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EXPERT OPINION: How Are Funeral Directors Like Bankers?

Written by Alan Creedy on . Posted in The Creedy Commentary. 1 Comment on EXPERT OPINION: How Are Funeral Directors Like Bankers?

Rick Baldwin

I serve on the Board of Directors of a community bank based in Orlando, Florida. In that capacity I receive frequent educational correspondence and one I received this week highlighted the striking similarities between what we do and banking.

The author says:

  • “Bankers often forget that they are in a retail business where people have choices.”

  •  “Bankers should be hiring people with retail backgrounds and not with just teller-line experience.”

  •  “By and large, bankers fail to recognize the importance of branding what they do.”

  •  “In the wake of the current financial crisis, customers differentiate between the banks they perceive as greedy and ones they perceive as trustworthy.”

  •  “The best way to silence a room of bankers is to ask them to describe themselves without using the words ‘people,’ ‘service,’ and ‘community.’

  • “Bankers are unaware that their brand is no different from every other bank in the country.”

“There is a familiar refrain among the people who handle branding campaigns and advertising for a living — banks just don’t get it. They are a commodity and they all sell pretty much the same things. They sound the same. They look the same. They just don’t realize it. Or, they just don’t care.”

I couldn’t help but notice that most all those qualities apply to the operation of funeral homes as well as banks! It made me think: maybe we just don’t get it either, or we don’t care either.

Here are some other important statements made by the author that I think also apply to us:

  • “Many bankers equate advertising and branding together.”

  • “Branding is much bigger than advertising, which simply supports the brand.”

  •  “Strong brands have these qualities: knowledge of market, focus on aligning products and services to fit their target market, an internal delivery system that is top-notch, and service consistency.”

  •  “Many executives falsely assume that they can pay for an advertising campaign that defines their company one way without worrying about whether the company actually is who it says it is.”

  •  “The best brands tend not only to influence customer choices, but also attract the best employees.”

  •  “The best brands tend to build on themselves — with the best people.”

As with bankers, our funeral brands are what people think they are, not just what we say they are.  Thankfully though, we all have the opportunity to influence and change what our brands stand for, each and every day!

Rick Baldwin is currently CEO of Celebris Memorial Services of Montreal (29 funeral homes / five cemeteries / five crematories / brands are Urgel Bourgie and Lepine Cloutier) and owner of Baldwin Brothers Cremation Society in Florida / Director and shareholder of BankFIRST of Orlando / Board of Directors of ICCFA / Director of UCF Foundation.  Earlier in his career he founded Baldwin-Fairchild Cemeteries and Funeral Homes in Orlando, Fl which he later sold to Stewart Enterprises where he enjoyed a successful career until his retirement in December 1999.  He served as President of Stewart’s Eastern Division and, later, as President of Corporate Development.  He is past President of CANA and the Florida Funeral Director’s Association.

EXPERT OPINION: HOW TO CALCULATE YOUR SHARE-OF-WALLET

Written by Alan Creedy on . Posted in Practitioner Forum: Insights and Ideas, The Creedy Commentary. 3 Comments on EXPERT OPINION: HOW TO CALCULATE YOUR SHARE-OF-WALLET

Scott Meierhoffer

A few years ago we came to the realization that there was a real necessity to review our system.  Not all calls are equal in service type, in merchandise and in revenue.  The old system indicated that direct cremation had the same market share value as a traditional burial.  In a sense that is true.  Every individual death accounts for a decision made by a family on the choice of a funeral provider.  In the strictest sense calculating market share would be accurate.

However, we devised a system to track a broader range of information, and in a fairly easy and cost-effective way, to clarify what was occurring in our market.  In so doing, we still track market share but we added the component of revenue and service type share to the study.

To initiate the process we identified the various service types that we were interested in tracking for both the traditional burial and cremation services.  These included the following service types: chapel service, church service, graveside service, cremation with visitation and memorial service, cremation with memorial service, cremation only, ship-in/ship-out and miscellaneous services.

We then itemized the charges for each service type from our own General Price List.  When funeral merchandise was included we used our average casket, outer burial container and memorial package in our computations.

