Dan Isard
on
If your salespeople think your cemetery’s prices are too high,
does that mean you need to adjust them? Not necessarily.
Maybe you need to take a look at what you’re selling
beyond interment rights and how you’re selling it.
Dear Cemetery Impossible,
My salespeople are telling me that our pricing is too high. Should I lower prices? What should I do?
Price Sensitive in Sedona
Dear PSS,
There are two issues involved in this simple question. The issue of pricing is critical. Your salespeoples’ sensitivity is another issue. Let me address each.
I have written previously about the concept of “good, better, best.” In designing a cemetery’s inventory, we are creating consumer options. People can spend what they want. They will ultimately find value. It might be with you, or with another cemetery. That being said, I rarely find that consumers shop cemeteries.
You can offer your consumers several different options within your property. You can set a basic grave or urn placement at one value. The basic option is just that—it is not ornate. It is functional. It is common.
People can decorate these common graves with more ornate flat markers or upright headstones. Often the headstone is at a higher price point than the interment right. There is a reason for that. People see the headstone or marker. It is the focus when someone goes to visit the grave. You want to be in position to sell the grave marker when you sell the grave.
While the grave may have a cost of goods sold that is about 15 percent or less, the marker may have a COGS that is 50 percent. The profit is not as great on the marker as a percentage, but if, for example, the grave sells for $1,000 and the marker sells for $2,000, there is about $850 of profit on the grave and $1,000 gross profit on the merchandise.
The difference is even greater when you subtract a perpetual care contribution from the interment right. The merchandise sale usually doesn’t require a payment to perpetual care.
In many cases, the cemetery doesn’t get to sell the merchandise. That is a failure of the cemetery’s relationship with the family.
There is no reason not to be able to sell the vault on a preneed basis. There is no reason not to include the grave marker in a sale of the interment package. If management is training the sales team properly, in most cases the merchandise should produce more profit than the interment right.
Years ago, I bought my first horse and then went to a saddle maker. The gnarly old saddle maker told me the prices of his saddles—three to four times the price of the horse I had just bought. I smiled and expressed my chagrin. He smiled and calmly explained, “Son, the horse is the cheapest part of being a horseman!” I think the grave or niche is the cheapest part of the interment purchase.
Therefore, as you train your sales-people, you need to teach them about the “package.” The package for burial sales includes the interment right, vault, marker, opening/closing and perpetual care. For cremation, the package includes the interment right, memorial lettering or marker, opening/closing and perpetual care.
I like to create a point-of-sale presentation form. This has three columns for various offerings to be compared. It shows the cost of the interment space and the other decisions (vault, marker, opening/closing plus perpetual care) that must be made.
The form also allows for showing various payment options. This will help your sales team talk about the entire process of the purchase. If we just look at the grave or niche, we are missing a big part of the buying decisions.
You might be thinking, “Do I need to include the opening and closing?” Yes, you do. I know this is a big point of discussion when advance selling, and many people don’t like my answer. I find this to be incredible. If someone wants to pay you for the entire interment process, why wouldn’t you take their money?
I understand the need to trust some money, and that adds a level of complexity. However, this is the business you are in. Some things, such as trusting, are complex, and some things, such as digging a grave, are simple.
If you think trusting is complex, try explaining to a family why they must pay for grave opening and closing when they were told by their now sainted mother that she “took care of everything” for them. That is a tough misunderstanding to correct!
Salespeople tend to think if someone raises the issue of price it is because the price is too high, but that is not necessarily true. Imagine buying something that you never purchased before. You might not have any knowledge of the reasonableness of the price. If so, you are going to ask about price. It’s only natural.
Funeral directors think their pricing matrix is tough to explain, but cemeteries, with the many different purchase options, really have complex pricing. Comparing one cemetery to another is nearly impossible.
Studies we have performed for cemetery clients show that 80 percent of the time, a family will purchase within a cemetery because other family members or friends are interred there. How do you put a value on that? Obviously you can’t. There is no way to compare that cemetery with another one.
In making a choice between a cemetery that’s more expensive but is where friends and family are interred and a cemetery you have no ties to, price is not the issue. It’s a matter of convenience. It is tough enough to travel to different family homes on Christmas or Thanksgiving. Imagine running across town to various cemeteries on the days you go to pay your respects.
I recommend that you train your salespeople to handle the inevitable price questions properly. First define the question.
If someone is indicating that price is an issue, what is their frame of reference? A Los Angeles cemetery cannot be compared with one that is 100 miles inland. Just as homes in Los Angeles are more expensive than homes inland, so are cemeteries interment rights. Monuments might be the same price. Vaults also might be the same price. All other costs are not going to be the same.
If someone thinks your cemetery is more expensive than a cemetery managed by a city or benevolent group, they are probably right again. However, it is going to be the interment right and not necessarily the merchandise that costs more.
Explain that the city is not a business. The care and maintenance might be done with less oversight. You could compare it to playing golf on a city course versus playing on a private course. One is going to be a much better experience than the other.
For some people, price will be a deciding factor because of their financial situation, but others will feel the higher-priced option delivers value that makes it worthwhile, and be willing and able to pay for it.
Not all cemeteries are created equal, and the same is true of salespeople. Some automobile salespeople do much better selling Yugos, while others excel at selling Cadillacs.
Make sure you have a salesperson who is good at selling what you offer, what you’d like families to buy. That takes preparation. It takes training. Give them the tools and then track their performance.