The issue of families struggling to pay funeral expenses is ongoing and I believe poses an increasing threat to funeral home financial health. Take a few moments and read an article posted in Forbes last month: 63% Of Americans Don’t Have Enough Savings To Cover A $500 Emergency. Now let that sink in a bit…
Depending on the zip codes your funeral home serves, regularly working with families who struggle paying for your goods and services may not be an issue. However, there is enough negative economic news to support my continued message that we as an industry need to start paying attention. Take a look at the chart below (courtesy of the St. Louis Federal Reserve and found by my fellow funeral professional Raymond Aikens):
One of the solutions for dealing with this problem is to train funeral directors how to address families in an arrangement session regarding payment options. Yes, I know that your firm accepts full payment before services rendered and you have a payment policy. So why do you have accounts receivable? Because your funeral directors sign contracts prior to securing the funds to pay for services rendered, the family walks out the door, the service is over and you have an unpaid bill. It’s your fault, period.
I, The Funeral Commander offer training and solutions of how to secure payment before a funeral contract is signed and also programs that will put your funeral home in a $0.00 accounts receivable status. If your firm has past due accounts, our Funeral Pay Plan provides a program to not only collect much needed funds, but also keep your firm in compliance with federal lending regulations.
This year I will be offering CEU’s at conventions and meetings to address cash flow for at need services. Contact me for further details and let’s do something about the ongoing problem with a solution, not just talk about it. From the Command Post, Cheers Y’all! #thefuneralcommander #FNhustle #FNchange
This post is a continuation of the discussion I started in last week’s post Funeral Payment Plans for At Need regarding an epidemic of consumers that are struggling to pay for funeral expenses. Determining if your firm needs a funeral payment plan to offer families you are serving requires a bit of research and math. It’s a relatively simple exercise; however much like any program for improvement, the first step is to question if you have a problem.
Here is a quick way to determine if your firm should have a funeral payment plan:
Look at the last 100 cases performed at your funeral home.
On each goods and services statement, did you collect the exact amount for each item equal to the amount listed on your General Price List?
No matter the reason is there a difference between collected/charged and listed price (was there a discount)?
List the amount of difference per case and add the difference for all 100 cases.
Do you have any accounts receivable (money owed from those services) over 30 days?
Now add #4 and #5 together…what’s that number?
If there is any amount of money either discounted or owed to you, then you have a problem. Your firm either gave something away (discounted) or you have not been paid for what your firm provided (goods & services receivables) which inhibits your cash flow (the lifeblood of a financially healthy funeral home). I know that there are thousands of funeral directors out there that tout “we collect all our money up front before services rendered, period!” Yeah, okay so why do you have accounts receivable and why did you discount from your GPL prices?
Now that you have determined and recognize that your firm has a problem, the second question is what are the steps/process for correction? This is a critical yet difficult part of the process; doyou have the intestinal fortitude (noun: courage; resoluteness; endurance; guts) to make a change in your arrangement process and behavior? Or in Funeral Commander terms can you grow a pair, take charge of your business and actually lead your people to the promise land of getting paid for the work you do?
The third question to ask yourself is how do I fix the problem? Well, I have the answers with training and I’ll be rolling out a new suite of funeral payment plan solutions shortly with Funeral Pay Plan.
From the Command Post through a thick fog of smoke on the front lines in the war of funeral reality, Cheers Y’all! #thefuneralcommander
Funeral director training can eliminate the awkward and difficult position they are placed when a family is financially challenged to pay for funeral services/products provided. Consumers continue to struggle in our economy as depicted in the chart below that was shown just this week on MSNBC that the average middle class income is around $53,000. So if the middle class income is this low, how about the incomes in the below middle class segment? That group of people die too and face even greater challenges…
If your funeral home has not yet had to deal with such a situation, two things come to mind. You are blessed to be in a zip code that is financially stable or it’s just a matter of time. Training funeral directors at our funeral homes to address the lack of funds for payment of services rendered has virtually erased the issue. If your funeral home has a payment policy yet has accounts receivable in the “book of promises,” then your payment policy is a failure and useless. I have been in hundreds of funeral homes and I have seen “payment policies” in arrangement rooms in frames on the walls, in frames on tables and even on GPL’s with those firms having quite a bit of money owed to them.
