Tag: LV0

I have long believed that most price shoppers in DeathCare begin with the price question solely because they don’t know what else to ask. That belief supports another which holds that what most shoppers are really looking for is someone they can trust. Thus I understood why it was important that we engage shoppers over and above simply answering their questions and that the longer the conversation the more likely we are to win the call.  All was well in my little land of making 2 plus 2 = 4.

Conversely, I have always struggled with what is, to me, the almost obsessive way DeathCare providers chase after unprofitable calls and ignore profitable calls.   Think about it!!   We will spend an unreasonable amount of our advertising money to attract direct cremation.  We will start cremation societies, and compete aggressively on price to go after what is (for at least a little while longer) the smaller, albeit growing, part of our market. Yet we spend little or nothing going after the higher end…who are often our best customers.   This inordinate and incomprehensible behavior has reached its peak in the pet cremation trend.

To be sure, I completely get the idea that pet services afford us an opportunity to interact with families we don’t currently serve in a positive way.  But spending in excess of $150,000 to chase after unit margins of less than $125 is beyond my mathematical ability.  I cannot help asking myself how much greater my return would be if I spent that same $150,000 chasing after unit margins of $6,000.  Then it dawned on me.  And if my epiphany has merit, it scares me. Perhaps we have so much trouble with price shoppers and so willingly distract ourselves…even to the point of sacrificing limited resources…because we, ourselves, don’t adequately relate to the value we bring.   Most price shoppers don’t know what the questions are so they resort to price.  It may be that we, too, have forgotten how to quantify the value of a life lived for ourselves and so we feel inadequate in explaining it to others.  Or, worse yet, we don’t know the answers.

If you are successful with price shoppers I hope you will comment.  Enlighten me.  What are the trigger points?

Wow!!  Big Brother is watching.

I really don’t pay much attention to the issue of privacy.  But I learned something today that really spooked me.  Go to www.spokeo.com and enter your name.  This site aggregates publicly available information and makes it as easy as a couple of clicks to find out a whole lot more about me than should be generally available.  I know this stuff is out there but I really don’t want it that easy to find.

If this spooks you too then go to http://www.spokeo.com/privacy and remove your name.  They make it easy so do it now.

If you know of other sites like this please let the rest of us know by entering a comment.

A few weeks ago, in response to a series of commentaries on business valuation, a reader asked this very good question:

“What are your views on funeral home brokers? I know Johnson Consulting will perform a valuation and then broker the sale, but how is it possible to ensure that the company doing the valuation is being fair when their compensation is dependent on a percentage of the sale? I realize this is common practice for a few companies that do funeral home valuations but it seems like a huge conflict.”

I felt my reader deserved more than a flip answer so I spent some time on research and, from this formed an opinion which i provide at the end of this article.  If you aren’t interested in the background just scroll down to the last paragraph.

Many years ago I shared a podium with the “Father of Business Valuation,” Shannon Pratt who, quite literally wrote the book on the subject.   He taught me that business valuation is both a science and an art.  There are many variables involved in the process of valuing an individual business which makes each valuation more or less “situational.”  In the end, however, the valuation falls back on the “highest and best use of the subject property.”  He also taught me that valuation often finds itself in the classic struggle between buyer and seller: ‘The seller wants more than it is worth and the buyer wants to pay less than it is worth” This is the primary reason, Independence and objectivity stand with professional competence as the three interdependent legs that bring trustworthiness to the professional valuation analyst.

There are three organizations in the United States that certify valuation analysts or appraisers specifically for business valuations (as opposed to property appraisals).  Each of these have recently promulgated codes of professional standards and by clicking on each of the names below you can obtain a copy of their standards:

• The Institute of Business Appraisers
• The National Association of Certified Valuation Analysts
• The American Institute of Certified Public Accountants

They all share Mr. Pratt’s emphasis on Independence, Objectivity and Professional Competence.  They also  add a fourth which, in light of the first three seems redundant:  Integrity.

After surveying all the websites of the most prominent valuation companies in our industry and then cross-checking with the membership directories of all three organizations it appears that none of them are certified by these organizations or, for that matter, even members.  I hope I am wrong but I checked several times and couldn’t find any references on their websites and when I entered individual names, company names and the word “funeral” in the specialty section in the membership directories I got nothing.  I even entered the states they are located in to see if individuals in the firms were certified.

