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Funeral Pricing

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I have funeral home owner clients that are astounded when the epiphany of the number of calls are irrelevant to their profit.  In a few weeks, the Super Bowl of funeral service is in Philadelphia where the pontificating will be at extreme heights.  One of the biggest of all is the “tale of calls” (not to be confused with the tail of a whale).

Allow me to explain.  A firm touts they are having a great year tracking to conduct 250 death calls over the 225 last year.  If the casketed calls this year are only 40% (100 of 250) of the total versus 50% (112 of 225) last year…is the firm really doing better?  If the firm “picked up” 38 new calls this year which are non-casketed, did those calls even budge an increase to their profit margin, most likely not.

In a recent Funeral Boot Camp where attendees learn how to properly charge for goods and services as well as understand measurement of profitability, I saw something remarkable…or so it would seem.  A 60 call firm had more cash in the bank and net profit than a 200 call firm.  How is that possible?  Revenue per call, proper pricing, and frankly they are a great client of ours (meaning this firm is making good decisions).  Since the revelation or the before mentioned “epiphany,” the 200 call firm has seen the light and now on their own path to profitability with our guidance.

So the next time you hear Foghorn Leghorn “crowing” about his call volume, ask ‘ole blabby what his profit margin is…and listen for the crickets.  The more you know, the smarter you are.  Be smart and contact me jeff@f4sight.com for your own epiphany.

From the Command Post (West), Cheers y’all! #thefuneralcommander

d-vs-g

My last post Funeral Industry David vs. Goliath was referring to innovation in the funeral industry. From all intents and purposes, Goliaths dictate and Davids innovate.  There is no greater example of this analogy in the funeral business than casket manufacturers.  Just recently one of the casket Goliaths was recognized for their “innovation.”  What is innovation?

Webster’s Dictionary: Innovation; a new idea, device, or method.

Have we become so complacent in our industry that throwing “old wood” on a casket is considered innovation?  The definition should be expanded to include making products for less cost (Chinese hardware and cloth for interiors) and moving South of the Border for manufacturing. YES!  Now that’s innovative; however with these cost saving measures why are you paying more for Goliath Company’s caskets?

There was a time when the casket peddlers led the industry with messages that their product was “the center of the world” and families would pay premium prices.  At that point in history (before Al Gore invented the Interweb) funeral home owners drank the Kool Aide by selling families Bronze, Copper, Stainless Steel, and Mahogany caskets even some adorned with gadgets.  Good idea, right?  I mean, the profits from these transactions had to be incredible. How’s that “innovation” working out for ‘ya today?  Funeral homes filled their casket rooms (later to become known as Hallmark Stores) with good, better, best, and ignoring the service side of their business.  What did the Goliath’s do?  After the contracts were signed and the rooms were filled, prices began swelling faster than a Krispy Creme doughnut in hot oil. Fast forward to 2016; when was the last time your firm sold a Bronze, Copper, or Mahogany casket at need?  In fact, exactly what material (Gauge or Wood type) is the average casket your firm sells now? Now Goliath’s are spewing “don’t raise our prices, raise your service prices” as they hand you the new X% more casket price-list for 2017.

Interesting that the casket Goliath’s even attempt to be “business consultants,” however 90% of the road warriors haven’t a clue how to interpret a funeral home P&L, much less understand the process of operations.  Perhaps I should create a “funeral home business and operations quiz” so that the next time Skippy the Casket Clown knocks at your door, you may find out just how much he knows about your business.  The results of the quiz will be devastating to Skippy.  But no fear!  Skippy will reach into his bag to reveal that he can improve your website (with a template), increase your cremation revenue (with his company’s Chinese urns and “proven presentation strategies”) along with various and sundry useless items for sale.  Innovation would be to improve the funeral home operating processes and providing solutions to elevate the positive financial posture for profitability.  Wait!  Maybe a trip, game tickets, or a nice meal will make everything better.

Let’s get down to the truth, shall we?   Caskets are made of wood or metal (unless you get the ones made in Mexico, they are wood composite).  The definition (according to my indoctrination in the cornfield) of a casket is “a container for precious materials.”  The deceased (precious loved one) is placed in a casket, their loss mourned, their life celebrated, and they are buried never to be seen again.  If your funeral home’s financial life depends on one of Goliath’s spawn, your business will be in a container for precious materials as well.

What would be innovation for caskets?  How about finding a way to manufacture a quality product for less?  The casket manufacturing Davids have already done so.  A simple price analysis and side by side comparison of local distributor, small manufacturer, or offshore caskets will reveal Goliath is out of touch and David has an arsenal of rocks in his sling.  Oh yeah, one more “innovation” that Goliath created:  “off brand” caskets that are sold through the local distributors.  Yep, the same casket you may be paying up to 50% more with a 1-cent sticker comes right off the manufacturing line as the “off brand” does.