Part of our consistent TouchPoints training provides our funeral directors with tools and scenarios to address money issues with families. By doing so, funeral directors have the confidence and complete understanding of all the tools available to solve any financial situation. For instance, when a family states “we don’t have much money,” the proper trained response is “how much is not much money?” By engaging in this conversation, the funeral director has a dialogue with the family that bridges their particular financial situation with their expectations of services/products. Once this conversation takes place, then the funeral director has the ability to match offerings with the family’s budget. By not having such dialogue early in the arrangement session and training how to breach such a sensitive subject without making the family even worse about their situation, training is a must.
Just for a moment, think about this: When a family loses a loved one, at the top of their mind is their loss. If the loss is coupled with financial issues regarding payment for services/products rendered, shouldn’t that burden be addressed pretty quickly? How many times in your funeral director career have you made complete arrangements including services and product selections, maybe even contacted clergy before presenting the final goods/services statement? When the family is provided and realizes the total amount due, all of a sudden it’s “cigarette and bathroom break time.” Upon their return from break, the financial issues are put on the table which may result in completely changing what has been already painstakingly planned. Basically, because financially issues were not addressed earlier, now the family and the funeral director have to hit the “re-do button” which in my not so humble opinion, is poor service.
Want to know more about providing meaningful and consistent training for funeral directors? Contact me! After all, as I have said many times: even professional baseball players take batting practice before every game, how is your funeral home training? From the Command Post and a thick fog of cigar smoke, Cheers y’all. See you in Indy for NFDA #thefuneralcommander
I have been a proponent of continuous improvement of our funeral service brands from training, technology, services/products provided to the physical environment of where we operate. This focus in my not so humble opinion is how we will both survive and thrive in the years to come as funeral service providers. As I was watching this morning’s news, a medical segment was profiling an online or “virtual doctor visit.”
The online consultation is provided by a licensed physician or nurse practitioner though a webcam for personalized treatment. When necessary, the professionals can submit an e-perception for pick up at a local pharmacy. Online consultation is for the convenience of the patient and according to this particular story; patients are moving this direction in droves. Convenience? Eliminating the hassles of scheduling an appointment during “normal clinic hours,” long waits at the ER or urgent care, and the costs associated with a doctor visit, etc. This new service allows the patient to remain in their comfortable surroundings and receive consultation; any guesses of what’s in the next paragraph?
As I write at this very moment I can see “we’ve always done it that way” (aka WADITW) smirking and thinking “that’s terrible service and unprofessional.” Is it? Similar service is being provided now across the country by savvy funeral directors that are in the quest of continuous improvement. Yep, total online offerings with the consumer never leaving their comfortable surroundings and the cremated remains delivered to their front door. Ole WADITW is smirking once again thinking “well, they can’t get a burial done that way and my families would never go for this.” Yeah, you’re right Sparky. But make sure and read the before mentioned reports above and maybe conduct some consumer research. Remember when we heard “nobody will use a dang card instead of writing a check and I need a travel agent?” Cremation is rising like the Pillsbury Dough Boy’s brother in a 400 degree oven!
As usual, my mission is provide fodder for thought by funeral professionals to consider and discuss. If you don’t like the message or challenge for continuous improvement, then how about this provocative question: matching suits and ties or not? From the Command Post and a thick fog of cigar smoke, Cheers Y’all! #thefuneralcommander #funeralnationtv
I don’t think there is a single funeral director, funeral home owner or cremation provider in the funeral industry that doesn’t know that the death rate in the foreseeable future is going to steadily increase due to the Baby Boomers moving on the the permanent Villages in the sky. Funeral industry pundits, soothsayers and oracles are continually propagating the “Boomer Boom” which will place all on solid footing and growth.
Visions of funerals that “reflect the life lived” with cocktail parties, receptions, doves, fly bye’s, movies, and theaters full of mourners wondering how they can “one up” such send off when their time comes dance in the heads like kids on Christmas eve. If I had sound to enter this written prose, this is where I would place the screech of nails on a chalk board (I bet some of you hear it and reacting as you read this) to get your attention.
