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It's Not the Funeral Product Industry
By Robin Heppell
When did it happen? Has the funeral service profession
always been product focused? I think a long time ago,
25+ years ago - during the good ol' days of unit
pricing- caskets were always part of the success
equation but not as much as a focal point (business
wise) as they have been as late. I believe that we can
blame the government! Well, it isn't their fault
completely, but when it came down that all funeral
services and merchandise had to be itemized on the Goods
and Services contract, monies had to be attributed to
the various components.
Did the merchandisers at that time come up with The
Plan? "If we get the funeral home operators to attribute
a good portion of the dollars from the Unit-Price total
to the product, then the product would become a very
important part of the financial success equation."
Whether they did or not we are left with under-price
service offerings and over-priced merchandise. Another
contributing factor could be the structure of Memorial
Societies' packages. Usually they target service fees,
thus driving down those prices. This leaves merchandise
as the one thing that funeral homes could supplement the
decreased returns on their service offerings.
The Funeral Arrangement Lottery
Upon the completion of every arrangement, when the
manager or owner looks over the contract, there is an
uncontrollable force that draws the eyes to Merchandise
column, bringing feelings of glee or melancholy. Solid
copper, inlayed mahogany - instant margins are
calculated in one's head and it's a good day! With the
current pricing structure, it would be more profitable
to have families select a cherry casket with immediate
cremation than a cloth covered lift lid with a
traditional funeral. Maybe it should be called the
Funeral Product Industry. I apologize if this strikes a
chord, but if the sale of merchandise is what gets you
excited, it's going to be a glum future.
Reality Check
The Pollara Report spells it out quite simply, consumers
value funeral merchandise the least! For those who may
not have seen the results, please see them below.
Coupled with this sentiment from the public, they also
told us repeatedly that they feel costs are too
expensive. In addition, Canadians surveyed stated that
the No. 1 reason for preferring cremation is that it is
less expensive.
Value of Products and Services (10 point rating scale)
o Professional services such as embalming, conducting
the funeral, visitations, & the receptions (7.1)
o Out-of-pocket expenses including flowers, notices in
the newspaper / memorial cards, clergy & church fees
(6.5)
o Cemetery property, including plots, niches or crypts
(6.5)
o Transportation such as a hearse, limo or other car
(6.4)
o Memorials such as bronze markers / granite headstones
(6.3)
o Caskets (5.6)
o Urns (5.6)
o Vaults (4.2)
Impressions of Funeral Industry
o Funerals are too elaborate, prefer a service that was
simple & cost effective: Agree - 78%, Disagree - 16%,
Don't Know - 6%
o Funerals cost too much, industry should be regulated:
Agree - 71%, Disagree - 17%, Don't Know - 12%
Reasons for Preferring Cremation
o No. 1 Reason: Cremation is less expensive - 23%
Source: Pollara Report, March 2004
There could be two reasons for this response. Either we
are not communicating the value of all of our offerings
(both services and products) or they are not seeing any
value in anything we offer! The merchandise suppliers
obviously supply funeral homes with "product knowledge"
but who should be supplying the "service knowledge?" The
one who creates it of course - the funeral home! Do you
provide your staff equal amounts of service knowledge as
compared to product knowledge? How are your services
presented? In many instances it doesn't take long for
the "service presentation" to become product focused.
"Mrs. Jones, the difference between a funeral service
and a memorial service is that the ..." Gee, didn't they
tell us that they do not value caskets and now we have
just tied our most profitable service offering to
something that doesn't have a perceived value.
Is this the slippery slope? So the consumers have a low
perceived value of funeral products, they tell us that
funerals are too expensive - with the casket being the
biggest ticket item, then we try offering our services
where the definition of a funeral is dependant of the
presence of a casket, and the number one reason for the
preference of cremation is that it is less expensive. Is
all of this just a coincidence?
We must realize that the rest of the world does not have
the love affair that we as funeral professionals do over
merchandise. For myself, I definitely want a solid maple
casket placed in a double-reinforced copper vault, but
we cannot assume that the public will be as passionate
about funeral products as we are. Furthermore, we didn't
have to wait for the Pollara Report to tell us - the
public has been telling us for years.