Thanks to the itnerweb and frankly, enlightenment of funeral directors, the casket Goliaths are taking more rocks to the head from the casket Davids.  The Goliath notion of treating funeral directors like mushrooms (“keep ‘em in the dark and feed ‘em crap”)   days are coming to a close.

I am more than happy to further this line of factual thought with anyone that chooses to reach out to me.  I challenge any Goliath representative to a public debate on Funeral Nation TV to refute these points of innovation.  What the heck, its debate season so the floor is open!

From the Command Post (West), without libation or cigar for clear thinking, Cheer’s Y’all! #thefuneralcommander

 

at need payment

Funeral payment plans used to be an option for consumers pay funeral expenses that did not fund pre-need, had limited life insurance, cash or credit card balances.  The days of funeral homes offering in house payment plans have gone away with the sales of bronze and copper caskets.  Why?

Administering the process of billing, collecting and accounting is a colossal waste for the actual return of the revenue sought after.  Another reason is the age old “when the tears dry up so does the checkbook” theory of consumers failing to pay for funeral expenses over time.  Finally, the credit worthiness of consumers has dramatically shifted in a downward spiral due to continuing unemployment, falling home value and of course other negative economic pressures.

But these folks are dying too and funeral home owners are struggling to maintain a balance between offering services/products that family’s desire with getting paid for services rendered.  This dilemma is not new and I have written several posts At Need Payment PlansDon’t Ask the Kids to Pay, along with Is it About Honoring the Life or Paying the Bill?  This “underbelly issue” of the funeral home business is not being addressed and is one that will continue to grow as fast as the shift from burial to cremation.

Think I’m wrong about this?  Take a look at all of this years (2015) convention and meetings.  How many seminars were presented that shared how to deal with consumers that are financially struggling, how to bridge the gap between wants of families vs. revenue generation, or cash flow solutions for at need funerals?  Nope, we still are listening to the soothsayers and pundits blithering about “charge more/show more value,” “how to market your funeral home (with no measurable results),” along with other subjects that are basically repackaged from the last seminar offering nothing remotely important to serving the broke ass consumer (I threw that in just to see if anyone reads this far down and paying attention).

Over the coming weeks I’m going to further delve into this particular subject and offer solutions.  At this very time I am working with a team of lending experts and organizations to create new a suite of funeral payment plans that will be offered by At Need Credit with several choices of options that funeral directors may choose based on their particular needs.

The new roll-out will be in January and will include everything from offering payment plans to excellent credit consumers, poor credit rated consumers, billing opportunities to accounts receivable collection.  If you know me, it’s not just talking, it’s all about execution.  The Funeral Commander is “getting it done” for funeral payment plans. From the command post through the smoke of a fat maduro cigar, Cheers y’all! #thefuneralcommander

 

 

parting-logo@2x

Parting.com launched its site which has virtually every funeral home in the United States with pricing for services listed for consumer comparative analysis.  This disruptive innovation is the first of its kind in the funeral industry; the FTC, State and other funeral directory websites have never been able to accomplish…listing General Price List information for consumer comparison.  It’s reported that a small percentage (9%) of funeral homes offer any pricing information on their website which provides Parting.com with a tremendous opportunity for consumer search using the internet for funeral homes.

Parting.com offers line item pricing from the GPL for basic services, embalming, visitations, etc. as well as direct cremation from the funeral homes listed.  As a service to the consumer, the listed funeral home’s prices for at typical funeral (basic service fee, transfer of remains, facilities for viewing, facilities for ceremony/staff, embalming) are conveniently added from the GPL listed.  Average national prices for a casket, dressing/casketing and outer burial container are separately listed but all added together to provide the consumer a comparative look at firms in the particular area of search.

In addition, most of the funeral homes listed have photos of the location (most look like Google earth shots), a link to make an appointment as well as a function for a consumer to review the service provided at the funeral home.

Innovation in the funeral industry continues to evolve especially in technology sector.  I remember in the recent past funeral homes that did not have a computer in the building (I still get applications for one of my companies that appear to be completed on a typewriter) and had a fax with the rolled paper.  From my vantage point, Parting.com has created a truly disruptive innovation site that no doubt is defined below:

Wikipedia defines Disruptive innovation: is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leaders and alliances. The term was defined and phenomenon analyzed by Clayton M. Christensen beginning in 1995.[2] More recent sources also include “significant societal impact” as an aspect of disruptive innovation.[3]

Interestingly, if a consumer is already searching the internet for a funeral home, they certainly have no or very little relationship with a provider.  Consumers now will have the benefit of comparative pricing if they are so inclined to use Parting.com instead of having to call or visit the funeral home for additional information.  Parting.com has “upped the ante” for funeral homes to create more interactive and informational websites to showcase their particular value, services, etc. to secure the internet shopping consumer.