The Baby Boom has potential for Bust for many funeral homes. WHAT? Captain, you are such an idiot because we are showing more value and charging more…how could we possibly go wrong? Take a look at the article posted in My Budget 360 regarding the financial posture of the pending retirement of Boomers. Couple this information with the financial heath of the Boomer’s Offspring and the visions before mentioned reflecting the life lived are for $695 cremation, a box of Bojangles chicken and a Dollar Tree balloon released “in honor of” because “that’s what they would have wanted” are more realistic.
We are entering the convention season which includes seminars and CEU credit classes. Just for your own observation and edification, take a look at the fall sessions and see if you can find “Strategies to Serve Broke Baby Boomers and Their Families.” The seminar would not as flashy, hopeful or sexy as the talk of a lifetime, but it’s worth discussing. From the desk of The Funeral Commander, Cheers Y’all! #thefuneralcommander
WOW!! What great response to the post Truth Discussion: Part III from literally all over the world; thank you (except to the woman with the handle “Cougar” that called me a few expletives, but she certainly typified the Southern saying “a bit dog always yelps”). One of my brilliant readers (a seasoned and well respected industry pro) and I had a long Skype discussion about the funeral industry buying and selling process a few days ago. During our chat, the notion of perceived value was discussed from a funeral product perspective. The truth is, because of overcapacity many manufacturers of funeral products are in survival mode.
Think not? Here is a question to ponder: Especially regarding caskets, if products have such great value…why offer such HUGE discounts? As I mentioned in Part III, I have recently seen a combined discount/rebate over 40% offered for a nominal amount of casket purchases. Leading with value? Not a chance…absolutely leading with price! If the main product manufactured has to be highly discounted to attract/retain customers and if the focus for sales reps is to sell all sorts of ancillary products such a paper goods, “business” systems, urns, websites, etc. then the truth is, things aren’t going so well.
Given this scenario, what are your thoughts? I’d like to hear from everyone your experiences of just how much a funeral industry product/service company wanted your business (discount/rebate, parking lots paved, vacations paid for, etc.). What are some of your stories and observations? We all know that just about anyone can be given a name-tag, tour, fed, getting all liquored up on free drinks in the middle of nowhere, entertained with game tickets, rounds of golf and such; but how about some of the more “colorful” attempts at “loyalty development?”
The truth is most funeral directors don’t ever see or get to experience such perks, I suppose that’s why the “Halloween” bags are so important at conventions/expos. What’s hilarious is some may read this and have no clue of what I’m talking about…oh well. From the desk of The Funeral Commander, Cheers Y’all! #thefuneralcommander
I 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: Value: the 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
There are all sorts of “Auld Lang Syne” and “Resolutions for 2015” posts going around, so as my first Funeral Commander post of the year, I thought I would recap some of the top 2014 funeral industry stories and offer predictions for 2015. Fortunately I have many contacts with funeral industry publication and news providers so I contacted them for their opinions on the top stories. Interestingly, we were all pretty much in agreement. Sadly, I read Connecting Directors Top 20 Most Read Funeral Articles and did a little “social media research.” The gulf between relevant news vs. “bubble gum for the brain” stuff relating to funeral content which many find important is truly a pitiful testament to the profession.
<Drum roll please> The overwhelming #1 funeral industry news story in 2014 according to all my sources was the $18.75 million litigation settlement Batesville paid to Matthews. What many found interesting was the lack of detail surrounding the settlement other than perfunctory press releases by both entities…most astounding was the Batesville statement and I quote “After 4 years, this case ends with no finding or admission of liability or wrongdoing, and we are free to continue to serve the funeral professionals in the New York metro area as we have been doing.” Really? Batesville paid nearly $19 million for doing nothing wrong and back to “business as usual?” Well its quite a tale of legal wrangling, conniving, mystery and intrigue including a code name “Capri Tactical Plan” (the court documents are readily available online with a simple Google search, quite an interesting read especially the internal emails). All agreed it’s curious that a public company has such a payout and nothing changes, no one fired or held accountable. One has to wonder, how much would it cost to make significant changes or accountability? True to form, the “spin” and information was kept to a minimum as not to reveal all the nasty goings on over contracts and such…so their reputation lives on: “let’s treat ’em like mushrooms; keep ’em in the dark and feed ’em crap.”
