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How To Stop Customers From Fixating On Price

Equalize Price Points to Crystallize Personal Relevance.

This is the first recession to show a measurable impact on DeathCare.  Most surprising have been the many reports from rural and “rustbelt” funeral directors that cremation has recently spiked, not because people in their markets want cremation but BECAUSE THEY CAN’T AFFORD BURIAL.   YIKES!!!!

A recent article in Harvard Business Review entitled “How To Get Your Customers to Stop Fixating on Price outlined 4 strategies.  I found the most appealing strategy to be: Equalize Price Points to Crystallize Personal Relevance. The article’s authors pointed out that in :

“most mature markets customers have become unresponsive to marginal changes in value.  They have lost interest in how each product option might serve them… [so] they default to price minimization.  In fact, (and this was interesting) a list of options at different prices doesn’t make [consumers] examine the relative merits of those options, it activates their predisposition to pare the price.” [emphasis mine]

Not a week after reading the article I found myself experiencing the very strategy I liked the most and it was exciting.

I encountered a funeral director who had courageously narrowed his casket price offerings from a low of $1,100 to a high of less than $3,000.  As I stood looking down a row of caskets I actually found myself saying (as if I were a consumer): “Wow, I can pretty much have anything I want.”  Having been in so many selection rooms over my career, at first I was shocked.  Then I found, to my amazement, a feeling of relief.   Here is a picture:

1. Solid Mahogany Urn shaped, Velvet Interior $2,650    2. Brushed Copper, Velvet Interior $2,995  3. Solid Cherry, Urn shaped, Velvet Interior $2,550  4. 18 Ga round end brushed, Velvet $1,740.  5. Oak Veneer, Velvet Interior $1,845  6. 18 Ga two tone blue, square corner, Crepe interior $1,495 7. Stainless brushed velvet interior $2,150 8. L  98 Mandarin $1,150 9. 18 Ga Blue round end, crepe interior $1,575 10. Solid Cherry, Velvet Interior, $2,600.

As I surveyed the selection room above I found myself moving from thinking about what I could afford to which casket I liked best and which would be a good fit for me (just like the research said I would).  And, as if I were an actual customer, I felt relief.  Some years ago I picked a Pembroke Cherry for my prearrangements.  At the time it sold for under $4,000.  I watched it creep up above $5,000 but just figured that was inflation.   When it went over $6,000 I made a mental note to find something cheaper.

Once a consumer realizes they can get pretty much whatever they want for just about the same price they move from thinking about what they can afford to what they want.  The research found that this allowed sellers to price above their normal average.

The implication is this:  Let’s say that your average casket and service sale is running about $7,500 and the range of caskets you are currently offering to reach that average is from $2,500 to $15,000.  The concept of equalizing your price points would suggest that as you narrow your price range you could accomplish two things:

First, you would change the playing field for handling price shoppers and likely increase volume.

Second, you would (as the research found) be able to realize a higher over-all average casket and service sale on what you are currently serving (say from $7,500 to $8,000 for traditional burial).

Of course, this implies that you have exercised some aggressive tactics to control the wholesale cost of your caskets.

This post first appeared in The Creedy Commentary on June 22, 2010

A Horrifying Revelation About Price

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?

Managers Vs. Leaders: Which Are You?

As a student of leadership and as a “Benchmark” Assessor for the Center for Creative Leadership, I am well aware of the impact poor leadership has on results.  The problem, in my mind, is the historical emphasis on styles more appropriate to factory settings than businesses that actually interface with the public.

The difference between a manager and a leader is significant and that point is often missed.  Both are responsible for accomplishing goals but one has a greater responsibility of setting goals than the other.  Both are responsible for optimizing performance but one is focused almost entirely on the day to day while the other must balance the day to day with the bigger picture of how to prepare for the future.

The dysfunctionality of the manufacturing style of managing has been widely known for at least two decades.  It gets work done but does not optimize performance.  As Drucker says so eloquently:  It creates “job impoverishment, not job enrichment”.   Building a team of high performers is quickly becoming one of the Critical Keys to Success for all businesses but even more so for DeathCare.

I am a “semi fan” of Seth Godin’s.  As a rule ranters make me uncomfortable.  But I subscribe to his blog because every six weeks or so he coughs up a gem and this link is one.  It will take you two minutes so  Click here to read it for yourself.

Great Advice on Turning Your Business Around

I started my career in business turnarounds in the 1970’s when I worked for  a company whose business it was to buy and “refurbish” distressed businesses and resell them. DeathCare is in need of a turn around. There are different types of turnaround strategies and turnaround strategists.  Many are simply liquidators who cut costs so drastically that the already wounded patient has no choice but to be sold for parts.  But the truth is most businesses can be saved if you are willing to do the work.

