Dan Isard
on
In this industry spotlight, we bring you key insights into low-cost funeral providers. In my 40 years in funeral service I have seen a rise in the quantity and legitimacy of low-cost funeral providers. In the 1980’s if someone was “donating their body to science or their university” they were often thought of as a nutjob. Those people that chose to use the services of Neptune Society or other low cost regional or national providers of the time were scoffed at by their friends. Family fights would often break-out when the kids found out the parents made their choice to be cremated. In the early consumer studies known as The Wirthlin Report, consumers chose a funeral home based upon price less than 5% of the time. However, since the 1980’s the rise in value seeking consumers has turned mainstream. Why?
There are five good reasons for this push.
One: People think a cremation service is all the same. If cremation is the choice of more than 50% of all consumers today, how do you differentiate between cremation services? We do not stress the difference between whether we own or use a third-party crematory. Many funeral homes don’t have cremation in their name or logo, so consumers may not think you provide anything other than a “funeral” which in their mind includes a casket and an embalmed body.
Two: If competing providers are the same, then price drives consumer decisions. People think funeral homes are all the same. More than a decade ago Glenn Gould stated at a conference, “65% of all consumers think that all funeral homes are the same”. If they are all the same, then there is no reason to spend more.
Three: We do not market funeral homes in much the same way. In the 1980’s whether you were in a small town or a large town and served near-by neighborhood you knew many of the families personally. You knew them from church or civic groups. Presently, Rotary, or other civic groups, have no longer any appeal. Churches have less of a role in our society according to the Pew Foundation surveys. So, we choose a funeral home differently than we did just two generations before.
Four: Peer Pressure has made the value choice more common. In 1980 our population was 226 million and our mortality rate was about 8.0 deaths per thousand. That resulted in about 1.8 million deaths. We know that our value focused funeral consumers were about 5%, resulting in about 90,000 price focused consumers. In 2019 our population was about 330 million and our mortality rate increased to about 8.6 deaths per thousand. This accounted for about 2.8 million deaths. If our value focused consumers are now up to about 20%, that accounts for about 560,000 calls.
Five: The Internet is a villain. We shop for cars, homes and appliances with the help of the internet. We shop for funeral homes as well that same way. In a recent survey of one internet provider almost 70% of all at need consumers, who did not know what funeral home to choose, chose a funeral home to call from their hand-held smart phones. Yet, most funeral home websites are terrible for attracting consumers and do little to differentiate themselves from others. Therefore, price is a differentiator.
There are maybe 3 types of funeral homes in the US. We have the funeral homes in the urban and suburban area that could be either Value Oriented, Boutique (high end reputation) and the Middle Ground appealing within a neighborhood. In the rural and middle America, we usually see only 2 types of funeral homes. We tend to see the Middle Ground and with the help of the internet we see the Value Oriented funeral homes reaching out and providing services further and further away from their physical location. This encroachment is akin to what happens to the Main Street Retailers when Walmart puts a store off the interstate.
So, this creates some questions as you think about your market.
Question One: Does this signal a point of peril for the classic brick and mortar funeral homes? No. It does mean that this has got to be a business with a more focused business plan. You cannot assume you will get calls any longer.
Question Two: Does this mean you need to change your business? No. However, you do need to change how you speak to your community and market. You need to go where they are and speak to them. You must talk about things that are relevant to todays consumer. Your website can have a selection area, but do not focus on cars and caskets.
Question Three: Can you match price with a value operator? No. You can only match price if you can match their overhead. The classic brick and mortar funeral home cannot do that any more than Ruth’s Chris Steakhouse can match prices with the Golden Corral.
Question Four: Is preneed the solution? Preneed is a marketing effort. Marketing is the solution. Even if you guarantee the preneed, if it is a case that you would not have gotten otherwise, that is accretive revenue. Therefore, even if you don’t get your full fee, as additional revenue it will be profitable.