The next step was to obtain our competitors General Price Lists and build the same packages for each competitor.  In these computations, we selected merchandise as close as possible to the merchandise we included in our own packages for comparative purposes.

After sending all of this information to our resident Excel expert to build an appropriate tracking spreadsheet, we began tracking information from the local obituaries daily and then auditing our results at the end of the month with the competitors’ websites.  For the most part, traditional services are simple to track and input into the correct service type.  Traditional burials in the chapel, church or graveside service categories are easy to detect from the obituary.  Determining cremation services has been more of a challenge.  The question is raised particularly often when the memorial service is held at a church following cremation.  It is difficult to discern if the funeral home is involved in these services or not.  Do we book the case as a “cremation with memorial service” or “cremation only”?

When reviewing the information now, we are not only able to see the true market share of which percentage of deaths went to which funeral home in our area, we can now see the percentage of the revenue expended those same funeral services among our competitors.

For example, in a given time period of a month, our firm may have accounted for 41% of the market share.  But based upon the call mix for that period, our revenue share may account for 47% of the dollars expended on funeral service.

Although we understand these are not exact figures, because we are comparing averages in regards to merchandise selected, we feel confident that this study gives us added insight to what is occurring in our community.

From the data we enter we can look at traditional burial separately from cremation, and look at each service type alone to see what families are choosing from all of the funeral providers in the area.  It becomes a clearer way to see trends developing in service types and the funeral homes families are choosing to provide them.

Two additional bits of data we are collecting are age of the deceased and if the memorial gifts published in the obituary call for donations to the funeral home to help pay expenses.  This information gives us more anecdotal results.  With the first we can calculate the average age of the deceased for each of our competitors.  The second gives us an indication as to the ability for families to pay for the services they select.

For example, if a competitor shows 21% market share and 18% revenue share with a high mix of cremation and a large percent of the families asking for donations to help offset funeral costs we can extrapolate that that competitor may have an accounts receivable issue which may be affecting their business model.

Much of this is unscientific and speculative to an extent, but it does clarify our community and what is happening with the dollars expended in our industry.

Scott Meierhoffer is currently Chief Executive Officer of Meierhoffer Funeral Home & Crematory in St. Joseph, Missouri and its affiliates which include: Pettijohn & Crawford Family Funeral Service, Mound City, Missouri; Bailey & Cox Family Funeral Service, Plattsburg, Lathrop and Polo, Missouri; Family Service Group, Horizon Cremation Center, Family PALS pet Crematory, St. Joseph Memorial Park, Mount Auburn Cemetery and Ashland Mausoleum, all of St. Joseph, Missouri.  Operations at these facilities include traditional funeral, cremation and cemetery services as well as pre-arranged funeral planning, pet cremation, reception and catering services and floral and gift shop.  A licensed funeral director in the State of Missouri since 1994, Meierhoffer is a member of Selected Independent Funeral Homes.

 

If Lee Iacocca Owned a Funeral Home

Written by Alan Creedy on . Posted in The Creedy Commentary. 4 Comments on If Lee Iacocca Owned a Funeral Home

There is an apocryphal story in accountant circles about Lee Iacocca’s first day as CEO of Chrysler.  As the story goes, Mr. Iacocca’s very first act was to call in the Chief Financial Officer and ask how many day’s cash was on hand.  The CFO responded that the company had 3 day’s cash available.  Mr. Iacocca responded, “Where shall we spend it?”

Last week’s commentary “A Horrifying Revelation About Price” addressed more than one concern I have about our profession and touched off a flurry of comments.  All of the responses were well thought out and worthy of reading.  But they made me aware that I need to drill down a little deeper on my points.

The Iacocca Lesson

In a limited resource environment Mr. Iacocca understood the vital importance of optimizing his resources.  Like most funeral homes, he knew the answer involved livelihoods.  It was no abstract theoretical question.  His query of the CFO understood principles I think are largely misunderstood in funeral service.