I became aware of Jack Stack and his Game of Business in the late ’80’s.  He is a savior not a liquidator.  Saviors save jobs and businesses and investments.   I found early on by luck and prayer that the fastest way to rebuild your business is to engage your employees.  They know where the waste is, they know what customers really want and, if they really trust you, they will tell you where you might be going wrong.   That is not to say that you should abdicate your role as leader and expect staff to run the place.  It’s not that easy.  Rather, it means engaging them to give you feedback and input and weighing that input with other information to decide what is the best thing for the firm at this moment.

Watch this 6 minute video, it will encourage you.   But one last note of warning: if your financial reports aren’t in order or you don’t understand them or they aren’t timely don’t even start.

The Emperor Has No Clothes

What employee turnover reveals about your leadership.

Employee turnover can reveal a lot of things.  Surely turnover is normal but both too much and too little are signs of serious management issues.  The pressures of the last ten years have led many in DeathCare to be frustrated with their employees.  An attitude has sprung up that suggests a feeling like: “If somehow I could just fix my employees everything would be alright.”

High turnover rates and no turnover rates are actually two sides of the same coin.  Both indicate an unwillingness to develop people and poor to nonexistent communication skills.  It is the leader’s role to communicate what is expected of people, to follow through and to teach and to develop.  High turnover indicates they have put too much pressure on people to meet expectations without giving them the tools and resources to do the job.  Tools and resources include emotional support and guidance.  Having no turnover is just as bad.  If you are a firm of any size it is impossible that you haven’t got at least one person who doesn’t belong.  Even Jesus made a bad hire although He did it on purpose to fulfill prophesy.  Most often, when someone tells me (usually with some pride) that no one ever leaves I am willing to take a bet that they have several aimless people who couldn’t find work elsewhere who are just showing up for a paycheck.

Drucker’s Orchestra metaphor is the best illustration:

When a new orchestra leader takes over a poorly performing orchestra he does not have the luxury of letting everyone go and replacing them with top performers.  Instead, he must ferret out the worst and work with the remaining average players to help them want to work at peak levels

Great leaders do 4 things extremely well:

  1. Select the right people
  2. Set clear expectations
  3. Motivate people to do their best
  4. Develop people

Interestingly, there are 8 things employees really want from leaders:

  1. Tell me my role, what to do, and give me the rules
    1. Clear direction
    2. Parameters so they can work within broad outlines.
  2. Discipline my coworker who is out of line
    1. Hold people accountable-be fair but hold fast to what is and is not acceptable
  3. Get me excited
    1. About the company
    2. About what we do
    3. About where I fit
  4. Don’t forget to praise me
  5. Don’t scare me
    1. They don’t really need to know about everything you worry about
    2. Don’t lose your temper
    3. Be fair and consistent
  6. Impress me
    1. be bold
    2. or be creative
    3. or be smart
  7. Give me some autonomy
    1. Give me a special project
    2. Trust me with an opportunity
  8. Set me up to win
    1. Indecisive leaders frustrate everyone and make them feel defeated

Do you find it interesting that financial incentives aren’t on this list?  Turns out that money is only a demotivator.  If you aren’t paid fairly it will demotivate you.  Overpaying you will not motivate you or make you more loyal.

 

Social Media Run Amok: Invasion of Privacy

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.

What Are Your Views on Funeral Home Brokers? Is There a Possible Conflict of Interest?

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:

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.

Do Boomers Find Your Website Annoying?

Funeral Home Websites have come a long way in the last 5 years.  Yet, most sites still remain fairly primitive.  One mistake many websites make (funeral and nonfuneral) is not understanding how their specific target market relates to websites in general.  Because many web developers and programmers are still relatively young and our audience is much older than they  this is particularly problematic for us.

Earlier this year I wrote a book review for a book entitled Boomdotand ended up befriending one of the authors, David Weigelt.  David’s firm, Immersion Active, is a niche marketing firm specializing almost exclusively in internet marketing to Baby Boomers.   They serve an impressive array of companies who want to grow their business in this “new” senior market including our loyal admirers: AARP (read the case study here).

Immersion Active has created a wonderful interactive device that enables us all to learn how an older person actually experiences websites.  It takes about ten to fifteen minutes. Try it out here.

Are You Too Proud to Succeed?

A problem, certainly not unique to DeathCare but just as certainly profoundly prevalent, is an artificial sense of professionalism.  Born out of defining success by what people might think of us, it blocks our ability to succeed by making us unwilling to “Stoop To Greatness”.

I just received this two page post from Patrick Lencioni’s blog: “Point of View”.  You can subscribe by clicking here. Lencioni is one of the foremost authors of management books in the U.S.  You will recognize “Death By Meeting”; “Silos, Politics and Turf Wars” and, my favorite, “The Five Dysfunctions of A Team.” Virtually all his writing deals with human relations and how to help people be more effective.

