Bob Brennan, the CEO of Iron Mountain, shared a unique perspective on Iron Mountain’s differentiation in the marketplace: trust. When you are in business for 60+ years, you have consistently delivered revenue and profitability growth, and your shareholder turnover is measured in years, you can use that term in a very specific context. Its competitors, from those offering physical records management to e-mail archiving, will say say the same thing–heck, every vendor will say their customers trust them. This brings me to Bob’s perspective, where trust is an equation.
Trust = (Credibility + Reliability + Intimacy) / Self Interest
Clearly, all of these variables are subjective, none more so than “self interest.” Even if a company puts up strong metrics in the other components, a high degree of self interest will dilute the trust factor. Bob quickly points out that Iron Mountain certainly has “self interest”–this is a capitalist firm, after all. However, its self interest is not as immediate, nor is it as unilateral as almost every other vendor. For example, Iron Mountain doesn’t need to force customers to “buy today” much like a car salesman. It has an enormous amount of recurring revenue, so it doesn’t need one or two transactions to hit its quarterly targets. As a result, it has more stable, predictable pricing (there aren’t many “buy today and get 80% off” types of deals). Also, when it comes to many services, Iron Mountain provides different purchasing decision altertnatives. If a customer wants to destroy paper or tapes (as opposed to storing them longer), Iron Mountain is OK with this. For other vendors, you either buy what they are selling or you don’t. Yes, Iron Mountain gets paid for destroying paper and tape along with storing it– but this offering isn’t forced on a customer at a particular point in time.
The very quick bullets:
- I agree with Bob’s perspective–Iron Mountain can establish a higher degree of “trust” with a customer because the business model changes the “self interest” variable. I cannot get the car salesman analogy out of my mind, but I am also well aware of how busy technology vendor salespeople become the last two weeks of a quarter.
- Why does trust matter? As companies look to rip out costs, one easy method is vendor consolidation. Organizations will not just look for who has the best widgets, they will look for what vendors have consistently delivered. “Consistently” is usually defined as more than a few years.
- You can pick on Iron Mountain’s “business agility” or “pace of innovation,” but you cannot challenge the uniqueness of its business model and what it enables. Personally, I would have never thought about equating a business model with trust.
Read more of Brian’s blog entries at IT BULLETins.
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