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Tag: deathcare management

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.

 

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)

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

Funeral Home Valuation Part 2: Why EBITDA?

Funeral home valuation, Funeral home appraisal, Cemetery Valuation, Cemetery Appraisal

EBITDA became popular in the 70s and 80s when buyers were trying to locate companies that had strong cash flow outside of financing and capital Expenditure concerns. Since buyers were going to change the capital structure anyway, it was convenient to have a quick apples to apples comparison.

EBITDA or Earnings Before Interest, Taxes, Depreciation and Amortization is a more reliable and cleaner comparison than Net Income.
1) In general, it is a much stronger indicator of ongoing, operational strength for the firm.
2) Taxes are considered “non-operational” in a sense because they can be affected by a variety of accounting and tax conventions. These have no bearing on the ongoing, operational strength of the firm.
3) Interest expense is a function of leverage, not operations. Companies in any given industry will have varying degrees of interest expense based on the debt load they incur.
4) Depreciation expense is an accounting convention recognizing investment in physical assets over the life of that asset.  It has no bearing on the ongoing operational strength of the firm. Firms with  investments in large capital expenditures like recently built facilities will have high deprection expense while similar firms with older facilities or fully depreciated physical assets will have lower depreciation expense.
5) Amortization expense is another accounting convention dealing with the amortization of intangibles. Because it is an accounting convention, we want to take it “out” also.    Firms with goodwill acquired through other acquisitions will have amortization expense while similar firms who have built their business without acquisition will have none.

So, EBITDA is considered by the financial community the way to compare apples with apples.  It is computed by adding back to net profits or earnings any income taxes paid by the corporation all interest expense, depreciation and amortization.   This is, of course, where many amateurs foul up.   A good tax planner will encourage a business owner to take advantage of all legitimate business deductions.  This includes inflating personal salaries above market as well as other expenses that might otherwise be personal.  As a result, earnings on many independently owned businesses are reported as less than they might be if they were the subsidiary of a public corporation, for example.  So, before EBITDA can be truly calculated adjustments should be considered by a professionally trained analyst to represent the true picture of operations.  Of course, these adjustments are only legitimate if it is reasonable to expect that an independent buyer will operate in a more efficient fashion or can find economies that the seller has not had access to.  This process is called “normalization or recasting”.

After normalization a funeral home typically yields a an EBITDA ratio of between 20% and 30% of NET Revenue with the average falling in the middle.  Interestingly, a branch (accounted for correctly) will often yield between 40% and 50% because it does not bear the burden of duplicated administrative or ownership overhead.

Next week proper categorization, operating ratios and normalization.

Disclaimer

While I have experience in business valuation, I am not a Certified Business Appraiser.   The explanation and comments contained herein are my own.

The Tyranny of the Ten Call Man

A Management lesson from the bible

One of the most common and pervasive staffing problems in funeral service is the man or woman who undermines almost every current and future issue management tries to address.  They are the “Mayor of the Prep Room”.  No matter what initiative you attempt, they quietly work behind the scenes to undo it.  Sometimes they employ a subtle mechanism I call being “cooperatively uncooperative”.  This means giving the appearance of being on board but quietly “forgetting” to do what they have promised.  Worse they are absolute geniuses in providing what seem reasonable excuses why exceptions must be made.   As “Mayor of the Prep Room” every attempt to communicate to staff is answered by a meeting after the meeting where they hold forth on “what we are really going to do.”  The worst of them are blatant about simply ignoring expectations and just doing things the way they want rather than the way the are asked to do them.  Effectively daring management to “Make Me.”

An example is worthwhile.  Recently the more progressive funeral homes have implemented monthly, weekly and even daily staff meetings.  Attendance is mandatory.  Yet every owner that has been successful in establishing regular meetings has shared with me that it meant they had to chase down and face down at least one staff member repeatedly to make them attend.  Many owners and managers simply gave up trying and either exempted them or stopped having meetings.  This obviously caused other employees to lose heart and wonder (sometimes openly) who was really running the business.   Formal power said the owner –but informal power didn’t agree.

Why do owners and managers allow this behavior?  They say that it’s because they believe the person is too valuable to lose.   They have convinced themselves that they would lose 10, 20 or 30 calls.  And maybe they would.  But over time the lack of progress in responding to the many challenges we face and the loss of employee morale (not to mention the loss of owner morale) cost much much more than the loss of those calls.  I call these trouble makers “ten call men” because the owners live in daily fear they control that many calls.

I don’t like “ten call men” because they arrogantly wield informal power and prevent opportunity without assuming any risk.  They play owners and managers like puppets.

Jim Collins, in his “must-read” book, “Good To Great” makes this observation about them:

“We have a wrong person on the bus and we know it. Yet we wait, we delay, we try alternatives, we give a third and fourth chance…we build little systems to compensate for shortcomings…We find our energy diverted…that one person siphons energy away from developing and working with the right people.

Letting the wrong people hang around is unfair to the right people…

The reason we wait too long often has less to do with concern for that person than our own convenience…Meanwhile all the other people are still wondering: ‘when are you going to do something about this?'”

It is not unusual in my consulting practice to find inspiration in The Bible.  On more than one occasion a verse from Proverbs has enabled clients to take long delayed but desperately needed action:

“Cast out the scorner and contention will go out; yea strife and reproach shall cease”                  Proverbs 22:10           

                                                                                                    

 

A Different Way To Think About Packaging

for the past 4 weeks I have been attempting to spark a conversation about Pricing Strategy against the backdrop of a recent Harvard Business Review article: “How to Stop Customers From Fixating on Price.” Candace Franco responded with great insight: 

“Very thought provoking … but here is one I’d like to talk over with someone … why are most of the package offerings I see on GPL’s categorized by final disposition? Such as cremation with full service etc. why not categorize by ceremony … such as “religious remembrance”, “life celebration”, maybe even a “destination” offering? I really like the idea of an “expeditious” package for those who think they want quick. To me the value of what you all do is in the service not the final disposition. The way it is now service always feels like an add on when I think it should be the focus.”

We need to think about this insight and, hopefully, talk about it.  My take is we categorize this way partly because customers often start with “I want cremation” so we think we are responding to that issue.  But I also think that it is our way of saying: “With casket or without casket”. 

Candace’s point has gotten me to wondering if we couldn’t sidestep that issue and do a better job of relating with families if we just let go of the casket issue altogether.   Why not have a Catholic Funeral Plan, a Military Honors plan, a Simple plan, etc, etc, etc.   I can anticipate that someone might say “too complicated”.   38 caskets on display is complicated…not to mention expensive.

I wonder…

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

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

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.