With so many funeral homes struggling to maintain the same profitability year over year (assuming they are profitable at all)  it is vital that limited resources be used in ways that shorten and optimize returns.  You can bet that there was a lot of demand for that cash among vendors and creditors.  Iacoca knew they would rather get $1 than the ten cents they would get in bankruptcy court.  So, he just blew right past them and wanted to know where he could get the fastest and highest return.  He needed to make his dollars generate more dollars and quick.  As John Horan observed in his comments to last week’s commentary, Iacocca knew he could not afford to: “Step over dollars to pick up nickels.”

Opportunity Cost

The need to generate more dollars from limited resources brings us to the central point of Mr. Iacocca’s strategy and one of my two points in last week’s article: this week I will address Opportunity Cost. This concept means that there is always more than one opportunity and what may seem like a good opportunity because “everyone is doing it” may not actually be the best opportunity.  In my response to Colleen Ellis’ comments I observed that Pet Care might be a viable strategy for some practitioners (if, and only if, it generates more human calls).  For others struggling to survive it could in fact be a fatal strategy.  Fatal because it overstretches limited resources with insufficient returns to make the risk worthwhile.

Opportunity Cost recognizes that if you choose to invest resources in an option so that another option cannot be pursued because you have exhausted your resources then the difference in return of the lost opportunity must be added to the cost of the option you chose.  An example might be that you have 3 different options for investing in ways that will improve your business as follows:

                         Option A     Option B     Option C
Investment               $50,000      $150,000     $200,000
Payback period            7 years     10 years      4 years
Annual cash return        $7,000      $15,000      $50,000

You choose Option B because everyone is doing it and it is less expensive and less boring.   The actual cost of Option B would be as follows:

Investment:                          $150,000
Unrealized cash from Option C         $35,000
Payback period for option B          10 years
Opportunity cost  (10 yrs x $35k)    $350,000
Investment                           $150,000
less: incremental cost of option c  ($ 50,000)
Actual cost of Option B              $450,000

My apologies to accountants and economists.  In order to simplify this illustration I have purposely ignored a number of other variables like the time value of money and risk.

To summarize this point:

  • Warren Buffet and Lee Iacocca would demand that for every dollar invested an additional dollar be earned
  • All options and opportunities should be weighed against other opportunities no matter how unsexy or boring they might be.

To illustrate further:  During the 90’s it was common for funeral homes to invest in the neighborhood of $50,000 in upgrades to selection rooms anticipating significant increases in sales revenues.  Interestingly, at the time, no one was investing even a fraction of that amount in staff training (an alternative investment option).  Here is how I would have looked at that scenario.

                Before   Select rm upgrde   Staff Training
Calls              200           200               205
Avge svce chge  $2,500        $2,500             $2,750
Avge cskt sle   $2,000        $2,500             $2,500
Total Sales   $900,000     $1,000,000         $1,076,250
C.O.S @ 17%  ($153,000)    ($170,000)        ($174,250)
Margin        $747,000      $830,000          $902,000
Incr                       $  83,000          $155,000 

Investment                 $  50,000         $  50,000
Opportunity cost:$155,000-$83,000)           $  72,000
Less:Incremental cost of Option C           ($    -0- )
Total Cost of Selection room upgrade          $152,000
ROI                    54% first year   310% first year

I think I know what Warren Buffet and Lee Iacocca would have done.

Post Script:

It was not my purpose to bash Pet Care but it stands as a good example of what might seem like a good idea but may not be the best idea.   Investing $150,000 to generate unit margins of $125 or less on a stand-alone basis is one thing.  But when you consider that investing $30,000 to $75,000 in a program that will train your staff in ways that will improve yield on existing customers whose margins are already in excess of $5,000 and improve services that will generate even more of those customers makes more sense to me.

Is Your Company Coherent?

Written by Alan Creedy on . Posted in The Creedy Commentary. 1 Comment on 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)

Interrupting This Blog For an Urgent Message

Written by Alan Creedy on . Posted in The Creedy Commentary. 1 Comment on Interrupting This Blog For an Urgent Message

Once in a while something comes along that deserves to be viral.  Something that speaks to the common good and addresses issues deep enough to be shared by everyone.

