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Want More Calls? Get Up Off Your…

Written by Alan Creedy on . Posted in The Creedy Commentary. 2 Comments on Want More Calls? Get Up Off Your…

Two key social media levers that have nothing to do with technology

With all the recent buzz about social media, I think it is important to remember that social media is not new.  In fact, there are a few practitioners who mastered social media decades ago and built veritable “competitive fortresses” on the concept.  There are two key levers for optimizing social media and neither one has anything to do with technology although the appropriate application of technology can significantly enhance your “social media” strategy (emphasis on social).

The first is a piece of wisdom from Mary Kay Ash, the founder of Mary Kay Cosmetics.  When asked the secret of her success her reply was elegantly simple:  “I remind myself every day that every person wants to feel important.”  The second is my all time favorite: “People buy from people they like.” Combine those two and you have a failsafe strategy.   Simple concepts that require no purchase or learning curve.  So, ask yourself each day: “Who have I made feel important today? and what am I doing to help people like me?”  Next week I will introduce you to a funeral director who has successfully controlled his competitive environment by asking those two questions.

Funeral directors are often likable people, what is needed is not a personality change but mechanisms that enable them to meet more people.  Enter Low Tech social media…a social media mechanism.

Many years ago I was consulting with a funeral director who was concerned that he wasn’t getting support from the local clergy.  Knowing that he was a member of NSM (now SIFH), I suggested he get a supply of their “Clergy Preference Forms” and contact the local clergy to get them completed.  A few months later I was working with him again and I asked how the forms had worked.   “Oh, they didn’t,” he said, “I only got one back.”  “What do you mean you only got one back?” I asked.  “Well, I mailed them all out and only one pastor returned it.” was the reply.

There are times when the vocabulary of tact, diplomacy and discretion simply fails us.  I couldn’t bring myself to say: “you stupid, lazy…” so, I was rendered speechless.

Not long ago I did a “Skype” interview with Matt Shannon of Holman Howe Funeral Home in Southern, MO. for the “Best Practice Ideas” section of my website www.alancreedy.org Matt had accepted Event By Wire’s invitation to use their equipment to webcast family holiday greetings to active military and missionaries serving overseas.

As I shared Matt’s story, like the clergy preference forms, people told me, “we tried that and we only had one or two people show up.  It was a real bust.”  They missed the whole point:  It isn’t about how many people showed up; it’s about how many people you told your story to.

What I wanted to show with Matt was that it was HOW he implemented the idea that made the difference.  Matt saw the concept as much more than a great PR idea (which it is).  He realized it was a MECHANISM (an “excuse” if you will) that gave him an opportunity to get in front of key influencers in his community.  The main point of the effort was to create and enhance RELATIONSHIPS.  He didn’t just put ads in newspapers and send out postcards.  He got up off his… and went to see local clergy, the people at the VFW, the local NBC affiliate and others.  I bet he even took a few people to lunch.   I think only  a few families actually came in.  But to Matt it was a great success.  Not only had he made new friends among the clergy, VFW and Media (all influencers) he had actually created some collaborative opportunities to work with their constituents (thus creating an environment where they could get to know and like him personally) The webcasts to missionaries, in my opinion, is genius.

So, dear reader, I don’t know your circumstances so if I use the tactless words stupid and lazy I know you won’t take it personally.  People buy from people they like and everyone wants to feel important are two life axioms that are key social levers with almost limitless power.  Social networking should be about meeting people, finding common interests and giving them reason to like you.  I bet some of the people Matt met with had never met a funeral director before.  Who do you think is going to be on top of their mind next time they have a need?

Unless, of course, you are not likable.  And there is even a remedy for that.  I have met a lot of successful funeral directors in 30 years.  It seems to me that there is often a correlation between success as a funeral director and a personal experience with the greatest social networker in history: “Dale Carnegie”.