The consensus for the #2 story is the closing merger of SCI and Stewart Enterprises. As witnessed in other industries like the airlines (American and US Air merger), long term stability and growth is strengthened in numbers. Consolidating processes, bulk purchasing and aggressive market share acquisition makes sense to financial analysts. I have the occasion to converse with regional consolidators and privately held funeral groups that are equally in the growth and acquisition mode. One must ponder the future of those that do not somehow affiliate themselves for the benefits well defined by other industries or continue the “we’ve always done it this way” and “we’ve been serving since Cornwallis gave up” path…time will tell.
I give #3 to the demise of Genesis Casket Company. This particular even was bad news for the funeral industry because it brings to light there is not enough burials currently or even forecast in the future for a new American company to enter the marketplace. Basically, cremation is going to eclipse burials in the US and reducing the need for any additional production capacity for caskets…a stalwart revenue source for funeral homes. For more, take a look at the post The Orchestra is Lovely on my thoughts there.
The story from the lawsuit in Pennsylvania to change the ridiculous over reach protectionist, anti-competitive laws restricting who can own funeral homes, what they can be called, whether they can serve food etc. lines up at the #4 story of the year. According to the Institute of Justice Attorney Dan Alban: “Today’s court decision completely ignored evidence that Pennsylvania’s funeral regulations do nothing to advance the public health and did little more than rubber stamp an irrational, protectionist law.” Call it what you may, this is a glaring example of much needed reform of archaic regulations only to protect the “good ole boy” network…but look at story #2; time will tell. Online cremation services have already started to creep in the backward funeral market of Pennsylvania.
There are a myriad of other stories such as the Ebola scare, the 25% of funeral homes fined in the undercover investigation by the FTC for Funeral Rule violations, and the much ignored by our industry growing population of “funeral poor” which were headlines in 2014.
But 2014 is now in the rear view mirror and 2015 is before us in the windshield. Here are some predictions for the road ahead:
Cremation will continue to rise at a rapid rate which applies additional pressure to traditional funeral service provider revenues.
Consumers will continue to educate themselves about the funeral business online and will make choices (just like any other consumer choice) based on their research from their screen.
Funeral service providers that offer complete and transparent information online (including pricing, remember only 9% of US firms have their prices online) will reap benefits.
Social media use by funeral homes will continue to emerge as the preferred communication to consumers. Of course as usual, there will be few adopters because the tried and true “Lions Club attending, calendar giving, diner place-mat advertising” crowd knows better…just look at their website (oh sorry, if you want more information you have to go to their location).
New funeral service provider models will continue to evolve and flourish such as Distinctive Life, Triad Cremation Society & Chapel, Family Choice Funerals & Cremations and Smart Cremation. These new brands are moving market-share and consumers are gravitating to their offerings.
Speaking of new models, casket companies will continue to produce their “newest and best casket” that will “families will love” with superfluous features adorned in their continued failing attempt to “turn the market around” in their corporate favor. The continued arrogance of some blinds their ability to flourish and at some point, if your company has not sold 1 more casket than the year before 10 years, maybe you’re not doing something right. Keep an eye on Aurora’s BeRemembered offering as they seem to be the only one not tone deaf to the needs of consumers and fresh ideas from a casket company…a bright spot in a cloudy bunch.
Be on the lookout for a new team of “Lasers” in the marketplace that will be bringing high discounts and deals to “low penetrated” customers trying again an already failed model of moving casket market-share. I don’t like the idea of being penetrated by a casket company (see story #1 above), but it seems that is the way some of them view funeral homes.
Please, no new urns.
2015 will bring news stories of ignorance and disregard of the funeral profession that will eclipse the headlines over the well deserved servants of the deceased.
Consolidation will continue and we’ll see some strange alliances from funeral service providers, suppliers, pre-need companies and even funeral related organizations. It’s called survival (see story #2 above).