 

Intelligence indicates knowledge not wisdom. A wise man knows how to use his knowledge to make a good decision. A person may have a lot of knowledge but be unable to use it properly.

There is no sensible businessman today that isn’t concerned about how they are going to cope with the future.  Never in the history of DeathCare has the pace and complexity of change been increasing as fast as it is today.  What is needed is perspective.   And in a recent article by Todd Van Beck in the Canadian Funeral Director Magazine I was almost startled to find an old perspective…a piece of genuine wisdom… that all of us desperately need today.

I know that several of my readers are trade journalists.  Todd has given me permission to reproduce this.  I appeal to you to help me bring a new / old perspective back from the dead.  Let’s help our readership find new ways to think about the competitive challenges of this day.

Click here for Todd’s article entitled Walmart

How To Stop Customers From Fixating on Price Part 4

Written by Alan Creedy on . Posted in The Creedy Commentary. 4 Comments on How To Stop Customers From Fixating on Price Part 4

Partition Prices to Highlight Overlooked Benefits

 This is the 4th and last in a series on pricing strategy based on an article from Harvard Business Review of the same title.  The purpose of this series is to stimulate thought and conversation among practitioners about pricing as a strategy rather than simply as a way of driving revenue.   So far we have covered the following 3 pricing stragies:

            “Equalizing Price Points to Crystallize Personal Relevance”

            “Using Price Structure to Clarify Your Advantage”

            “Willfully Overpricing to Stimulate Curiosity”

We have also presented a brief discussion of the commoditized consumer.

Partitioning Prices to Highlight Overlooked Benefits is the most difficult to grasp and execute.  The research found that poorly executed it has the ability to alienate customers.  They see it as burdensome and a form of “bait and switch”.  Think luggage fees that have been partitioned out of the normal ticket price for airlines. 

If done correctly, however, partitioning can have a powerful effect on buying behavior.  Basically, the partitioning strategy is based on the proven premise that customers don’t really tune into benefits they might find valuable unless they know their value.  So, if you include items within a package and the buyer doesn’t know the value of the individual items included in the package they don’t really have a way of distinguishing between product or package offerings. 

According to research, “Presenting a cost as a set of smaller mandatory charges invites closer analysis and therefore increases the likelihood that a customer will revise a routine consumption behavior.”   Basically, this means that if you use package pricing you need to set a frame of reference by either identifying the individual prices of the items in the package or by clearly showing that the cumulative value of items in the package exceed the package price by a specific amount.   Say, for instance, that to induce people to buy your best burial package you include better quality caskets, a video memorial and DVD, 10 death certificates and your premium level register book.  If you don’t partition those items as having a specific price customers may not see the value of going from better to best.

Let’s be even more specific: Let’s say you offer a “good”, “better” and “best” packages.  In your good package you offer two caskets.  In your better package you offer 3 and in your best package you offer a choice of 4 caskets.  Partioning strategy tells us that you should should show the value of the caskets in each package.  That doesn’t mean the price of each casket but something more like you would see in a retail advertisement.  Think of a “callout” bubble next to the pictures of caskets that says something like: “A value of $2,995” or (for your Best Package) “A value of $4,495”.

The research concluded that “to those who saw the price partitioned, quality mattered: the better package induced more people to choose the more expensive [product]…people are unlikely to factor a benefit into their choice unless an explicit charge is made for it.”

funeral pricing, funeral home management, funeral consulting, funeral price strategy, funeral price shoppers

How To Stop Customers From Fixating on Price Part 3

Written by Alan Creedy on . Posted in The Creedy Commentary. 2 Comments on How To Stop Customers From Fixating on Price Part 3

Part 3 Willfully Overpricing to Stimulate Curiosity

Last week we discussed the commoditized customer and the second of 4 pricing strategies: “Using Price Structure to Clarify Your Advantage.”  If you didn’t think I was certifiable last week there is a good chance you will be thinking about sending me for treatment this week.  Please remember: our goal is to use these insights to begin to rethink funeral service’ pricing strategy.

