I recently attended a two-day seminar led by “some of the brightest marketing minds.” Between the registration, travel and paying staff to cover my tasks for my time away, this seminar cost me several thousand dollars.
I heard about organic marketing, online remarketing and strategic relationships, along with I don’t know how many different phrases that were just random acronyms to me, including BR (bounce rate), BANT (budget authority need timeline), CR (conversion rate) and SEO (search engine optimization). When I returned home, I created my own acronym – WOT, for waste of time.
I have two questions: Does any of this stuff work in building a larger market share in the funeral profession, and how much should I be spending on my advertising and marketing?
Signed, CABBY (Confused and Bewildered Beyond Yuma. Get it? I live in Yuma)
To start, in this column, I tell the jokes – and I work alone! However, you raise a very interesting point. Marketing a funeral business is unlike marketing any other business. While we do sell products, we primarily sell services, and we sell a service based on trust. There is no way to compare this beyond the feeling of comfort family members sense after you help them make decisions about the disposition of their loved one.
Let me first address the question of how much to spend on marketing. The math is simple. We see the average funeral home spending between 4% and 6% of revenue on its total marketing budget, which includes programs, inserts, media purchases, printing and preneed. If you own a business with $1 million of revenue, you would spend between $40,000 and $60,000 a year in total marketing expense.
I break it down as follows:
If your case count is rising and you do not spend 6% of revenue on marketing, that is great! You’re getting positive results with less cost. Don’t increase costs without looking to get a greater increase in case count.
Please read the annual NFDA Consumer Awareness and Preferences Survey in The Director (September). It is AF (acronym free). The number-one reason people choose a funeral home is previous service. To me, this means we need to spend the greatest part of our marketing time and budget on protecting those relationships. So, first and foremost, start marketing preneed to the people you’ve served. Secondly, just because a person’s preneed has been arranged, that doesn’t mean you stop communicating with them – have a newsletter, have events focused on them.
The second most important reason someone chooses a funeral home is “they know someone at the funeral home.” That tells me you need to do more events to get yourself and all members of your staff out in the community. One firm I worked with gave all their part-timers windbreaker jackets that were imprinted with the firm name and logo. There were 30 people wearing these jackets all over town! It was as if the firm had a walking set of billboards! Suddenly the community realized how many of the employees they knew from this firm.
I recently published the results from our decade of consumer family follow-up surveys. In many regards, they are like NFDA’s results. However, there is a yin and yang to marketing, which means we need to look at the entire picture.
Previous service is the number-one reason for choosing a funeral home, followed by the firm’s reputation. Prearrangements and location are the next two reasons. But notice the two lowest reasons: price and advertising. Advertising doesn’t swing patronage in this business. It can affirm a decision to use a firm, but full-page ads don’t swing patronage.
Now let me help you with a funeral profession application of some of the terms you mentioned. There are two ways to grow a business: organically and inorganically. Organic growth is growth from within. Inorganic is growth by acquisition of another company. For example, most stand-alone funeral homes grow their businesses organically. The large, multiple-location operators, while they try to grow a business organically once they own it, they grow their entire company by acquisition.
Of the two methods, organic growth takes longer and is usually cheaper than inorganic growth. Obviously, if you buy a 100-call funeral home, your entire business increases by 100 calls overnight, but it cost you a bunch of money.
Organic marketing is the growth of your business from within. In the 1980s, someone named this “gorilla marketing”; others called it “hand-to-hand marketing.” In the 80s, many funeral home owners thought that belonging to Rotary or other civic groups helped them either grow or at least maintain their business. This was a form of organic marketing. These days, we strongly encourage our clients to use aftercare and outreach to build a favorable impression with consumers.
Strategic marketing (strategic relationships) is another powerful form of organic marketing. Think about other businesses that are somewhat or directly related to what you do. Two that come to mind are cemeteries and hospice. We all know that combination businesses – funeral home and cemetery – operated under a common ownership tend to be the high ground of the marketing battleground. Hospice is a marketing jump ball.
We tend to perceive that many hospice organizations see us as the enemy, and there are some ways in which we are diametrically opposite. Funeral directors are paid by private funds, whereas hospice is funded by insurance or government agencies. Still, I have spoken with many funeral home owners who have great relationships with hospice agencies. By cultivating a relationship, the firm gets strong referrals from the nurses and social workers working with families.
You must understand that people who are total strangers when they walk into your funeral home become deeply reliant on you. You give your soul to them for three or four days. The relationship with hospice staff is just as encompassing. Nurses provide care for both the living and the sick. Social workers learn everything about a family in a short time, maybe even more than you will learn about that same family. It is natural for a family to trust the hospice staff, just as they trust you. However, if they have a relationship with the nurse and social worker before they develop the relationship with you, who is going to have the stronger and more influential relationship?
Cemeteries typically are advance-sale enterprises. The average cemetery sale of interment rights takes place when a buyer is age 65 to 75. It makes good sense to market in harmony with a cemetery if the two are not competing for the funeral. The cemetery will get a consumer to be in a relationship years before that consumer will think about preneed.
Furthermore, if the cremation rate is 50% nationally today, what will it be in a decade? A consumer who makes a choice today is more apt to choose a casketed funeral event than they might be in 10 years. You are better off securing that relationship now!
Marketing your company with a relationship with either or both of these strategic businesses can help your business. Organic marketing with aftercare or outreach programs will introduce more people in town to your staff. Remember to keep this focused with a budget that will keep your profit where it should be.