Funeral Home Valuation Part 4: The Final Chapter

Written by Alan Creedy on . Posted in The Creedy Commentary. 3 Comments on Funeral Home Valuation Part 4: The Final Chapter

We have now learned about 3 key variables in arriving at a value for your funeral home:

Now we will pull all this together so you can begin to play around with your own numbers to calculate a “ballpark” guess (I use these words intentionally) of what your worth.

But first an aside.  I want to thank all my readers and followers for your patience during my recent hiatus.   I try to publish this commentary weekly but didn’t anticipate the amount of preparation necessary for the NFDA convention.  My responsibilities as incoming Chairman for The Funeral Service Foundation, presenting at two sessions and other exhibit floor duties interfered with my commitment to you.  I learned that all major conventions are attended in three phases (especially for those with other duties).  Preparing for the convention, attending the convention and, finally, catching up on all the work you didn’t do while you were at the convention.  Thanks for your patience.

Now back to our subject.  The range of purchase multiples I hear most frequently today is 4 to 6.5 times EBITDA.  For your amusement let’s assume that the neutral point or average multiple for a decent but unremarkable firm is a multiple of 5 times EBITDA.    There are several factors that will move the needle either above this figure or below it.    These factors are not interdependent and any given firm is likely to have a combination of both positive and negative factors.

Factors that move the needle up

  • Strong management with non compete agreements in place who will stay on
  • Dominant or near dominant market share that is stable
  • Market share that has been consistently increasing over the past 5 years
  • large volume size (probably greater than 300)
  • Strong sales mix (burial vs. cremation)
  • Located in mid to large city
  • Strong local brand awareness
  • Competitors with a consistent history of laziness
  • Facilities and rolling stock which does not need urgent capital investment

Factors that move the needle down:

  • Decrepit facilities and rolling stock
  • Weak management that insists on staying on
  • Strong management that will not sign a non compete agreement
  • Declining market share
  • Firms below 300 in volume
  • High cremation rate or cremation rate increasing more rapidly than the national average
  • Poor financial statements
  • Unrealistic expectations or demands
  • Preneed fraud

There are, of course other factors but these are the most common.  If any of you readers can think of others throw them in the comment section and add to this conversation.  Also, you should be aware that the multiple for what I call mega firms or regional consolidators can be much higher.  The ceiling for these firms seems to be somewhere around 8.0 to 8.5 times EBITDA.  I am not sure where the cutoff for this class  is but I think it is safe to say it is probably in excess of $10,000,000 in revenue.  (just guessing)

So, you have looked at your market factors and you feel the needle is probably above the average rather than below it.   You have determined that your EBITDA is somewhere around 23% (I made that up but it should be between 20% and 30%).    You serve 350 families a year with an average sale of $6,750 yielding net revenue (remember to ignore your cash advances) of $2,362,500.  At 23% EBITDA is around $543,000.   Let’s look at what would be a good “ballpark guess”.

EBITDA                   Multiple                      Value

$543,000                  5.5                        $2,988,563

$543,000                  5.75                       $3,122,250

$543,000                  6.0                         $3,258,000

Now throw the “Magic Valuation Dart” at our results and I bet you would agree that your firm is worth in the neighborhood of $3,000,000 (or more).    Keep in mind this is the gross value.  What you put in your pocket will be after you have at least paid off the long-term debt as well as the ubiquitous Mr. Tax Man.    Also keep in mind that this price INCLUDES the physical assets of the firm (land, buildings, rolling stock, equipment, your antique car [just kidding]).   If you prefer not to sell the real estate and, instead, lease it to the buyer that may have a material effect on the price.   But now we are getting complicated and that is the reason that true and reliable (not guesses) valuations are done by professionals who have both experience AND comparables.

