Expert Opinion: Size Matters: Making the Case for Growth

Why is bigger better when it comes to creating memorable experiences?

Look at any successful service business, whether it’s a hospital, a hotel, a restaurant or even a funeral home, and you’re bound to come away with one undeniable message: the experience you create for your customers and guests is crucial to the future of your business. It’s what they remember and talk about, long after they’ve forgotten the price or the products. The next time they’re in a position to buy your service, what they remember is what guides their choice.

It’s why you see the leaders in all kinds of service industries making big investments in designing a better customer experience. They’re also making big investments in facilities, technology and training to ensure that the key elements of the experience are delivered consistently – every element, every customer, every time.

Making Memories

For example: Walt Disney World realized that happy family memories were one of the most important “deliverables” that Disney could provide.  In response, the company invested in rethinking on-site photography to literally make happy memories a saleable product.

Digital photos have long been an amusement park staple – think of those automatic cameras at the top of the roller coaster that capture full-grown adults screaming in zero-g like little girls. Disney took that opportunity to a whole new level, staffing the park with roving photographers who carry top-notch equipment. They’re stationed near every scenic point in the park and trained to reliably take beautiful, memorable family photos, without that awkward moment where you hand your camera or phone to a total stranger and hope for the best.

An important ingredient in Disney’s program is a wireless system where families carry a bar-coded “PhotoPass” that can be scanned by any photographer throughout the vast resort network. That system tags every photo as it’s taken and automatically uploads it to a website where it’s available for purchase by the family, even weeks after they’ve gone back home. A short vacation can produce dozens or even hundreds of high-quality photos, and an average add-on sale of nearly $100 per family.

Funeral Service Opportunities

In funeral service the situation is even more critical, because most people actually host or arrange funerals just once or twice in their lives. Like any other event business, marketing in funeral service depends on the impression you make on the guests. When they attend services (at your firm and at your competition), they’re unconsciously comparison-shopping. As funeral guests they’re getting a free sample of your service that will guide them when it’s their turn to be funeral hosts.

The unhappy reality for most funeral providers is that the free sample isn’t very inspiring.

Having spent a lifetime attending traditional funerals, about 40% of the country has opted out of traditional burial services, choosing cremation instead. In market research, when consumers explain why they choose cremation they often complain about outdated traditions, outdated facilities and outdated content in traditional funeral homes. Since most consumers have never actually purchased or arranged a funeral before, their complaints must be based on your free sample – their experiences as guests.

Why Are We Still Talking About This?

The formula for success in the experience economy isn’t a secret – some magical mystery that only the select few may know. It’s a straightforward matter of investing, first in designing an experience that sets you apart, and then in the People, Place and Process to deliver it consistently. Businesses around the world have mastered it to create a competitive advantage they can count on to help them grow.

Overdependence On An Unreliable Partner

If the answer is that simple, then why are funeral businesses so slow to embrace it? Of course, tradition is part of the answer. Funeral homes have a long tradition of out-sourcing the job of creating event “content” to one of the least predicable partners – the clergy. Driven by the rules of their own denominations and their unique styles as individual ministers, the clergy keep funeral directors guessing about the quality and content of every service right up to the end. Some funeral directors have begun to take over the content-creation themselves, but this usually requires an investment in people and technology. They need celebrants, digital media wizards and audio-visual hardware to build a better service.

Another obstacle to change is the fact that funeral and memorial services are a once-in-a-lifetime event. For each family, this is a never-to-be-repeated, last-ever chance to say good-bye to someone they love. For funeral homes there are no do-overs – just one (and only one) chance to get everything right. There are dozens of details to be managed, and just a day or two to pull everything together. Since most funeral directors work from handwritten notes on the back of the case folder, consistency and reliability are always issues. The fear of getting something wrong can make funeral directors even more conservative and undercut creativity before it starts. The quality of the experience is usually what suffers.

Information systems have real promise as a way to make execution more consistent and reliable in funeral homes. By coupling automatic task lists with mobile web access via smartphones and tablets, we can do a lot to make execution idiot proof. Staff can be reminded wherever they go, and managers can keep tabs on everything that is due (or overdue). Systems are beginning to emerge with these kinds of capabilities, but funeral homes have been slow to adopt them.

