5 insights to packaging funerals
Numerous funeral homes are implementing and experimenting with package pricing with excellent success. But little is known about the principles of packaging (elsewhere known as bundling) outside of the fact that fast food and car dealerships have been doing it for years. Those that have adopted package plans find it has helped them in two ways. First, it has improved their average overall sale and second, it has improved the arrangement process for their clients by making it easier.
Why package?
Packaging provides two advantages: First it is a convenience for families. Most families find the task of selecting from the laundry list of items required by the FTC rule to be onerous if not confusing. By synthesizing this information into simplified packages it is easier for them to make choices that please them. So, a primary factor is the emotional convenience and customer friendly nature of simplification. Second, by pulling together the various elements of a given service type into a single price, value perception is enhanced as people accept services that are “already paid for”. The key in any pricing strategy is to help people feel they are getting a little more than they are paying for and packaging is the best way to accomplish that.
Packaging do’s and don’ts
Many people bungle packaging by thinking they have to cram a lot of extra items into it that people don’t really want. Ask yourself this question: is your purpose in packaging to somehow magically persuade people to pay you more? If so, don’t expect the consumer to be fooled. If, instead, the items included in a package are there because they make sense to your funeral arrangers then it is likely to be perceived as value to the consumer as well.
Keep it simple. Studies consistently show that when making complex decisions people feel most comfortable if you break their choices down into groups of three: burial, cremation or mausoleum entombment for instance. For this reason, all of the better programs we have seen offer a good, better best package and these are presented in two sets: packages for burial and packages for cremation. A package should be presentable on a single 8.5 x 11 sheet of paper. Most find it easier to design the best package and then simply reduce it for the remaining two categories.
Don’t let people unbundle your package. The packages are offered for the convenience of the customer. If they want to delete items to lower the price then gently and respectfully take it away and suggest you go back to the itemized price list. Keep your discipline. The first one to flinch loses.
To Discount or not to discount?
The prevailing wisdom among professional pricing strategists is that the cumulative price of the individual items included in the package should be greater than the package price. They also believe the resulting discount should be in the neighborhood of 10%. In funeral service we believe this is debatable. Given that it is a true convenience factor in the arrangement process, discounting may or may not be necessary. That being said, it is our belief that most funeral directors err on the side of giving too much discount and that discounts should be more in the neighborhood of 5% on traditional burial and perhaps 7.5% (splitting the difference between 5 and 10%) for cremation. Our reasoning is that discounts of more than that could have the unpleasant effect of sending a signal that you have too much margin in your prices. Our research supports this as pricing strategists warn bundlers that they should be careful not to discount too deeply. Enough to encourage people to take the package not so much that you are sending a signal that will backfire on you. Finally, if you do discount, the amount of the discount should be prominently displayed on your presentation material and also on your statement of goods and services.
Presentation:
The Federal Trade Commission Rule requires you to present every arranger with an itemized General Price List. But it does not require you to go over it in detail. We recommend you present it immediately by saying “we are required to give you a copy of our general price list and you should take this with you when you leave.” Then lay it on the table for them and immediately say, “Many of the families we serve prefer, however, to review our package plans in order to simplify the process of making decisions. Let’s talk a little bit about what kind of service you were thinking about.”
Of course, you need to come up with a script that you are comfortable with.
When someone making arrangements suggests deleting an item to cut the cost we recommend you say something on the order of: “Well, that is included at no extra charge in the package price. But if you prefer we can build a custom service using our itemized price list.” Then stop talking.
Including Merchandise
There is some debate as to whether to include merchandise in your packages. Most successful programs do include at least caskets and urns. Vaults may be more difficult to include as they may not be used in 100% of the services you perform. The number of choices within a package should be limited compared to an average selection room and quality should fit the package level.
Are most firms that discount packages also selling the same packages (discounted) on a pre-need basis?
Alan, agreed. This is why we have not discounted any packaging because the growth would realistically not be recovered on the preneed by the time of delivery.
Alan, for packages including merchandise, care should be given in crafting the protocol and the training to assure that arrangers don’t “back into” packages. Policies regarding substitutions should be clearly defined, logical, and consistent. This wisdom comes from not having been clearly defined, logical and consistent.
Alan, we saw average sales go up when we stopped packaging. This requires a lot of training, measuring, reporting, coaching and rewards. I agree that if one offers a discount package, it is wise to not discount too much. I recall client-families who were disappointed that they couldn’t take out the things they didn’t want and still benefit from the discount. A smaller discount makes this less an issue. Besides, I think people who buy a package are seeking convenience moreso than a discount. Seems like the purpose of a package should induce buyers to buy more things than they would otherwise. One might want to consider a Memorial Products Package, a Transportation Package, that sort of thing.
Alan, we designed our packages to be above our average burial or cremation sale every time, we included a 5% discount. They include merchandise of all sorts including reception and food services. They have served us very well, although we are feeling a need to freshen them up with some new training and incentives for our arrangers. Family satisfaction after selecting a package is generally very good.