I am grateful and blessed to have thousands across the globe read The Funeral Commander blog regularly. I am thankful for all the responses, even from those that take issue with my recalcitrant point of view because I believe that we don’t communicate very well as a general rule in the funeral industry. My personal belief is that we all should provide information in order to make good decisions; to the families we serve and to each other. This platform provides me the ability to share my experiences, observations, point out the obvious about the oblivious, and frankly say what some want to, but don’t. I want to encourage everyone to speak their mind, have an opinion, maybe even express an original thought from time to time…
I pray that everyone (even my favorite casket companies) will have a fruitful and safe 2015, after all, we are all in this together. From the Command Post and blurred by cigar smoke, cheers y’all! #thefuneralcommander
Who pays funeral costs? As part of an ongoing conversation on this funeral blog the debate continues regarding payments for funeral and cremation services by consumers. Traditionally, the burden of making sure that a deceased person’s funeral bill is paid to appropriate entities such as the funeral home and cemetery are primarily upon the deceased’s survivors. However, a growing trend is shifting from family to governmental agency responsibility and expectation of services without securing necessary payment.
Are choices of disposition based on the amount of funds available to be paid for services? Rising costs of funeral goods and services are no different from any other; a hotel room or an oil change all cost more than even 5 years ago. Payment for goods and services are secured promptly or you don’t get your room key or car keys returned. From these two analogies, are funeral professionals compelled to “give the room key” or “returning the car keys after the oil change” without payment? In essence, if a consumer can’t pay for a particular hotel room or vehicle service, then they can’t get the same level of accommodations or the vehicle service desired. Why the expectation that funeral proprietors should provide desired level of services without equal payment for such services?
The subject and issue is not going away…the “I am struggling to pay” segment of consumer is growing faster than “can I write you a check, use my credit card or use the life insurance” consumer. What is your experience? Cheers y’all.
Funeral directors daily serve families making funeral arrangements that find themselves unable to pay for a desired funeral to honor their loved one. A fair analogy quote for this situation is “I only have bus fare, but I want to buy a Cadillac” (this comes from my fellow funeral professional Todd Winninger). Just yesterday I was chatting with a funeral director about payment plans for their funeral home. When a family does not have a pre-need trust, but has limited life insurance, cash or credit card balance, my company At Need Credit offers a payment plan.
Two of the three plans require that a family make a down payment, at least half of the goods and services of the total cost. By asking a family to meet the funeral home “halfway,” then the family is committed and the funeral home can at least recover a majority of its cost of goods. When describing the information about how the plans work, the funeral director asked me “well, what if the family can’t come up with half of the total cost for a down payment?”
My response to the director was similar to the title of this post; “if a family cannot come up with half of the down payment for your goods and services, why are you trying to sell them a Cadillac when they only have bus fare?” There was a silence on the other end of the phone. I went further “what are you currently doing if a family cannot produce even half of what you are charging for goods and services?” The standard answer was given “we reduce the casket and services” the funeral director said. So then I went into the math mode “so lets say your least expensive service with the least expensive casket is $4995 and the family doesn’t have even $2,500…what are you reducing…are you performing a graveside service with no visitation, no embalming, and no hearse?” Silence again…then “well no, we just try to work with the family” which in funeral director terms means that the firm takes whatever the family can pay at the time, perform basically what the family wants, and hope for the best.
Just a week ago I addressed this issue from a different perspective titled “A Real Dilemma, the Cost of Being Broke.” The issue is not going away; I get emails, phone calls and inquiries daily from funeral homes inquiring about At Need Credit payment plans. My funeral home locations weekly face this problem. The questions I want to bring to the funeral professionals: if your family only has bus fare, why are you trying to sell them a Cadillac? I know that there are going to be responses from some that some social or government organization will pay something…but even then, are you matching the goods and services with the amount you collect? Meaning, if the organization pays your firm $1,000 what do you give the family in return…do you provide the absolute minimum? I hear often, “what if the family has no money?” I then ask. “how much is no money?” I have personally seen a “no money family” pay $15,000 cash for a funeral. From my own experience, I have never known a family to have absolutely $0…I am not disputing that they exist. So another question for discussion: when a family says they have “no money,” how does your firm serve them?
Anyone with a computer, television and even those that still read newspapers (I personally dont know anyone anymore that gets the paper under 75 years old) knows that our economy is in the toilet…if not, CNN Money reports that 76% of Americans are living paycheck to paycheck to bring you up to date. For discussion sake, please share your funeral home solutions to those that “have bus fare, but want to buy a Cadillac.” Cheers y’all.
The Funeral Commander~Jeff Harbeson 