Business

Make sure to watch your flanks in holding onto revenue

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I’ve noticed with much interest over my career in funeral service that most funeral home owners are really up to date when it comes to market share percentage as compared to the competitor(s) in their market area.   They all either watch the local obituaries or have someone else watch and count death numbers on their competitor(s) website to be up to date on this percentage.

Holding on to that percentage rate is one aspect of making sure that your business is keeping its revenues up.

However, I haven’t seen the same level of commitment and thought by funeral operators when it comes to keeping revenues up on the calls you are getting and especially knowing where they are losing revenues on what I will call their “flanks”.

There is no doubt that Revenue per Call is dropping in most full service funeral homes across the country.  Most of this is simply the fact that cremation, a lower cost disposition, is taking percentage away from burial services at almost all funeral homes.  However, there is evidence to suggest that even when client families choose burial services, that they are spending less per service than years earlier.

I am going to take you back to some of the statistics in the recent Carriage Services Shareholder Letter.  If you go to Page 7 of that letter you will see that over the years from 2018 to 2020 Revenue per Contract dropped from $5447 to $5020, a drop of 7.8%.  And yes, the cremation rate of the company, as shown on that same page, increased 7.6%.  However, even burial contracts when considered alone,  dropped in revenue per case by 2.7% in that same time period.

So, what does that tell us?  I think it tells you that some families are not choosing all of the options that are being presented. . . like an evening before visitation.  Or, it tells us that just maybe, some of those services that you have offered and client families have always accepted and paid for, maybe are being purchased through other vendors who now have expanded to market to death care client families.

I thought about that take when I recently saw this article in the Wall Street Journal.  It talks about tradition cable television companies, such as Comcast and Charter Communications that have recently entered the world of cell phone service.  In my area we have recently been inundated with television commercials from Spectrum Cable offering cell phone service. . . . and they are showing commercials that appear to be half the price of Verizon, my current cell phone provider.  I haven’t looked into it yet, but I’m a Spectrum Cable customer, and saving $80 per month on cell services looks pretty enticing.

The cable companies have been losing cord-cutters to streamed or internet television providers and cell services seem to be a way that they can bundle their customers to add cell service while holding on to the cable services.  The Wall Street Journal article estimates that cable providers now provide cell service to over five million former cell company customers.

Getting back to funeral services. . . . where might some of this revenue decline be occurring?  I would first look to see if the cemeteries I serve are getting more aggressive at providing their own burial vaults to the consumers.  Or, are your customers for the high margin memorial folder market going to Insty-Prints or some other commercial printer that does the job less expensive.  Or, are you losing out in hosting post-service receptions because of either price or perceived inadequate facilities.

Many wedding venues who are extremely busy on Fridays and Saturdays have now expanded their business to include Monday thru Thursday funeral receptions.

Burial vaults, memorial folders, receptions. . . . .these are just a few of the places where you may be losing ancillary revenues on your flanks. . . .Depending on you location and situation, there may be many more, such as losing urn sales to mail order.

How do you fight these businesses that are now moving into some of the aspects of the funeral profession trade?  I think the easiest ways are to make sure that you have a commitment to providing these services in a fashion that pleases your clientele. . . i.e. does your reception area provide the amenities that client families want?

I also think another way to fight this trend is having package pricing that includes some of these items. . . . managing your sales to give client families some kind of discount for keeping all of these items under your control is better than a higher price when they don’t use you for the service.

In any regards, we hope that this article helps you understand that while market share is very important, there may be other criteria that is chipping away at your revenue even while you build market share.  It pays to keep an eye on it.

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