Rethink Everything: How funeral homes and cemeteries can find success by doing things differently

What if the fundamentals of running a successful funeral business were counterintuitive to all of your practical experience? Imagine that all of the experience your family accumulated over generations running funeral homes was diametrically opposite what you should be doing to make a profit in this business.

It has happened in other, much simpler industries than the funeral and cemetery businesses. Leadership in the luggage industry has shifted from well-established companies like Hartmann, Samsonite and Hillenbrand's former American Tourister division, to Tumi and Versace. Profitability in the airline industry has shifted from legacy carriers to Southwest and jetBlue. The Japanese taught American auto companies how to make a profit from small cars, and now Hyundai and Kia are teaching the Japanese. Department stores of the '50s, '60s and '70s have been replaced by big-box retailers and much more profitable specialty retailers. Three big broadcast companies have surrendered profitability to premium cable networks.

All of these industries are victims of social and technological change. Industries with firm foundations in society trying to keep up with society as technology creates opportunities for new concepts that fit better with contemporary lifestyles.

Compared to most industries in the U.S., the funeral and cemetery industries are very old. In addition to being old, neither has changed a great deal over the past 100 years in terms of technology, ownership, or operating practices. It should be expected that there would be fundamental philosophies or axioms that are generally accepted by practitioners that actually hinder progress, even restrict profitability and success.

For example, funeral-home owners cannot overcome the idea that volume, any volume, is good for business. This assumption is fundamentally wrong and contributes to the financial challenge of thousands of funeral homes nationally. Other misconceptions are that the consuming public perceives some value in embalming and caskets. Families see value in memories; they have funerals for the benefit collecting friends and family members, sharing and making memories. Profitability will come when funeral directors begin to merchandise services and memories as they merchandise caskets and suits today.

How cemetery operators are missing key opportunities on cremation
The challenge on the cemetery side is even more compelling. Funeral directors are moving in the right direction, but cemetery owners have made no apparent progress against their greatest challenge, which also represents their greatest opportunity.

Research conducted nationally indicates 83% of middle-income families that want cemetery space already own it; 90% of affluent consumers wanting cemetery property (or mausoleum) already own it. Any research data can be somewhat flawed, and certainly it will vary from one locale to another. But even if this data is 80% accurate, it defines the challenge cemetery salespeople are having selling cemetery space. Pre-need cemetery sales over 50 years have filled the pipeline and the growing preference for cremation is limiting future demand. Deal with it: The majority of people who want cemetery property already own it, and the others don't want it. Once the industry accepts this simple reality they will create the opportunity for their future success.

Cremation families don't believe cemeteries have products for them. Funeral homes lost cremation families to minimum-service cremation providers (i.e., cremation societies) until they began advertising cremation services. Today, families receive cremated remains from funeral homes and crematories, take them home for scattering, or let them sit in the back of closets for years. Funeral homes nationally hold thousands of cremated remains just waiting for family members to retrieve them. Every family is a prospect for cemetery products, but without fundamental education, these families will continue to treat cremated remains as unwanted waste from an industrial process.

Cremation consumers consider themselves rugged individualists; protecting the environment by rejecting culture and tradition, rejecting what they perceive to be the high cost of dying, and fearing that family members will never visit their grave. The reality is they are ignorant. They don't know what's available, and it's not their fault. It's the deathcare industry's fault - funeral, cemetery and vendors - for not running fundamental advertising to explain how deathcare is relevant.

The cemetery industry has consistently rejected all forms of advertising other than lead-generating direct mail and telephone solicitation. Direct-mail response rates have declined from 20 to 30 per cent from when it began following World War II, to 0.2% today. Meanwhile, postage and handling costs have increased several hundred percent and telemarketing has been rendered obsolete by answering machines and the "do not call" list. Yet the industry continues to dump mail and flirt with huge fines in an effort to sell traditional burial. Wake up: Society has moved on, and so should the cemetery industry.

The challenge for the cemetery industry is to grow the market for cremation products with information. The present demand for these products is minimal, but the potential is huge. Exploiting the opportunity is a matter of accepting the challenge to recognize the change in society, and to become a part of the new traditions. There is some urgency in this matter as ultimately, the consumer will find an answer to their dilemma. Already, churches, universities, country clubs and other businesses are installing columbarium niches on their properties. Consumers relate to these locales, and find the option appealing. Consumers prefer the serenity of a cemetery, so the industry is in a superior position to compete. It is only a potentially better hand; there is no reason to believe consumers will seek out the cemetery; the cemetery must create the demand.

