The Truth Discussion: Part II

TFC-Truth & HellI posted Can We Handle the Truth? a few weeks ago with tremendous feedback from many points of view.  Most  were in agreement with the notion that we in the funeral industry need to take a step back and reevaluate our businesses from many avenues of approach.  There were some that agreed with the post content, but doubted that such a collective discussion would ever take place, much less have impact.

I have traveled extensively the last few weeks attending a “meeting of funeral professionals” (I’ll leave out the name of this particular event to protect the innocent), meeting with several funeral home/large cremation providers and with a prominent/high volume funeral financial provider. At the funeral professionals meeting the format allowed for various speakers within our industry present a multitude of topics from how to manage change to the importance of social media (yawn…old news talking about it, implementation and execution are foreign strategy topics).  I listened intently to most of the speakers and one stood out as a practical real world, experienced voice.  In a nutshell this funeral provider actually understands consumer segmentation, invested, created, and implemented services/products to meet demand.  This man and his company created several different value propositions based on consumer needs/demands finding tremendous success; how refreshing.

In the very same week, an article was published by a well-respected industry leader regarding price competition.  The message had excellent points  such as projecting a clear message to consumers differentiating your brand versus competition along with providing value and customer service.  Let’s take a short look at how Walgreen’s does it:

What’s the message?  If one brand offers the exact same service for a better price (value) and can clearly communicate to consumers…what are the results?  Why didn’t the commercial show the pedicure for $30.00 ($10.00) more…would the lady react  the same? The truth is that a basic cremation is transfer of a body from place of death, the necessary paperwork, and the crematory fee. Most states require a minimum cremation container which adds to the cost.  How can a firm clearly articulate the difference to consumer on these basic charges in a value proposition?  Well, “we’ve been here forever, we care more, we have a bigger building, etc.” is not much of a definitive set of reasons to pay over $1000 more for exact services.  But here is the rub; the next piece of advice in the article is raise your prices.

A few thoughts about raise your prices. I get it, I really do.  If a business has expansive real estate and huge operating overhead costs, raising prices is just about all that can be accomplished. OR can change the model, cut fat out of operating costs by updating with technology and training personnel to perform better.  Perhaps earn new business by (fill in the blank) marketing?  Maybe even do as the speaker I referred to above, invest in developing different brands to meet consumer demands. Three elements of sustaining a business: 1. Do more business 2. Raise prices 3. Cut costs.  Does the current economy dictate that raising prices is the best answer right now?  Competition (like the Walgreen’s commercial) is savvy communicating their message to consumers.  Basically, they can do what you can do…for less and actually make profit.

There are many firms in the US that have created fantastic opportunities for celebrating life with upgraded facilities, offerings of services, technology, clear messaging and a true reflection of “you get what you pay for.”  The same firms invest and respond by creating value and realize that “one size does not fit all” by broadening their business (most cremation societies are owned by large funeral homes).

Just for fun, let’s look at Merriam-Webster’s definition: Valuethe amount of money that something is worth : the price or cost of something: something that can be bought for a low or fair price: usefulness or importance.  The funeral industry definition: Value: pay more for something that can be bought for a lower or fair price just because we say so.  The article is right on point; show value…

An analogy:  2015 Cadillac ATS vs. 2015 Toyota Corolla; ATS base $33,215-Corolla base $16,950.  Now the question is: for the majority of working Americans, which is the best value?  Both are transportation and designed to take you from one place to another.  Many would absolutely agree the ATS…however, if the consumer does not have the ability to buy the ATS, the value means nothing.  Are we trying to convince consumers that a Corolla should be priced the same as an ATS and has the same value?  Value is defined by the person making the purchase, not by the person selling…it’s hard to show the value of a Cadillac if you only have money for bus fare, “I Only Have Bus Fare But I Want to Buy a Cadillac”, sound familiar?

The truth is the consumer is dictating changes that some funeral providers are unable to meet because their operating model is outdated only allowing for “raise prices” and a willful refusal to make hard choices for change. The funeral consumer is finding information online (not necessarily from funeral home websites), shopping for “better deals,” seeking celebrants for direction, and choosing offers/products/services outside of traditional funeral channels.  The funeral consumer is choosing cremation over burial at a rapid rate which applies pressure to funeral homes and manufactures to find new revenue.