According to the article from Harvard Business Review, from which these discussions originate, this week’s strategy has proven to be particularly effective for mature industries.  Their examples range from coffee to high priced elevator systems.

In a price competitive mature market the logic behind willful overpricing seems counterintuitive.  At the same time, I can well remember that our primary pricing strategy at the funeral home I managed was to be $100 higher than anyone else.  This “strategy” is one I have often encountered as well as its evil twin: being $100 lower than anyone else.

According to research, customers don’t automatically dismiss the higher price model.  Instead, a  higher price often seems to motivate them to take a closer look.  That closer look could (and should) reveal information they care about that works in your favor.  (it bears repeating here that the point of all these strategies is to get consumers focused on value over price)  Some of the things I can think of are quality (“your mother never leaves our care”) or reputation, or an unconditional guarantee, etc. 

In one experiment products were priced at an 80% premium.  Subjects were able to recall twice as much product information than the comparison products; this enabled them to cite more arguments in favor of buying the products.  “The overpricing also evoked a more passionate response to the products which led to a willingness to pay much more than was originally intended. By contrast, people who were exposed to a premium close to their expectations (10%) or one that was outlandishly high (190%) simply acted according to their pretested inclination…”  THIS IS IMPORTANT because most funeral homes in price competitive markets are only marginally higher than the lower priced firms.  This research would tell us they are not enough higher to provoke the necessary attention to value.

The implication is that a price range exists above what customers thought they would pay that causes them to ask value questions.   Willfull overpricing can reverse the downward “price cutting” trend common to mature products and services.  Starbucks deliberately set a price point for a product that, at the time, most restaurants gave away. The price made people rethink the importance of coffee in their lives.

In another example Kone, the Finnish elevator company, used willful overpricing to introduce innovation.  In the 1990’s the elevator industry had become very price competitive.  In this highly commoditized market Kone introduced an innovation that the market (being entirely price focused) was unprepared to take into consideration. 

In order to provoke consideration of their advantage, Kone began responding to RFP’s with two proposals:  A normal proposal with old features and normal pricing and a much higher priced proposal for their innovative elevator system.  It took a while but it caused buyers to talk about the new concept and even to call Kone for an explanation.  The high price enabled them to have conversations about value with people who wanted to know why it was higher priced.

How could this work in funeral service?

Why not create two price lists:  one that is price competitive but strips out all the liability and quality of service (in fact one that maybe highlights some of your competitor’s disadvantages without mentioning them by name) and another that highlights features, safeguards and other benefits that are included.   For instance:  Transfer of remains to the funeral home: 

Normal: use of a 3rd party trade service at our convenience.  We are not responsible for problems or errors $350

Full service:  The deceased never leaves our care, two attendants and a Cadillac Funeral Coach within 2 hours of the first call. $650

I just made these up but maybe you can think of some better ones.

A last point of caution:  the research suggested that if you use this strategy the overpricing should be 50-80% above what people expect.  What price shoppers expect is generally a function of your competitor’s prices.

So, the next time someone says “your price is a lot higher than the others.” see it as an opportunity.  The trick is not to focus on the value that YOU think is important but the value THEY think is important.

funeral pricing, funeral home management, funeral consulting, funeral price strategy, funeral price shoppers

How To Stop Customers From Fixating on Price: Part 2

Written by Alan Creedy on . Posted in The Creedy Commentary. 3 Comments on How To Stop Customers From Fixating on Price: Part 2

Part 2:  “Using Price to Clarify Your Advantage”

Increasingly, funeral markets are being commoditized.  This series is adapted from an article in Harvard Business Review entitled “How to Stop Customers from Fixating on Price.” You can purchase a pdf copy directly by clicking on the link.   In the article the authors point out that:

“Most people think commoditization occurs only when competing products or vendors are indistinguishable in terms of features or capabilities.  But research tells us that commoditization is as much psychological as it is physical.

