Transparency Will Lead To Trust & Loyalty
Lessons from the scrap metal industry.
The scrap metal industry is one of dinosaurs.
Since 2012, I have worked for my brother full-time for the scrap metal business our Dad started in 1977.
Despite it not being a glamorous industry, it has a large footprint on the US economy – having an impact of $117 billion in the US in 2021 (according to ISRI.org)
That number should be taken seriously, especially when discussing a product and service that is a byproduct of other industries.
What is scrap metal recycling?
Some people may see junk collectors sifting through curbside trash and auto salvage companies selling parts, but that’s just the tip of the iceberg in scrap.
Scrap metal recycling and its materials can be categorized into three main sectors;
Non-Ferrous Metals
These are higher-valued metals that have specific applications and are non-magnetic. These metals are of higher value due to their complex mining processes, limited supplies, and non-corrosive characteristics. These metals do not stick to magnets. Some popular examples are:
Copper – which is used in electrical and plumbing systems
Aluminum – which is used in food, technology, automotive, and construction
Stainless Steel – which is used in medical, aerial, and food
Ferrous Metals
These are more common metals that can be mined easily and are sturdier and heavy. They all derive from iron ore, which can be melted and shaped into I-beams that build skyscrapers, bridges, automotive parts, and more. These metals are corrosive and will stick to a magnet.
Electronics
These are components from technology and originally was home to a large quantity of gold. In the 1980s and 1990s, my Dad was in the middle of the recycling rush of computer components like RAM and CPUs from the early computers with a significant amount of gold.
Today, these components do have gold, but a very minimal amount, as they are often made from aluminum or copper and have a gold plate on the outside.
Where Money Is Made in Scrap Metal
In the scrap metal industry, the main focus – like stocks – is to know when to sell and when to hold your material based on where the commodities markets are trading.
Lifecycle of Scrap Metal — a brief timeline of an aluminum can
An aluminum can is brought to a scrap yard.
The scrap yard buys the aluminum can(s), usually 10 pounds or more, from the customer for around $0.25–0.40 per pound.
Then, the scrap yard adds those cans to the growing pile of other cans.
The cans are then packaged (crushed and baled) by the scrap yard.
The scrap yard will then lock in a bulk price for a load of cans with a significant volume — so perhaps they sell it for $0.28–0.45 per pound.
A larger scrap yard buys the cans (following the same previous steps) or is sold directly to a smelter.
The smelter will load all the cans in large kilns, which melt all of them together.
The melted aluminum is then poured into ingots to create new aluminum products.
Recycling an aluminum can has the same recycled material back on the shelf as a new can in 30 days.
The key to making money in scrap metal recycling is ensuring scrap yards sell and buy materials when the prices are correct. Like stocks, metal prices are greatly affected by economic downturns and upswings. So timing can be a massive benefit to the players involved.
Knowing the market patterns is where the best scrap yard succeeds. That knowledge translates into the prices that scrap yards change and offer their customers to ensure they make the best profits for today’s market conditions.
This knowledge has been kept a secret for years…more on that later.
Volume is also crucial.
The more scrap you have to sell, the higher bargaining abilities you have for better prices to sell.
But that comes with a poisonous aspect: greed.
The Dark Side of Scrap, Exposed
Scrap yards have always been notorious for cheating customers – which is still true today.
Some ways we prevent that bad-name to follow our own business, we have scales checked quarterly (despite only being required once annually by the state) and we have large scale screens to help customers always see their weights when we put together their receipt.
Whether scrap yards are tinkering with their scales or changing prices at the door when customers come to sell their material, there are always questionable stories floating around.
So, when my brother took over the business in 2008, he began to find ways to stand out in the industry – especially in the highly competitive NYC metro region.
His secret?
He shared his yard’s current prices online and changed them regularly.
This was unheard of.
My dad even said he was crazy and was nervous it would hurt the business.
He created a website that allowed him to edit and change a complete list of scrap prices he was paying customers whenever the markets reflected changes.
This gave his customers – electricians, plumbers, and contractors – “insider” knowledge of where scrap prices were heading and what they could expect to be paid when they brought their scrap.
The prices were just the vehicle that drove the more critical aspect of this industry change.
The real value of sharing prices was much more significant.
It created TRANSPARENCY.
Transparency in an industry known for blatantly cheating customers was more valuable than any scrap price changes shared.
It showed customers that there could be a sliver of trust in this industry.
That Transparency Led to Trust & Loyalty
Our customer growth increased once our scrap yard began sharing scrap prices. Being in a very competitive region, we weren’t worried about scrap yards “outbidding” our prices to customers because the age of the internet allowed us to increase our reach to
As a marketer in the scrap metal industry, I can share our latest services, our best prices, our policy on various materials we buy, and share customer events, but three values must be nurtured.
Being transparent with customers will help achieve trust and build loyalty with your customers.
These are the golden values most important to me as a marketer, whether marketing in scrap metal, small businesses, or with my freelance clients.
Demonstrating to customers that you are willing to be transparent about unheard-of parts of your industry creates trust in their relationship, which leads to loyalty to your brand.
In this case, for scrap, the transparency offered by sharing current prices was a home run; it allowed customers to be aware, learn about patterns, build trust with the scrap yard, and ultimately create loyalty to recycle their metals there.
I realize this is a unique industry and story, but I challenge you to think about ways to enhance customer transparency.
How can you create transparency in your industry?
I can think of numerous ways, but my example of prices is an excellent place to start.
Talking to marketers and small businesses, not seeing prices is for products or services frustrating part of most industries.
At the end of the day most people care about is the bottom line. So they are more than likely to jump on a call with a salesperson after they have been made aware of a price.
Here are a few questions to ask yourself to help find gaps in your industry that may offer opportunities for transparency:
What is the most common question customers ask? Adding an FAQs section to your website may help answer questions. If they are vital to your business, having answers on your landing pages may be worth it. Bonus: this can also help with SEO for people searching for those questions.
What do my competitors do (or don’t do) that frustrate customers? This is usually a homerun shot. Customers will talk and tell you why they left your competitor and use that as insider knowledge to enhance your services or products.
Do your customers know the basics? A mistake many businesses make is that they assume their customers understand the inner workings of their industry. Wrong. Educate your customers with videos, tutorials, and explanations that make them feel more knowledgeable.
What’s a secret you learned that helped your success? Remember when you learned a “secret” in your industry that resulted in tremendous success? Share that with your customers.
Regardless of how you add transparency to your business, always remember to empower your customers and their decision-making.
With customers, your business will succeed. Catering your messaging, enhancing your services, or creating higher quality products around transparency will allow you to earn their trust and, ultimately, loyalty to your business.
Transparency is a choice, but gaining customer trust and loyalty is a must.
Transparency is a good way of getting there.