Final Thought:

If you follow valuation theory or current writings on the subject you have encountered, from time to time ,experts who have devised nifty “multiple calculators” by giving weights to the various factors affecting the choice of multiples.  I may, in fact, do this myself some day if I am exquisitely bored.  They start with a base “safe” rate which is frequently (but not lately) the 10 year treasury bond rate and then add or subtract points to that.   For instance:  If you serve 700 families a year you might add a quarter point to the multiple.  Conversely, if your market share showed consistent decline you might subtract half a point and so on.   The problem with this approach is that it is really cloaking subjectivity in the garb of scientific accuracy.  Like every individual, every business is different and a professional valuation is a combination of math and professional judgment and experience; with emphasis on the judgment part.  If it were mathematically scientific then every expert would come up with exactly the same number every time.   That’s my opinion and I am sure some valuation experts would resent my opening the kimono but that’s the way I see it.  After all, even the valuation textbooks define value as “what a willing buyer will pay a willing seller.”  Where is the science in that?

Disclaimer

While I have experience in business valuation, I am not a Certified Business Appraiser.   The explanation and comments contained herein are my own.  After some extensive research I have chosen to affiliate with Johnson Consulting Group for these services.  In my opinion, among those firms specializing in DeathCare, JCG is the premier business appraiser with the widest range of comparables and deepest level of experience.    If you are interested in having a professional valuation done or just exploring your options you may contact me directly at 919.926.0688 to coordinate their service.

Brad Speaks: Courage: How to Merchandise Your Service Charge

Written by Alan Creedy on . Posted in The Video Blog, Video. No Comments on Brad Speaks: Courage: How to Merchandise Your Service Charge

Many years ago I observed that funeral directors were spending a lot of energy, time, and resources (like money) to improve their casket merchandising. With a consistent year-over-year growth trend in cremation I found this odd. Especially in light of the complete absence of effort to do the same thing with service charges. So, I began asking practitioners what they were doing to merchandise their service charge. Mostly this question caused an interesting preoccupation in one’s shoes and a change of subject. But I did get some good answers. The best one was also the one that satisfied me that there was an answer involved an interesting combined emphasis on customer service and professionalism. It came from Brad Speaks in Independence, MO and it is the answer I feel we should all practice.

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Matt Shannon: New Ways to Use Webcasting

Written by Alan Creedy on . Posted in Video, The Video Blog. 4 Comments on Matt Shannon: New Ways to Use Webcasting

If you are like a growing number of funeral homes you offer webcasting. We webcast our mother’s funeral. This was the only way her 95 year old brother, 103 year old best friend and a handful of others could attend. They were thrilled.

But with the help of Event By Wire Matt Shannon of Holman-Howe Funeral Home in Lebanon, MO has found a way to create PR events and even engage the local network TV station.

As you view this video I want you to keep one thing in mind:

This program works because Matt gets up out of his chair and uses the concept to create meeting opportunities for influence makers in his community. He gets others involved in promoting the project.

I have seen others try this and fail because all they do is send letters and postcards and maybe put an ad in the local paper. The thing to remember is that this is both a public service and an opportunity to meet people who could influence future business. PEOPLE BUY FROM PEOPLE THEY LIKE. and the best way to learn to like someone is in person!! So, get up off your rear end and go out and meet somebody. Here is another thought, how many people are trapped in hospice who might like to send greetings to long distance friends or family…or…family who would like to send holiday greetings to someone who can’t travel. Don’t miss the missionary angle either.

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Randy Bunker: Engaging Customers in A Powerful Way

Written by Alan Creedy on . Posted in The Video Blog, Video. 2 Comments on Randy Bunker: Engaging Customers in A Powerful Way

A satisfied customer is no guarantee of a repeat customer. So say a growing number of marketing strategists including some of the most prestigious among the marketing professors at harvard, Stanford and Wharton.

Today businesses must go beyond satisfying customers to ENGAGING customers. Here is a great example of encouraging participation, customer engagement and a super opportunity to bond with those you serve.

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Send Out Cards: Creating Customer Loyalty in a Powerful Old Way

Written by Alan Creedy on . Posted in The Creedy Commentary. No Comments on Send Out Cards: Creating Customer Loyalty in a Powerful Old Way

My friend Frank Dawson in E. Liverpool, OH has created a veritable competitive fortress by leveraging a simple principle: It was Mary Kay Ash who, when asked the key to her success, said, “I reminded myself every day that EVERYONE wants to feel important.”