Want to know more?   Tune into Episode #9 of Funeral Nation TV we interview the founders of Parting.com and learn about their disruptive innovation in the funeral industry.  From behind a thick fog of smoke and the Command Post, Cheers Y’all!  #thefuneralcommander

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

back homeThe Wall Street Journal just provided an interesting article Younger Generation Faces a Savings Deficit which outlines how the millennial generation is financially struggling.  Basically the economy has not been particularity kind to this group and due to many factors; they pretty much have no savings. Why is this an issue for the funeral industry?

We all know the millennial generation, for the most part are children of Baby Boomers.  And as we are also aware, Baby Boomers have not been the most fiscally responsible generation of all time.  Yep, we (Baby Boomers) are living longer which means we are spending more money on medical care to keep us alive and depleting our funds towards end of life. In many cases, we are still supporting our college educated millennials that have returned home in debt and unemployed (or underemployed working at low wage jobs with a high cost degree).  I am privy to daily inquiries for funeral funding of a relative that had no life insurance or made any provisions to pay for their own funeral, but relegate such to survivors.  It’s shocking to know that people actually say they have nothing, no funds to pay for their deceased loved one’s final expenses.

If the deceased left noting and their survivors are the generation depicted in the Wall Street article, how is your funeral home going to get paid?  Even more disturbing is the fact that millennials will most likely struggle to pay for a cremation out-of-pocket much less a funeral and all the cash advances like cemetery charges.  How does that affect the financial health of your funeral home?

I recently posted The Orchestra is Lovely regarding the bad news about Genesis Casket closing and indicators about the future of such companies.  If you are in the casket business and depending on millennials to buy caskets for their deceased Baby Boomers, the future is rather dim.  Another post from earlier this year Is it About Honoring the Life or Paying the Bill? reiterates the facts regarding how funeral homes are facing an increasing consumer base in financial difficulty.

Whats the good news?  We all have time to make smart decisions and choices to meet the changing demographics of funeral consumers.  A thorough analysis of operating costs, processes and re-engineering of how our funeral home operates is essential for not only growth, but survival.  I am fortunate to have “the secret sauce” with a team of real professionals that essentially function on “continuous improvement.”   There are some great consultants that will provide you and your firm the due diligence, solutions and oversight necessary to meet this tide of change.  I can attest they are not the ones hawking “new and improved” caskets (not to mention all the other goodies in their bag like websites, urns and funeral toilet paper), but consultants that actually know what a robust and healthy funeral home P&L should contain.

Want more insight?  Send me a message and I’ll gladly offer you some ideas of who can help you and how to prepare for the what lies ahead. From the Command Post: Cheers y’all! #thefuneralcommander

 

washed outIt’s the time of year that summer comes to a close…the end of a season associated with happy, warm and carefree days. However, this description of summer is not necessarily reflective in the funeral industry.  Just like the ocean, the death rate has an ebb and flow; historically the death rate is higher in the 1st and 2nd quarter of any given year and the 3rd quarter (summer) is significantly slower.  This historical trend offers the opportunity for timely discussion.

As a funeral home owner/manger, how do you prepare for the ebbs and flows of the death rate for expected “slow times?” Does your firm adjust prices based on recent revenues?  What type of marketing campaign do you launch (if the phone isn’t ringing, then go out singing is one of our firm’s methods)?  Or  are you the proponent of the ever popular “we have experienced this before” and do nothing?  The problem of decreased death rate in today’s atmosphere is coupled with other issues; competition (locally and online), shopping consumers, increase of cremation, decrease of traditional burials, and of course when a call is lost, so is the revenue along with that family most likely not returning either.

Lest we forget: it’s price increase time!  Yes, if not yet, your happy supplier will visit soon telling you how much you are loved and appreciated…and that love will cost you more this upcoming year!  Now, don’t forget that suppliers have to make profit and if you review the wall street owned ones, they do handsomely.  Nothing wrong with profit, frankly I’m in favor.  Back to my point, this time of year.  The funeral homes that I am owner/partner, we operate our fiscal year January-December.  However, the major suppliers find it necessary to impose their fiscal calendar upon us to suit their financial needs…this time of year.

What does this mean to you and your firm?  Well, first it’s time for you to make adjustments to your GPL and product price lists or absorb the product price increases starting October 1.  Remember the “slow” summer season just ending?  Now you have to account for those losses and adjust for upcoming increased product costs.  Frankly, if your firm has been adjusting prices along the way, this is not a big deal.  However, the majority of funeral homes in the US only make price changes this time of year, when dictated by suppliers, if any adjustments are made at all.  I know it’s hard to believe, but I see GPL’s and price lists that are actually dated “2010.”  Second, are the prices you are paying for products (and getting ready to pay more) a value to your firm and families?  At some point, there is a price for “loyalty,” just ask consumers.  I’ll address this question in another post soon.

So for discussion sake, how does your funeral home address “slow periods?”  Anyone out there heard the latest price increase numbers?  What are your methods to formulate price adjustments? How often does your firm adjust prices and what time of the year if only annually? Happy Labor Day (I’m working, but doing so with a cigar as part of the celebration).  Cheers y’all! #thefuneralcommander

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