A commoditized market is one in which buyers display rampant skepticism, routinized behaviors, minimal expectations and a strong preference for swift and effortless transactions regardless of product differentiation.  The key is not what you do to your product but what you do to your customer.  You must find a way to reengage a customer who is past caring.  Commoditized customers choose on the basis of price because they have become convinced that the options available are equally palatable and the minor differences are not worth investigating.  Fresh rounds of innovation go unnoticed and better formulated marketing messages don’t get through.  The best way to get them to sit up and take notice is to take price and alter it in a surprising or challenging way.”

In part 1 of this series we discussed the first of four strategies for altering your pricing strategy: “Equalizing Price Points” Today’s approach uses price structure to clarify advantage.  Remember our goal is to cause the commoditized customer to take notice of the advantages we offer by altering the way we price.

In the reference article the authors cite Goodyear’s struggle many years ago as they developed newer and better tires.  We are enamored of the many real and valuable benefits legitimate funeral homes offer relative to such things as service, quality, merchandise and our ability to facilitate the bereavement process.

Goodyear adapted their pricing strategy in a way that caused customers to stop and think about the differences instead of thinking that “a tire is just a tire”.   Like us, Goodyear engineers were enamored with the many technological and complex improvements in quality and tread life they were innovating.  The problem was that customers didn’t care because tires were priced by quality not what customers valued about quality.  When Goodyear changed their pricing strategy by aligning price with tread life consumers stopped opting for the cheapest tire and changed their buying behavior completely.

How could we alter our pricing strategy in ways that consumers would focus on value?  I am not sure I know any longer what consumers value; but the majority, I am convinced, still feel that “Mom’s Body” is a sacred thing.   Given that as an assumption, here are two ideas that I am throwing on the wall for reaction:

1. All the funeral homes I work with are operated by people who have a high level of personal integrity.  That integrity creates “value” boundaries expressed in a variety of ways.  But the most common is the attention to detail and the quality of the measures they take to protect and preserve the body…including the process of cremation.   Such things as “chain of custody”, internal control procedures, safeguards, licensing and the consistency and clarity of processes are important to them.  This may or may not be true of low cost providers or discounters.  I am told that often it is not.  Most frequently they cut corners, outsource a lot of work and are not always as diligent about safeguards.  The problem is the customer doesn’t know this. Or worse, they don’t know if they care.

So, let’s say integrity and trust are valued at your firm and you hope that they help distinguish your service.  Hampered as you are by integrity, it makes it difficult for you to offer the same low price to compete.  And your integrity prevents you from cutting the corners to enable you to do that.

What if you made cutting corners the customer’s choice? You could do this by creating packages based on the level of care the customer wanted rather than the quality of service.

Here is one small example.  Let’s say you do all your own cremations, “chain of custody” is rigorously observed, etc etc.  But, you have a discounter who says he will do a direct cremation for $549.  You might create a competing offer in which it is carefully and respectfully disclosed that for that low price you outsource in the same way your competitor does, you cannot guarantee any of the values you normally offer and you require a “hold harmless” agreement in the event anything happens whether within your control or not.

According to the principal of using price structure to clarify your advantage potential customers will be forced to think about how sacred mom’s body really is.

2. How about suggested prices? Here is one that is totally outside the box.  We are required to offer General Price Lists listing our prices.  But what if those prices were only a suggested reference point instead of fixed.   In other words you would make it clear to customers that they need only pay for the value they feel they have received.  For those of you who offer unconditional guarantees think of this as a reverse guarantee.

Am I out of my mind? Not really, The Museums of Modern Art and American History in New York City have been doing this for years.  The admission fee is clearly presented as a suggestion.  Restaurants in cities like Vienna, Berlin, Seattle and Denver are trying it too.  They are finding the “Pay-What-You-Want” model is both sustainable and competitive.  Research shows that customers, on average, pay 86% of the suggested price.  This average is a blend of those that paid full suggested price and those that paid less, but everyone paid something.  I shared this with a funeral director friend (thinking he might ask me to step out of his car) and he recalled a time when a family was so delighted with his service they deliberately overpaid his bill by $500.

The point is: by offering price as a suggestion you create a situation where people start thinking about what they value and pay for it accordingly.

We have two more strategies to discuss, but this one deserves input.  Think about how you could alter your pricing strategy by aligning what customers value with price instead.  Be creative.  We need to get their attention.