The Real Issue & A Better Solution

The biggest reason that funeral homes haven’t joined the Experience Economy is also the simplest – economics. Most funeral homes are just too small to afford the tools they need – better facilities, better technology and better people – to consistently create a better experience and grow the business. A business doing 150 funerals a year can only use its tools about 3 times a week. It’s not going to throw off enough cash to self-finance the improvements that it takes to stay competitive.

Fortunately, better access to working capital can help overcome those limitations. A $200,000 SBA loan at 5% can have payments as low as $1,100 per month. This opens the door to a couple of interesting possibilities.

First and simplest is to invest in those facility and technology improvements now, while they can still create a competitive advantage instead of just helping you catch up with your competitors. Using the industry average funeral of $6,560 and a 20% dynamic profit margin on new cases, it would take just one or two new families per month to fund that investment. To look at it another way, if your New and Improved experience lets you generate a 4% average upsell on your services, you would fund the investment with room to spare.

A final opportunity is the tried and true approach – buying out one of your less capable competitors. Assuming you can negotiate a realistic purchase price (always a big ‘if’ with funeral directors) the economic advantages can be huge. You grow your market share immediately and have more case volume to absorb (and profit from) that New and Improved Funeral Experience you worked so hard to create. The savings from consolidating back-office functions like accounting, transportation and the prep-room will often fund the financing cost and leave profit to spare.

The Common Ingredients

All these strategies have two common ingredients: Vision and Leverage. As a business owner you have a vision of what you want your business to be – a powerful vision of a compelling experience for customers that will give you a lasting competitive advantage. At Live Oak Bank, it’s our job to help provide the final ingredient – the leverage you need to grow your business and make your vision a reality now.

Be sure to attend the session: Size Matters: Why Growing Your Business is Key to Your Future, and How Small Firms Can Make It Happen at The NFDA convention in Charlotte Sunday, October 7 from 3-5PM 

About the Authors

Doug Gober is a Senior Loan Officer with Live Oak Bank. A CPA by training, Doug joined Live Oak after working with some of the leading companies in the funeral industry for more than 30 years, including Batesville, York Casket, Matthews International and Carriage Services.

Paul Seyler is President of Competitive Resources, Inc., a New Orleans-based firm providing research, strategy and execution support to companies both inside and outside the funeral industry.

Comments

  1. I will be there with my notebook (paper) in hand…if the SBA is as tough as the local banks, a lot of us small folks will find the growth you speak of hard to achieve.
    Thanks Alan and Doug for all you do for funeral service.

  2. The latest audio video software for your chapel is available right now at a reasonable price. Collect, deliver and preserve family media to set your firm apart, add value to your service by accomplishing what your families really want, quick, creative, meaningful and easy to use, you don’t have to be a geek to get it; and you don’t have to mortgage your business to afford it. :)

  3. Dean Lambert says:

    To the writers: I have to take exception to your characterizing clergy as “unreliable partners.” This is a cop-out, pure and simple. Wedding planners work with clergy all the time, controlling of the things they can, to help clients create an overall memorable experience. The officiant in a religious or non-denominational nuptial ceremony is merely one element of a successful wedding, and the same can be true in an event commemorating a person’s death.

    In my view, until we commit ourselves to look inward for ways to improve client experiences, funeral service will continue to falter as the “go-to” source for creating memorable end-of-life events. I fully understand the strain of lower profits can make it difficult for business owners to invest in hardware, software, facilities, and other conventional resources that aid in creating memorable events. But who says a funeral director needs to BUY these things? Sure, you need to keep your funeral home updated, but recent research says consumers are choosing venues other than a funeral home or church for memorial services. Does this mean a funeral professional cannot or should not be involved or relied upon to help plan, organize, and manage a memorial event? NO!

    Many event planners work from their homes, turning to trusted vendors and venue owners to become part of the event team. The best thing is, the planner (or funeral home owner) who does this, needs not continually reinvest in new technology or facility, or training. It is the vendor’s responsibility to bring to bear the latest innovations. The event planner (funeral professional) only needs to remain curious enough and creative enough to really hear what a client wants and find ways to make it happen!