As previously suggested, cost is not the primary driver
of impressions of the funeral industry, however, it
remains an important consideration as a majority of
Canadians who have yet to arrange a funeral believe that
it is an expensive endeavour. This perception is
compounded by the fact that Canadians do not appear to
attribute significant value to funeral products and
services, beyond the professional assistance they would
receive on the front line. With the trend toward
simplicity evident across all demographic cohorts, this
value defines what future funeral clients will be
searching for, for themselves and for their loved-ones.
Source: Pollara Report, March 2004
If we have been successful in educating our families
that Funerals equals Caskets, and they do not see the
value in Caskets, then what are they telling us when
they say, "I don't want to have a funeral."?
This is not the fault of the manufacturers; they are
just conveying their message to their customers (the
funeral homes) very well - offering product knowledge in
the form of seminars, print, Internet, etc. Are you
spending as much time educating your staff and
communicating to your customers the benefits of your
offerings as the manufacturers provide to you about
theirs?
The Solution
Align your service and product offerings (and the manner
in which they are conveyed) with what your customer
values - if they are not product focused nor should you
be
Reformat your pricing by shifting some margin from
merchandise to services
Invest in training and equipping your staff with
knowledge to properly present your service offerings
The Effect
By lowering your merchandise prices you will:
Further the cause of strengthening the relationship with
your customer as they will feel that they are not being
forced to purchase something that they feel is over
priced
Be able to inform price shoppers that you have the least
expensive merchandise in town
Reduce the probability of third-party merchandisers
(casket & urn stores, Internet casket & urn website,
cemeteries, etc.) having an impact on your merchandise
sales
Encourage families to purchase higher quality products,
which will convey a positive message to others attending
the service.
Friend: "Gee, Martha that looks like an expensive casket
you got for your husband."
Window: "Actually, not really, it was quite reasonable."
Be able to reply to the cynic who says, "You funeral
directors jack up the prices by two or three times
wholesale!" "No we don't."
The Path to Get There
It is all well and good to tell you to raise your
service fees and lower your merchandise prices, however
it would not be right on my part to put this idea in
your head and then leave you out on your own. This
transition is easier said than done and if it isn't well
planned out, it could be disastrous to your business.
You will need to be prepared to be able to justify your
service fees - but I will leave that up to you as you
are the experts of your offerings and of your community.
Once mastering the communication of the value of your
services, one option to help this transition is to
create funeral packages for each of your service
offerings. There are more complex pricing strategies
available but by following the packaging model, you will
be able to transition the service / product pricing
structure easier, increase average funeral values, and
provide more value to your families.
The intension of this article is not to bash the
manufacturers of funeral merchandise but to convey to
the funeral home operators that they must align their
strategies and offerings with those of their customers.
And if this alignment is successful, the consumers will
be more apt to purchase products as they should have a
higher perceived value of then which in turn will
increase merchandise sales, and also make the
merchandise suppliers happy!
So, who is going to be the first in town to have the
lowest priced merchandise? Maybe the one with the new
competitive advantage.
Robin Heppell, CFSP, combines his expertise in
technology and pre-need, his formal business knowledge
and his deep-rooted legacy in the funeral profession so
that he can help funeral homes and cemeteries be more
competitive, more profitable, and provide the best
possible service for the families they serve.
Through his consulting firm, FuneralFuturist.com in
Victoria, British Columbia, he assists funeral directors
and cemeterians throughout North America embrace and
incorporate innovative strategies and technologies.
This "Funeral Futurist" has over 20 years experience in
a highly competitive, high cremation (90%) market. He is
a fourth generation funeral director and a Certified
Celebrant. Heppell is also a faculty member of the
Canadian College of Funeral Service, a contributor to
Mortuary Management and the Canadian Funeral News.
Internet Marketing for Funeral Professionals Visit
http://www.FuneralFuturistU.com |