With all the meetings and discussions over the last few weeks, the recurring need for adaptation to accept consumer change is at the top of the list.  Yes, there are companies and funeral homes making significant strides in the right direction.  However, the truth is, the vast majority of funeral providers will continue the status quo…just like Radio Shack did.  From the desk of the Commander, Cheers Ya’ll! #thefuneralcommander

12 comments
  1. Howard Beckham said:

    “We have meet the enemy and he is us!” written by Walt Kelly in the comic strip “Pogo”
    Yes funeral directors are frequently their own worse enemy. You are on point with the “Radio Shack” comment.

    About value…different people perceive value differently. There are people who still purchase Cadillac ATS’s. There are just more people who purchase Corolla’s. Depending on the market you are in Cadillac dealers can do just fine. Bust Toyota can do well in almost every market. From my experience here in the south, many people who could easily afford the top of the line when it comes to funerals go for the middle or low end (direct cremation with a family organized memorial service).

    Tradition is rapidly going away and economy and the perceived value of what the family wants, need, expects and is willing to pay for is creating a whole new paradigm to adapt to.

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  2. Can someone explain the Cadillac vs Toyota analogy using a funeral as an example? Thank You

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  3. Jeff Harbeson said:

    Dave:

    Absolutely…A Cadillac model is $xx,xxx and a Toyota model is $xx,xxx. Both are transportation performing the same function. Basic cremation is removal, paperwork, crematory and most cases a basic cremation container; just getting cremated. The car analog at least a consumer can visually see the difference of the two basic models, for cremation what is the difference in price…thousands of $ for: ? Thanks for reading! Jeff

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  4. Thank You, One of my favorite industry blogs

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  5. Jeff Harbeson said:

    My pleasure. Are you in the funeral industry as well? Jeff

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  6. I manage a distribution center in Maryland (Haven Line Industries) Lunch is on me if you are ever in the area.

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  7. Jeff Harbeson said:

    Thank you sir…I would enjoy meeting you!

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  8. Morguie said:

    If I might weigh in here (I saw that Dave asked this through my own blog). The analogy of the cars — the difference in the more expensive model is that there is a level of service provided, such as the extras a car dealer might offer, say, an extra maintenance and roadside assistance package, warranty, or a detailing once per year, all of which are included in the price of the vehicle.
    That is not to mean that you don’t get good service is you go to a cremation service facility and purchase the basic items, such as you outlined above. One would hope that you are treated well and encouraged to contact the proprietor if you had any other concerns, etc. However, a basic cremation (sometimes called affordable or “cheap” cremation —I hate that word!) is JUST that. No facilities are provided for a gathering or a service, no services beyond the ones you purchase as listed on your contract.
    Basically, the place takes care of the body and the necessary paperwork and transport. The rest of any other ideas you think of regarding holding a Celebration of Life service or a viewing, etc. are ON YOU, a sort of do-it-yourself deal.
    The alternative, more detailed and more expensive service is provided, and alleviates the stress and expertise you would have to put into making these things come together in a meaningful and seamless manner.
    Funeral homes are staffed by licensed and experienced professionals. That is their forte and what they do best.

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  9. Morguie said:

    I cannot agree more, Howard. I was just having this conversation with my better half, the other night. I told him I firmly believe that funeral homes AND the cemeteries too, are very much part of the problem of cost-prohibitive services and goods they offer. If folks are DIY-ing it is because they are looking to save money on death-care purchases, due to many factors suffered by a great many people during this (continued) jobless recession. Since nobody likes to take the bull by the horns and pre-plan for themselves, this is left unfunded, uninsured, and often in the laps of dependent adult children who have modest means avail. There is no good reason , in my opinion, to charge Upper Manhattan prices for a columbarium niche or for simple opening and closing, or marker setting…yet there are mighty expensive enterprises doing it daily…then they wonder why they haven’t been able to encourage more grave burials or interest people in niches. YOU ARE CORRECT, we are our own worst enemy. I think the original hope was to make up for the lost sales revenues of traditional services being lost to less expensive cremation alternatives. I just hate to think that a generation or two ahead, there will be some regret that people will feel when they cannot properly trace their family trees, etc. because ashes in the wind or in a jar on a shelf somewhere are all the evidence that might be left to show someone even existed on this earth. For now, people are living in the moment, happy to take Mom or Dad home and put them on the mantle, without thinking about what may become of them later. And to think they cite the expense as their main reason for making simple choices. We aren’t that miserly or greedy…folks just cannot fathom paying so much for a DEAD person’s things. After all, if you’re dead, you’re a bit …well, useless. They don’t balk at paying $25k-50k for a wedding..they value the usefulness of the living celebration much more.Terrible.

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  10. Jeff Harbeson said:

    Well said Ms. Mouse!!

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