WARNING! This is not about caskets!
A couple of decades ago I was visiting with 3 funeral home owner friends. They were discussing among themselves that the expensive makeovers of their selection rooms, popular at the time, were not working as advertised. Having heard nothing but glorious praise about these “retail” style showrooms I was taken aback by their private comments among themselves. Even more curious was the response when I asked them why it was that such a widely praised concept wasn’t working for them. In unison they said:
“It doesn’t work for anybody…they just don’t look at the numbers.”
“Well, then, why does everyone say it does,” I asked.
“Alan, if you had just spent $50,000 on something you would tell everyone it worked too.” They chimed, again in unison.
I have never completely recovered from that conversation. And, by the way, my answer to them was: “The heck I wouldn’t…I’d take out an ad.”
In more recent years I have seen several vendors become somewhat dependent on this phenomenon.
- A pre need marketer consistently sells significantly below their client’s At Need average creating a future shortfall of unprecedented proportions…even when they publish their own statistics! Because they have so many clients and so many of them are highly respected no one dares to do the math. Could you survive on an average sale (with cash advances) below $3,700?
- A pre need insurance company carefully states a growth factor in such a way that client’s are led to believe they are getting more than they actually are.
- A consulting company provides analytics and training that most of their clients never use other than for bragging rights. The work they do is excellent but produce very few results.
- An advertising specialty company sells a preneed lead generator that drives leads but the leads (while many) are poor and are unaffordable.
- Casket companies offer discounts that aren’t discounts at all. They also lock you into long term contracts with the intention of raising prices. You will know prices are up but you won’t realize you are paying much more than you expected.
So, the formula is: Get industry leaders excited, make a lot of noise and no one will actually DO THE MATH!
I am not sure that this really is an anomaly. Seems to me this is symptomatic of our whole society.
Adolph Hitler made this a core part of his strategy. He said: “Tell a big enough lie and tell it often enough and people will believe it.”
I prefer to remind myself that many of the people who watch wrestling on TV believe it is real. It is, however, discouraging to realize they all vote.
Here are some rules to live by:
- Your colleagues do sometimes exaggerate
- Never believe everything people say at conventions
- If you like something you hear spend the money to go see their operation
- you will be surprised to find that most of what people tell you they are doing is really only stuff they wish they could do if their staff would cooperate
- and if it is, in fact, real then you will recoup your investment with some real learning.
- If you like something you hear spend the money to go see their operation
- Do the math:
- Figure out the average sale
- Make them work out an example in front of you
- Know what your operating ratios should be
- all operating ratios for funeral service are calculated on NET sales
- net sales are gross sales NET Of cash advances
- all operating ratios for funeral service are calculated on NET sales
- Quit Drinking Downstream from the herd
- Try thinking for yourself. It will often give you a headache but rarely the pain in the rear end the alternative yields.
Sorry for the cynicism. But somebody’s gotta say something.
This is a great piece, Alan. Thanks. In my estimation, this is what consittutes being an “independent” funeral director. Independence has very little to do with ownership, if the funeral home owner can’t or isn’t thinking for him/herself. Many funeral homes are franchises of the casket company they represent.
Tom, don’t forget to do the math on the preneed too.
We’ve been there an lived that miserable experience with the specialty display room and heard the great discount stories.
Real math doesn’t correspond with fantasy.
When it really comes right down to it, the numbers always tell the truth. The funeral home is not “accountable ” to the supplies or to the consultants. If anything THEY are accountable to the Funeral Home Owner(s). Sure some people can “cook the books” to show different thing, but when it comes down to it, the basic raw (net) bottom line numbers are what matters.
Thank you as always Alan for being “the voice in the wilderness.”
Hi Alan, once again your blog is so helpful. I read these often and enjoy your independent viewpoint. You have always been a respected mentor to me, as I started out my career in preneed with Trust 100 20 years ago this month. Being an owner is quite a challenge, and I encourage you to continue to be the one to “Say Something!”
what a joy to hear from you. 20 years????? aaarrrggghhh!
Hello Again Alan, Thank you again for the insightful blog. I am in the same Trust 100 generation with Megan, (yup, almost 18 years for me) and have always appreciated your honest straightforward approach with just the right humor to get your point across. I laughed out loud at the reference to the ardent believing viewers of “professional wrestlers” as those who also vote! Downright scarey,isn’t it? Keep the shots coming, Brother, whether you use the shotgun or the rifle.
Another brilliant and well positioned post about using common sense in the funeral industry. As we all are aware, the manufacturers are creating their “newest and best ever” products for launch in October at the NFDA Expo as this very moment. Interesting conversations take place when the “wholesale average” and such bubble gum for the brain arises when we challenge vendors for not anecdotal, but real math. “Our research shows” is just not credible.
Thank you for continuing the conversation of “doing the math” and decision making.
Well said Allen. When I did business with Batesville years ago I had a hard time making sense of their math. I was told that with discount and rebate I would be receiving at 25% discount with a signed agreement with the company. I would encourage anyone who is receiving discount and rebate from Batesville to do the math. If you a receiving a 15% discount and a 10% rebate you are not receiving 25%. Do the math. If the wholesale number you are paying for the casket is $1000.00 dollars your 15% discount is $150.00 making the wholesale price $850.00 dollars. Your rebate is than 10% of $850.00 or $85.00 dollars. Your total cost is then $765.00. If you were to receive a straight 25% discount your total cost would be $750.00. We are relaying too much on what the manufacturers are telling us and not doing the math.
Another great post, thanks for the information you share Allen. Also some good comments. If you do not take care of your business, someone else will. We do have a few suppliers that want the funeral home to succeed.