The challenge for funeral homes: Restructure your business around consumers' priorities
For nearly 200 years, funeral service had a firm foundation in American culture based upon Judeo-Christian priorities. Even after the American culture shifted away from church attendance, consumers purchased funerals because they were a little embarrassed to admit their deceased loved was un-churched. Instead of the clergy attending the funeral as a friend with a few words of salvation, they received honoraria to say nice things about people they didn't know. After a few decades, some people came to conclude it was more embarrassing to be identified with the church then not, so they stopped having funerals.

What if funeral industry leaders had rethought their business formulas before they were on the verge of bankruptcy? What if they had challenged everything they knew to be true about their businesses and looked at it from a different point of view? A popular business book, "Blue Ocean Strategy" challenges us to do just that. The book's premise is that every industry operates upon generally accepted priorities that lead firms to compete in oceans turned red from bloody competition. Companies in the same industry restructure their businesses to meet consumers' priorities and thrive in highly profitable, temporary legal monopolies while other companies race to keep up.

At one time all motels had restaurants and bars simply because inns had traditionally offered food and lounges. Over time, food service became a drag on profitability, and motels started to spring up on exits across the country that provided a superior room at a very competitive price; they did very well until the legacy names caught up.

How different would the funeral business be if it was structured around consumer priorities versus what we have always believed funeral homes should be? What do we learn about ourselves when we objectively study the industry?

• We believe funeral homes should be large and auspicious.
• Arrangers must be licensed by the state to embalm, even though the best arrangers may never work in an embalming room.
• Funeral homes should be inconveniently located downtown as opposed to where people live.
• Funeral homes should be dependent upon burial to realize a profit.
• Caskets should be displayed like automobiles in selection rooms.
• Funeral homes should derive more profit from selling merchandise instead of their facilities and staff.
• Success in business is dependent upon providing superior service even though the consumer can't tell the difference between good service and poor service.
• Instead of seeking moderate profits from families preferring ground burial and mausoleum, funeral homes should learn to generate superior profits from cremation memorialization and personalization.

What does the consumer really want, and how could operators achieve superior profits by breaking with the past?

• It is becoming increasingly obvious consumers put higher priority on convenience than large facilities.
• Successful funeral homes don't necessarily give superior service, and consumers wouldn't recognize good service if they did. Instead, families select funeral homes based upon personal relationships, convenience and a perception of value and price.
• Instead of caskets, people want memories. Focus groups commissioned by four different vendor companies in diverse regions of the country all drew the same conclusion: there is far more profit in creating memories and keepsakes than in caskets.
• Instead of visitations, families want receptions with food service.
• Instead of graveside services, many families want memorial services.
• Instead of seeking moderate profits from families preferring ground burial and mausoleum, funeral homes should learn to generate superior profits from cremation memorialization and personalization.

How do we sell cremation services - and personalization?

An emphasis on serving the family is wonderful, and should be the priority at every funeral home. However, many funeral directors have come to believe serving the family means not presenting personalization options with the excuse that they don't want to become salespeople. No consumer is well served when the knowledgeable professional they consult fails to provide important information. Personalization and memorialization are what families come to funeral homes for; not educating the consumer is failing at job one.

Funeral homes devote large sections of their facilities to merchandise - caskets, urns and clothing - yet make little effort to help consumers understand the varied forms of personalization available. Sales tools are fundamental and used in every business to aid in the communication with consumers. The ceilings of European churches built 1,000 years ago were painted to illustrate biblical stories. The priests would use the paintings to relate bible stories to their mostly illiterate parishioners. To sell personalization, the arranger should have tools that graphically present the services funeral homes offer, such as a "Remembrance Registry," which is a binder with picture pages illustrating services such as balloon, dove or butterfly releases, special hearses, veteran services, musical programs, etc. Another productive tool is wall-hanging posters that present services, and other options.

Ask yourself, would it make you more comfortable if a funeral home offered you a warm cookie and coffee during the arrangement room? Would it be nice to have soothing music piped into the arrangement room? Would it be nice if the funeral home referred you to a good local restaurant or banquet facility, or even provide a room where a reception could be catered on site? Would you be more likely to spend more time in the arrangement room with the funeral director that did all of the above? The answer to all of the above is yes, of course.

Glenn Gould is CEO of MKJ Marketing, Largo, Fla., and author of the new book, "Deathcare Marketing: 25 FAQ's." He draws on twenty years of experience as an executive and consultant with several Fortune 500 companies, including Batesville Casket Co. Visit MKJ's website at www.mkjmarketing.com You can reach Glenn at 727-524-8100 or ggould@mkjmarketing.com