the new website and everything else you did to get my business in the first place.

At Keystone our customers problems are our problems. Due to the nature of our shared savings, performance based business model we can’t pass the buck or leave the client with equipment or services that aren’t working. Our success is your success. Our bottom line is your bottom line.

I wanted to discuss an item that often comes up when speaking to companies with multiple locations across a large geographic area. Often a company has contracted with one of the 3 major waste hauling companies to provide waste and recycling services at all their locations. They are given a so called “preferred rate” in exchange for volume of business that they are giving to one vendor. Makes sense right, buy in bulk and save money? Anyone who has shopped at Costco or bought wholesale knows how this basic business principle works.

Well, not so fast. While it’s true that by consolidating vendors and using purchasing leverage a company can drive down procurement costs. But the waste industry is unique in that the local characteristics in each market largely determine the how competitive a particular hauler can be in any given market. And often the large hauling companies don’t serve the smaller towns and villages so they end up sub contracting the service to the local hauler anyway, while making mark up on the service at the expense of their customer.

Download our whitepaper to learn more:

National or Corporate Hauling Contracts: Fact or Fiction??

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