Who’s your customer? The Generators vs. the Regulators

In an earlier blog post, “Local Governments Must be Top Priority for Solid Waste Companies“, I argued that most solid waste and recycling companies fail to prioritize local government relations, in spite of local government’s role in defining those companies’ success or failure. Why is this the case? The waste industry is populated with very smart people who know their businesses very well. They surely understand that, without the permission of one or more cities or counties, their business would cease to exist.

The problem is that many waste and recycling companies forget that they have two sets of customers: the people and businesses from whom they pick up waste and recycling, and the local government officials who allow them to pick up waste and recycling from those people and businesses. I like to call them the waste generators and the waste regulators, respectively.

In franchise jurisdictions, the generators pay the bills, but they usually have no choice about who picks up their waste and recycling – the regulators decide that. To be sure, the regulators (sometimes) listen to the generators when they speak up about service levels, pricing, recycling programs, etc., but the ultimate buy-or-don’t-buy decision lies with the regulators.

The regulator-as-customer dynamic is more clear in contract jurisdictions, in which municipalities pay private hauling companies to collect waste and recycling. In those jurisdictions, the regulators call the shots and pay the bills.

Even in jurisdictions in which open or modified competition between haulers exist, the regulators retain some authority. More jurisdictions are looking at franchise systems to allow them to speed diversion or other waste goals. A hauler could be serving the generators well and have the rug pulled out from under them by the regulators.

As I mentioned earlier, the regulators do, at least sometimes, listen to the generators. However, serving the generators well does not ensure the regulators – the people with the power to grow or destroy a hauler’s business – will be happy. This is in part because many generators, especially in more left-leaning parts of the country, hold views about waste and recycling policies that are distinct from the question of whether they think their hauler is adequately picking up the garbage every Monday morning. More on that in the blog post, “Big Differences in Solid Waste Policies Reflect Red/Blue Divide.

The regulators hear a lot of different views from a lot of different people. The regulators themselves frequently hold pre-existing and strong policy views – this is why they went into local government service in the first place.

Outside open competition jurisdictions, pleasing the generators is primarily a method to please the regulators, who, after all, have ultimate authority over whether a waste and recycling business succeeds or fails.

Regulators are the ultimate customer, and every waste and recycling company must be obsessed with ensuring the regulators like them, and want to do business with them. In my next post, I’ll get into how companies can go about doing this.

Jeff Eager is the Founder and CEO of Waste Alert, which provides weekly email updates on local government activity to solid waste and recycling companies. He is a practicing attorney specializing in solid waste franchise issues for private waste companies, and is the former mayor of Bend, Oregon.

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