His comments should give us all pause to reflect:

Stooping to Greatness

Earlier this year I had the opportunity to spend time with the CEO of one of America’s most successful companies, a legendary organization known for its employee and customer satisfaction, as well as its financial performance. I attended their company’s management conference, listened to various presentations about their culture, and the extraordinary, homey and sometimes slightly wacky practices that distinguish them from their competitors.

Overwhelmed by the organization’s simple and powerful behavioral philosophy, I asked the CEO a semi-rhetorical question. “Why in the world don’t your competitors do any of this?” The CEO thought about it for a moment and said, “You know, I honestly believe they think it’s beneath them.”

And right away, I knew he was right.

After all, every one of those competitors, the vast majority of whom are struggling, knows exactly what this company does, how it works, and how much it has driven its financial success. The company’s cultural approach has been chronicled in more than a few books. And yet, none of them tries to emulate it. In fact, based on numerous interactions I’ve had with employees who work for those competitors, I’d have to say that their attitude is often dismissive, even derisive, toward this company and its enthusiastic employees.

And this dynamic exists in other industries, too. A fast-food company I know has remarkable customer loyalty, as well as unbelievable employee satisfaction and retention, especially compared to the majority of their competitors. The leaders and employees of the company attribute most of their success to the behavioral philosophy and attitude that they’ve cultivated within the organization, and the unconventional yet effective activities that result.

One example of that philosophy is the action of the CEO, who shows up at grand openings of new franchises where he stays up all night with employees, playing instruments and handing out food to excited customers. Few CEOs would be happy, or even willing, to do things like this, but this executive relishes the opportunity. These, and other activities that most MBAs would call corny, are precisely what makes that company unique.

This happens in the world of sports, as well. There is a well-known high school football team where I live that is ranked near the top of national polls every year. They play the best teams in the country, teams with bigger and more highly touted players, and beat them regularly. The secret to their success, more than any game strategy or weight-lifting regimen, comes down to the coach’s philosophy about commitment and teamwork and the buy-in he gets from his players. That philosophy manifests itself in a variety of simple actions which speak to how the players treat one another on and off the field. For example, players pair up every week and exchange 3×5 cards with hand-written commitments around training and personal improvement, and then take responsibility for disciplining one another when those commitments aren’t met.

And yet, whenever I explain this and similar practices of the team to other coaches who are curious about their success, I encounter that same sense of dismissiveness. They get a look on their face that seems to say, “listen, I’m not going to do that. It’s silly. Just tell me something technical that I can use.” As a result, few teams actually try to copy them.

Some skeptics might say, “come on, those companies/teams are successful because they’re good at what they do.” And they’d be right. Those organizations are undoubtedly and extremely competent in their given fields, and they have to be in order to succeed. But plenty of other organizations are just as competent and don’t achieve great levels of success, and I honestly believe it’s because they’re unwilling to stoop down and do the simple, emotional, home-spun things that all human beings — employees, customers, players — really crave.

What’s at the heart of this unwillingness? I think it’s pride. Though plenty of people in the world say they want to be successful, not that many are willing to humble themselves and do the simple things that might seem unsophisticated. Essentially, they come to define success by what people think of them, rather than by what they accomplish, which is ironic because they often end up losing the admiration of their employees and customers/fans.

The good news in all of this is that for those organizations that want to succeed more than they want to maintain some artificial sense of professionalism (whatever that means), there is great opportunity for competitive advantage and success. They can create a culture of performance and service and employee engagement, the kind that ensures long term success like no strategy ever could. But only if they’re willing to stoop down and be human, to treat their customers and one another in ways that others might find corny.

Best,

Patrick Lencioni

Is Your Company Coherent?

Booz & Company, one of the foremost consulting leaders in innovation, has discovered a link between performance and strategy called “Coherence.”  For a company to be described as coherent, it must be resolutely focused on the interrelationship among three critical elements: its market position (its chosen “way to play” against competitors); its most distinctive capabilities, which work together as a system; and its product and service portfolio. 

They have devised a Coherence Profiler which should be of use to all Deathcare Practitioners.   This 5 minute survey provides a “real-time” diagnostic for the coherence in any company.  Coherence delivers a premium to companies by increasing effectiveness, efficiency, use of critical resources and overall alignment. 

I recommend taking the profile by clicking on the highlighted link above.  You can also read the full article by going to the Strategy + Business website directly (click here)

Social Media Is Kinda Like Wearing Your Underpants on the Outside of Your Pants

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?

Social Media: How To Get The Phone To Ring

I consider Frank Dawson of Dawson Funeral Homes in E. Liverpool, Oh. to be the “Grand Master” of social media. With it he has not only built his business but created a veritable competitive “fortress.” He has done this by applying a simple axiomatic human principle.

Watch this video to learn more about that principle and a simple fun low-tech way to build great relationships through social media the old fashioned way.

[wpvideo x2s1HoQD]

To learn more complete the form below:

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