    I have been working with funeral homes since 1993 and the blame game has evolved from “increasing cremation rate” to now include a long list of woes: “Casket prices;” “uncooperative, competitive clergy;” “hospice working against full-service funerals;” “the economy;” “pre-need shortfalls;” “reduced number of licensed professionals;” and so on. Successful funeral home owners have found ways to manage these weaknesses and threats and in some cases, turn them into strengths and opportunities!

    I believe funeral professionals remain uniquely qualified to be the authorities on memorial events, due to specialized training and experience. However, there is a danger that the profession is ceding this advantage to others while playing the “blame game.” The recipe for success includes: Listening to what the client wants and needs; understanding inherent barriers and controlling what you can to the best of your ability; managing that which you cannot control to minimize ill effects; being curious and creative; partnering with qualified vendors; turning supposed foes into allies; embracing change!

    Respectfully submitted.

    • Alan Creedy says:

      Dean, I agree with much of what you say but I would stand by Doug’s “unreliable partner” comment with this proviso: Until and unless the professional funeral director is willing to become more assertive in challenging the clergy and their customer in directing the process for which they are being paid then they indeed share the blame. If there is a finger to be pointed then it is two ways. The Funeral Director has let the family down by allowing the clergy to embarrass themselves. But the clergy has let the family down by failing to find out what they needed. While it is taken out of context and certainly has a different application it serves as a good backdrop that Jesus was not above asking: “what do you want?”

      • Dean Lambert says:

        Alan, why should there be any finger pointing at all? Consumers end up in the middle, which causes them to be uncomfortable and may repel them from any sort of process involving clergy OR a funeral director. If the consumer has a relationship with his or her clergy, a funeral director should probe to understand the depth and breadth of this relationship. This provides an understanding of any challenges that might exist in planning and/or managing the memorial event (the “funeral”) wherever it is to be held. A funeral director cannot control the actions or inaction on the part of clergy. In my view, it is a moot point. The question is, “What are funeral directors prepared to do to establish themselves as essential to the memorial event process as opposed to merely retrievers and preparers of the body?” This question has nothing really to do with the behavior of clergy, hospice providers, eulogists who think they are being funny, crying babies, uncooperative relatives, or any other potential detractors from a high-quality experience.

        If it helps to categorize some clergy as “unreliable” in terms of the ability to predict or control their level of cooperation, I suppose I will concede the point. However, many event variables can be labeled this way. When one is aware of what one can and cannot control, plans can be made to adapt to these conditions to ensure as high quality an event as possible.

        • Dean, I could not agree with you more, in those rare cases where opportunity and preparedness meet. As you accurately describe it, the opportunity to succeed as a funeral director today has never been greater. However, the preparedness piece is lacking. In a funeral world of learned craftsmen, there is not an abundance of inspired artists. Not only do we have the challenge of unreliable, unprepared partners, we have the challenge of unreliable, unprepared providers. A provider who is ready to meet the consumer where they are understands the importance of having partners who are as ready to meet the customer as they are. However, at this point in our business, this is simply not the case. We are not only dealing with a provider who is not identifying and preparing their partners properly, they are oblivious to the fact that they need them.

          The norm in this business is reactive, not proactive. People like us who believe in this business have to continue in our attempt to light that newfound, creative fire. The interaction you mention with our customer, or our potential partner, that I totally agree with, is the exception, not the rule. No good, conscientious provider would ever leave this establishment of their brand to an unsupervised supplier. The real world here is that funeral service is one place and their customer is somewhere else. This is CSI meets the Flintstones.

          Specifically, as it relates to ministers, my most recent research indicates they would welcome the chance to be better. Some are trying, some are not. We can help the willing. According to the most recent Pew Research, our society is approaching 40% “un-churched”. They are spiritual, somewhat religious, believe in God, but don’t attend a regularly organized event. They cannot be ignored. However, that also means that 60% are still “churched” in some way. We all know how religious even the “un-churched” get at a moment of crisis. So even for the most non-religious of consumers, this still may be a significant religious event led by a member of the clergy who hasn’t seen them in years, if ever. His importance in connecting our business with this consumer cannot be ignored. We can help him or her be better. Their performance, bad or good, is a reflection on us, whether we like it or not.