How Do You Handle Price Shoppers?

Written by Alan Creedy on . Posted in The Creedy Commentary, Practitioner Forum: Insights and Ideas. 2 Comments on How Do You Handle Price Shoppers?

As I was preparing this week’s article my friend, Dale Clock, posted this question and a followup on his blog Dale Time. (please click on the highlighted words and read his full comments)   This is a phenomenon that has become all too familiar and one that deserves discussion and feedback.  How do you handle price shoppers?  Do you have a system?  How successful are you?  You can comment on his blog or mine.

Now is the time to share.

The irony of Dale’s question is that this week’s article in The Creedy Commentary is about pricing strategy and is entitled “How to stop customers from fixating on price.”  It is based on recent research reported on in an article in Harvard Business Review.  I decided to delay my article in favor of helping Dale hear from even more readers.  So stay tuned.

The Perils of Group Think

Written by Alan Creedy on . Posted in The Creedy Commentary, Leadership. 5 Comments on The Perils of Group Think

Why it is so important that you practice Critical Thinking

I am concerned that we, as a profession, are making vital decisions about our future largely on the basis of opinion and conjecture.  Worse, we are allowing ourselves to be influenced by strong personalities or companies who have a need to fit their product into our solution.  Folks with “axes to grind” or “dogs in the hunt.”  You know what I mean. 

If you have been active at any level in our industry for the past half decade you cannot help but be aware that there is growing belief that we are in process of transformation.  Most people agree that DeathCare will be very different as quickly as 10 years from now.   A majority (including some of our major vendors) think our best years are behind us.  (I disagree)   There seem to be an unlimited number of people who have opinions on where it will go.   And opinions and conjecture always seem to degenerate into debate…mostly pointless. (yet another opinion)

 In general, however, there is simply confusion and that brings me back to my point.  As a profession, unless we begin to think for ourselves we are simply destined to repeat the past.  The result: we go in circles. 

Stop and think: For more than ten years we have faced continual erosion of profitability.  Despite our best efforts trends have not been impacted…at least in our favor.  A lot of you (not all) have spent money, time and resources to end up not much better off than you were before.   You did what you did because you thought it would work.  After all, all your friends thought it would work too. 

Einstein once said, “Problems cannot be solved by thinking within the framework in which they were created.”  Deathcare, despite its appearance of fragmentation, does have a shared vision.  Unfortunately, even for those who claim to think outside the box, that vision views everything through a very narrow context: Traditional Burial.   As a consequence many of us have made choices that, in retrospect, had we been thinking critically, we would not have made.  Things like spending too much on a new building, or getting into the pet cremation business solely for the purpose of generating more revenue, buying a cemetery, or paying too much to buy out a partner.  Nothing is wrong with any of these and some of you have managed to turn lemons into lemonade.  But they have not been the answer we thought they would be.  In fact, in many cases they only increased our burden.

I am not trying to make you a cynic…just a skeptic.

The essence of Critical thinking lies not in answering questions but in questioning answers.

  • Just because it fits your paradigm doesn’t mean it’s true
  • Just because your friend did it doesn’t mean it’s good for you
  • Never allow someone’s position, clothing or apparent socioeconomic level influence you
  • Practice a healthy dose of skepticism when someone needs to include their product in your solution
  • Be patient, early adopters make mistakes
  • Develop a tolerance for short term ambiguity and anxiety
  • When you find an expert be very sure they aren’t just a hammer in search of a nail
  • Ask “Why?”
  • Ask “How do you know?”
  • Take anecdotal evidence with a grain of salt
  • And, best strategy of all: Be Warren Buffet and ask,  “If I make this investment how am I going to get two dollars back for every $1 I spend? How long will that take? And do I understand  the risk?”

My opinion is that we have a great future.  But that future demands that we objectively examine every “sacred cow” almost three dimensionally.  Then we must decide which of them should be turned into hamburger, which should be nurtured and built upon and where we might find some new and more effective ones. 

Action Item:  If you have really begun to think criticially you know that your first step should be to:

Question everything I have just told you!