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Tag: funeral packaging

A Different Way To Think About Packaging

Written by Alan Creedy on . Posted in The Creedy Commentary. 3 Comments on 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

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 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.

Should Packages Be Discounted?

Written by Alan Creedy on . Posted in The Creedy Commentary. 5 Comments on Should Packages Be Discounted?

5 insights to packaging funerals

Numerous funeral homes are implementing and experimenting with package pricing with excellent success.  But little is known about the principles of packaging (elsewhere known as bundling) outside of the fact that fast food and car dealerships have been doing it for years.   Those that have adopted package plans find it has helped them in two ways.  First, it has improved their average overall sale and second, it has improved the arrangement process for their clients by making it easier.

Why package?

Packaging provides two advantages:  First it is a convenience for families.  Most families find the task of selecting from the laundry list of items required by the FTC rule to be onerous if not confusing.  By synthesizing this information into simplified packages it is easier for them to make choices that please them.  So, a primary factor is the emotional convenience and customer friendly nature of simplification.  Second, by pulling together the various elements of a given service type into a single price, value perception is enhanced as people accept services that are “already paid for”.  The key in any pricing strategy is to help people feel they are getting a little more than they are paying for and packaging is the best way to accomplish that.

Packaging do’s and don’ts

Many people bungle packaging by thinking they have to cram a lot of extra items into it that people don’t really want.  Ask yourself this question:  is your purpose in packaging to somehow magically persuade people to pay you more?  If so, don’t expect the consumer to be fooled.  If, instead, the items included in a package are there because they make sense to your funeral arrangers then it is likely to be perceived as value to the consumer as well.  

Keep it simple.  Studies consistently show that when making complex decisions people feel most comfortable if you break their choices down into groups of three:  burial, cremation or mausoleum entombment for instance.  For this reason, all of the better programs we have seen offer a good, better best package and these are presented in two sets:  packages for burial and packages for cremation.   A package should be presentable on a single 8.5 x 11 sheet of paper.   Most find it easier to design the best package and then simply reduce it for the remaining two categories. 

Don’t let people unbundle your package.  The packages are offered for the convenience of the customer.  If they want to delete items to lower the price then gently and respectfully take it away and suggest you go back to the itemized price list.  Keep your discipline.  The first one to flinch loses.

To Discount or not to discount?

The prevailing wisdom among professional pricing strategists is that the cumulative price of the individual items included in the package should be greater than the package price.  They also believe the resulting discount should be in the neighborhood of 10%.  In funeral service we believe this is debatable.  Given that it is a true convenience factor in the arrangement process, discounting may or may not be necessary.  That being said, it is our belief that most funeral directors err on the side of giving too much discount and that discounts should be more in the neighborhood of 5% on traditional burial and perhaps 7.5% (splitting the difference between 5 and 10%) for cremation.  Our reasoning is that discounts of more than that could have the unpleasant effect of sending a signal that you have too much margin in your prices.  Our research supports this as pricing strategists warn bundlers that they should be careful not to discount too deeply.  Enough to encourage people to take the package not so much that you are sending a signal that will backfire on you.  Finally, if you do discount, the amount of the discount should be prominently displayed on your presentation material and also on your statement of goods and services.

Presentation:

The Federal Trade Commission Rule requires you to present every arranger with an itemized General Price List.  But it does not require you to go over it in detail.   We recommend you present it immediately by saying “we are required to give you a copy of our general price list and you should take this with you when you leave.”  Then lay it on the table for them and immediately say, “Many of the families we serve prefer, however, to review our package plans in order to simplify the process of making decisions.  Let’s talk a little bit about what kind of service you were thinking about.”    

Of course, you need to come up with a script that you are comfortable with.  

When someone making arrangements suggests deleting an item to cut the cost we recommend you say something on the order of:  “Well, that is included at no extra charge in the package price.  But if you prefer we can build a custom service using our itemized price list.”  Then stop talking. 

Including Merchandise

There is some debate as to whether to include merchandise in your packages.  Most successful programs do include at least caskets and urns.  Vaults may be more difficult to include as they may not be used in 100% of the services you perform.   The number of choices within a package should be limited compared to an average selection room and quality should fit the package level.