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It’s Not the Funeral Product Industry!
June 3, 2008When did it happen? Has the funeral SERVICE profession always been product focused? I think a long time ago, 25+ years ago – during thegood ol’ days of unit pricing- caskets werealways part of the success equation but not asmuch as a focal point (business wise) as theyhave been as late. I believe that we can blamethe government! Well, it isn’t their faultcompletely, but when it came down that allfuneral services and merchandise had to beitemized on the Goods and Services contract,monies had to be attributed to the variouscomponents.Did the merchandisers at that time come up with The Plan? “If we get the funeral home operatorsto attribute a good portion of the dollars from the Unit-Price total to the product, then the productwould become a very important part of the financial success equation.” Whether they did or notwe are left with under-price service offerings and over-priced merchandise. Another contributingfactor 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 homescould 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’shead and it’s a good day! With the current pricing structure, it would be more profitable to havefamilies select a cherry casket with immediate cremation than a cloth covered lift lid with atraditional funeral. Maybe it should be called the Funeral Product Industry. I apologize if thisstrikes a chord, but if the sale of merchandise is what gets you excited, it’s going to be a glumfuture.
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 sentimentfrom 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 lessexpensive.
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 / memorialcards, 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 2004There 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 whoshould be supplying the “service knowledge?” The one who creates it of course – the funeralhome! Do you provide your staff equal amounts of service knowledge as compared to productknowledge? 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 funeralservice and a memorial service is that the …” Gee, didn’t they tell us that they do not valuecaskets and now we have just tied our most profitable service offering to something that doesn’thave a perceived value.Is this the slippery slope? So the consumers have a low perceived value of funeral products, theytell us that funerals are too expensive – with the casket being the biggest ticket item, then we tryoffering 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 adouble-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 toarrange a funeral believe that it is an expensive endeavour. This perception is compounded bythe fact that Canadians do not appear to attribute significant value to funeral products andservices, beyond the professional assistance they would receive on the front line. With the trendtoward simplicity evident across all demographic cohorts, this value defines what future funeralclients will be searching for, for themselves and for their loved-ones.Source: Pollara Report, March 2004If we have been successful in educating our families that Funerals equals Caskets, and they donot see the value in Caskets, then what are they telling us when they say, “I don’t want to have afuneral.”?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 toyour customers the benefits of your offerings as the manufacturers provide to you about theirs?
The Solution
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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
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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 feelthat 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 positivemessage to others attending the service.
o
Friend: “Gee, Martha that looks like an expensive casket you got for your husband.”
o
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.”
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