Lest we jump to judgment it should be emphasized that this is a “Niche” specialty with equally “niche” buyers so I am not convinced certification in the general practice of business valuation is necessary.  At the same time adherence to a third-party code of ethics as well as active attendance at continuing education seminars would seem to be a good idea.

Now to my opinion and answer to my reader’s question.

Given the emphasis of the certifying organizations on independence and objectivity, it is natural that potential “conflict of interest” is called into question.  I did not delve into the question of how these organizations handle this issue.  Surely their members deal with it.  All of them seem to agree that it should be disclosed.  It seems to me that a more important question is whether or not the buyer of the valuation’s interests are aligned with that of the analysts.  If, in fact, the success fee influences the valuation then it would seem obvious that the SELLER’s and analysts interests are aligned.  Further, since compensation is directly in proportion to the ACTUAL price received an explicit quality control mechanism is built in.  On the other hand a valuation performed for a buyer by the same entity that brokers the business may be in conflict.  If I were the buyer I might want to acquire an independent opinion.   In reality most active buyers are as astute (and sometimes more so) as the valuation analyst.  But what about valuations performed for reasons other than the actual purchase or sale like “buy-sell” and estates?  These are special purpose valuations that sometimes take into consideration other issues like minority interests.  In these cases it is important to preserve objectivity and independence.  Again reference to the three organization’s standards provides guidance.

Finally, however, the potential conflict of interest you are concerned about is also a benefit.  You mention Johnson Consulting Group.  When they complete a valuation it results in an excellent offering package that can then be presented to multiple buyers.  More importantly, most if not all of those concentrating on the funeral and cemetery businesses are Niche experts and maintain a list of potential buyers and sellers that create a convenient fast track to transaction.

As always, especially in transactions of this size, an attitude of “buyer beware” is the first and foremost step to protection.

First, it is important to say that ignoring the current social media trend is akin to ignoring the increasingly vital need to have a viable website. Second, one of my concerns (but not the subject of this article) is that being active in social media like Facebook and Twitter has the potential to mislead many funeral directors relative to actual effectiveness, at least at this stage of its development. Here is why: the standard FD Litmus test for advertising effectiveness is having friends and family say, “I saw your ad.” Of course, if they say, “I liked your ad.” Then you can be sure it will become a favorite. The problem is that your family and friends don’t die that often and they were going to use you anyway…hopefully.   My personal Litmus test for advertising is whether it makes the phone ring. And, to be sure, more than a few funeral directors have told me that they have gotten calls and / or preneeds from their Facebook page. So, with those disclaimers in mind:

I have been on Facebook now for almost 2 years. Facebook tells me I have 268 “friends.” I don’t know many of these people because I didn’t know in the beginning that it was not considered impolite to refuse someone’s friend request. I have Facebook linked to my smart phone so while I am waiting in the doctor’s office or in the airport I thumb through the updates. I admit I am charmed by Arvin Starret’s quips and intrigued by the seemingly free spirit life of Brad Speaks.  But those are the exception. I find it inane to know whether someone is or is not at work… A little strange to learn that someone is flipping pancakes at the Rotary breakfast or taking their kids to McDonalds. On the other hand I do like the funeral homes that announce that they are “Honored to be serving the Smith Family today”.

What I dislike the most is those who use social media for advertising. I joined the NFDA discussion group hoping for some real discussion. After 4 months I unsubscribed. In all that time there was only one viable discussion question. All the rest were fringe promoters trying to hawk their product, service or “world-changing” idea. I, for one, will be glad when the Kate-Boylston seminar is over. I am sure it has helped them build attendance and I don’t blame them for it. But enough already, it’s starting to feel like the political advertising that we are all so glad to have behind us.   Harry Beckwith in his excellent book, “What Client’s Love,” observes that “You cannot intrude in  customers lives.  The more you intrude the more you annoy.”

To my point: Why is Social Media kinda like wearing your underpants on the outside?

Because it makes the SENDER more important than the RECIPIENT. It’s all about me and not enough about them. If, in fact, it is a new way to build your business then how does it communicate what’s in it for the buyer? What compelling value proposition is there? Other than the fact that you are out there, what differentiates you from the pack?

I am anticipating strong response to this article. Help us all figure this out. How can we make social media more about the recipient than the sender?