          I, again, completely agree with the wedding planner analogy. Just two weeks ago, I presented for three hours on the subject at the Kentucky State Convention. An event planner’s greatest assets are good ideas and a rolodex full of prepared, reliable partners. This is a professional whose people, place and process are soundly in place. In the case of funeral service, some investment in all three areas is normally required to bring us remotely up to speed. That investment could be financial or cultural or both, but generally a change of the significance necessary here is not free.

          As part of taking control of the event, it makes sense to help any participant operate at his or her highest level. Whether it is us, the clergy (or some other officiant) or the family, each has a role in the successful outcome in remembering a life lived. There are no do-overs. This is not blaming these entities for our lack of success, rather recognizing the responsibility we have to make everyone involved as productive and meaningful as possible.

          I agree that funeral professionals are uniquely positioned, however I am not convinced that a large percentage are uniquely qualified. Most of their focus, training, and experience have been firmly based on those things in which the consumer sees the least value. We must break this vicious cycle before our potential customer deserts us totally. It is not too late, but a huge uphill battle.

          Dean, one of the criteria you suggested is that a funeral director should probe the depth of the family’s relationship with the clergy. I agree. The business should be properly equipped with alternatives predicated on their response. I would suggest that the funeral director should probe the depth of the family’s relationship with the deceased, as well. But how many do?

          There are numerous educational opportunities for funeral professionals to help them understand what needs to be done to address the needs of a consumer who is soundly rejecting their standard formula. It is a very small percentage of funeral directors that have taken advantage of them and even less who attend and actually implement some of the ideas they heard. In any time of upheaval in any business or societal institution, there are winners and losers. I am still betting on the willing, existing providers to be the winners. The barriers to entry in this business give them a head start. We must take every opportunity to be better. Discussions like this one, with people who care, need to be prevalent in funeral service today. Sadly, they are not the norm. It won’t keep those, like us who care, from doing everything we can to promote progress.

          • Such a rousing discussion! I am thrilled that, once again, Providence allowed me to “stumble-upon” this site and dialogue. Hello Doug! You know I so agree with the opportunity that exists within the industry to make an enormous change and unforgettable affect for families. It takes so little to be so much in their experience and memory . . . who’ll they’ll recommend and return.

  4. Paul Seyler says:

    Wow – sorry to have been on vacation and missed the debate. I do have a couple of thoughts to add. When we wrote this article, we started out with a couple of questions:

    if you accept the idea that many funeral guests don’t connect with the content of the memorial event, then what should a funeral director do about it? If it’s typical to outsource content creation to the clergy, then how do you intervene to improve that content? If the clergy typically control 82% of a typical hour-long service, then what do you do about that 82%? It could be brilliant or just mediocre, but it’s not irrelevant. We also don’t accept the idea that it’s a moot point, and neither do most wedding planners. They work hard to influence and contribute to a better performance from the clergy, and we feel funeral directors should, too.

    If you accept the premise that people are choosing other venues for their services, then as the owner/operator of a venue, how do you respond? If you’re a funeral home owner whose largest single asset is a funeral home, how do you produce a return on that asset? Is it enough to keep the place updated, or should you consider re-tooling your own venue to be more competitive. It’s a classic “make-or-buy” dilemma, and our position is that it’s sometimes a good decision to MAKE a better venue than it is to BUY time in someone else’s. All of those prospective partners out there (operating those non-funeral venues) thought the best strategy was to MAKE their own. Should we accept that their facilities are as good as it can possibly get, or consider doing something better.

    Our whole point in this article is that funeral home owners DON”T typically think this way. They haven’t had much access to capital, so they don’t often think like capitalists. Using capital investment as a competitive strategy has historically been out of reach for small operators. If that access to capital is changing, then some new possibilities open up. That’s what we’re trying to highlight. .There are more ways to grow, more ways to access capital, and more competitive strategies available to those who do.

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