Frank sends personal notes, often with a photograph enclosed, on average 100 times a week. After more than 40 years everyone in his town is his personal friend. It doesn’t get much better than that. But sending 100 personal notes a week takes a lot of time…not to mention getting all those pictures developed. Today with cameras in cell phones there is a much easier and cheaper way. But it gets better, with the program I show here you can actually turn this process into a small revenue generator. Check it out here. If you want to know more just email me at alan@alancreedy.org

Alan Creedy: Sensory Rich Mission Statements Work

Written by Alan Creedy on . Posted in The Creedy Commentary. 3 Comments on Alan Creedy: Sensory Rich Mission Statements Work

It is accepted wisdom that companies should have a mission statement.  In most cases this exercise produces a plain vanilla restatement of something that sounded good.

Effective mission statements connect with personal values…for both the members of the organization and those they serve.   Some are bold others are just simple statements of commitment.  But the best ones skip the self serving stuff and focus on the customer.  Does anyone care that you want to be the biggest or the best?  No, everyone wants to know “What’s In It For them.”  So Mission Statements need to be Sensory Rich. They must resonate and answer unspoken questions.

Here is a unique way of expressing a sensory rich mission to customers I found in a local parking lot.

Basil Forsberg: Revenue that Replaces the Casket Sale

Written by Alan Creedy on . Posted in The Creedy Commentary. 1 Comment on Basil Forsberg: Revenue that Replaces the Casket Sale

Cremation has been growing at the rate of 1% a year for more than 30 years. Many areas are now at greater than 50% cremation. Without the sale of a casket this imposes very strong economic pressure to continue operations.

Basil Forsberg of Nipawin, Saskatchewan, Canada shared with me a way he has found to replace some or all of the lost margin on cremation sales. He worked out an arrangement with a local municipal cemetery by persuading them to install two 3 foot ribbons of concrete in an unpopular part of the cemetery. He then found a supplier of 2 to 4 private cremation niches that he installs on the concrete. The family pays the cemetery $250 for each installation.

You can talk to Basil directly (I recommend it…he’s a pretty smart guy) by calling him at (306) 862-3979 or emailing him at: basil.heritage@sasktel.net

Why People Call…a web video

Written by Alan Creedy on . Posted in Video, The Video Blog. 3 Comments on Why People Call…a web video

What is needed is a sensory rich way to communicate why people should call us rather than the other guy. I created this draft version for a client’s website. He is now working to use it as a commercial for tv ads. Most of the work is done. It can be modified for your use outside his trade area for less than $900.

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People Call Us Video is the intellectual property of 
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Laura Marchelos: A Bold Testimonial Ad

Written by Alan Creedy on . Posted in Video, The Video Blog. No Comments on Laura Marchelos: A Bold Testimonial Ad

Many funeral directors know that when they really help someone that person often becomes a friend and advocate. Yet, we are reluctant to ask for that public testmonial. Kilpatrick Funeral Homes in Monroe, LA produced this testimonial ad for about $3,500. It’s a great one.

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Kevin Bean: How To Get Customers to Stop Fixating on Price

Written by Alan Creedy on . Posted in Video, The Video Blog. 1 Comment on Kevin Bean: How To Get Customers to Stop Fixating on Price

In a recent Harvard Business Review article of the same title as this page the authors discussed research findings on 4 approaches that work for moving customers off price fixation. The one I liked most was narrowing your prices so that customers stopped thinking about what they could afford and, instead started thinking about what they wanted.

Not two weeks after reading that article I walked into the selection room of the Bean Funeral Home in Reading, PA. and witnessed first hand the impact of this concept. Mr. Bean has narrowed his offerings on caskets to range from a low of $1,150 to a high of $2,950. I literally experienced emotional relief, stopped thinking about cost and started looking at what I liked. What makes that experience interesting to me is that I was NOT a customer…I was a visitor. If it had that kind of impact on me (supposedly a knowledgable person) I can only imagine the impact on an actual customer.

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