Pizza and Pre-Planning
More than ever, in our transitionary society, funeral homes are depending on pre-arrangements, at a younger age, to get families to choose their funeral home over a competitor. People just don’t seem as loyal as years gone by and the thought is that the idea of getting some future business on the books can’t do anything but help a funeral home in the future.
Several years ago our funeral home started offering monthly seminars on pre-planning. We still do and it has proved a great way to pull in new families in the community and get them to know us. The seminars are billed as a discussion on death, dying, grief, and funeral customs in our area. . . .and that is what they are with a usual discussion on the costs of services also. The seminars are pretty heavy on the fundamentals of funerals and pre-arranging.
Funeral homes are finding, however, that more and more people would like a less heavy discussion on the topic, but still want to understand what they can do ahead of time. More and more funeral homes are turning to less formal ideas such as discussed in this article on the Krause Funeral Home and their Pizza and Pre-Plan events at their funeral home. According to one couple that took part the pizza party concept helped them feel more comfortable talking about death.
If you read the linked article, as a funeral home business person, a couple of things cause me to wonder if pre-arrangements can be as easily thought of as before. For instance, Mr. Krause communicates that the price of funerals today is $6000 – $12,000 and he believes that trends indicate that the price will double in the next 15 years. In my opinion, while that has been the history of funeral costs, will it continue to be the trend or will we see funerals slowing down in cost and margins be squeezed? I guess if you are a consumer, however, it certainly does not hurt to be overprepared as long as excess funds can go back to your family.
Krause also states that you can buy your funeral today and the service and merchandise will be guaranteed without any added expense in the future. My question, and funeral directors really differ on their answers to this, is that (Guaranteeing) better for the funeral home than just having the money in an insurance account that acts as a “bag of money” to pay for the funeral at a later date. The theory here being that the interest or dividend paid on the account would be somewhat equal to the cost of the inflated funeral price over the years while the funeral home has no obligation to provide services or merchandise at a loss.
I’ve always felt that guaranteeing the services and merchandise by the funeral home is a dangerous way to go in thinking about future cash-flow projections. Certain portions of your operation you have no control over future inflated costs such as property taxes, health insurance costs, utility costs, and the like. This is an inherent risk that many funeral homes do not think about. I’ve also felt that “guaranteeing the cost” did little more for the idea of the funeral home getting the death call at the time of death than just setting up a pre-arrangement that was non-guaranteed. Most people set up that pre-arrangement with your firm because they are comfortable with you and probably will not change funeral homes unless they move out of your area. So, is the cost of “Guaranteeing” worth it? It is an age-old question that has no right or wrong answer — only a great discussion point for differing funeral directors.
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Ron–
Thanks for your insight. I’m hoping to do an article on the degree of consumer loyalty once I can gather enough statistical information. I do know, from some statistical information that I have, that previously serving a family is slightly declining as a reason for selecting a funeral home. That number is small enough, however, that it could be statistically that just the movement of families to different locales could be the reason for that — i.e. they would not have used a funeral home in a new locale. There is also statistical evidence that “pre-arrangements” are becoming a more common reason for using a certain funeral home. That makes sense because most funeral homes are really advocating pre-arrangments in this day and age.
From a consumers perspective the guarantee option always makes sense. Even if prices do go down, it’s done, and you can maybe upgrade or get cash back. From the funeral directors perspective, the age, and interest rate of the instrument were my guides, this was when deposits were earning 5% or more, at today’s rates, seems more risky.
Although families are generally vested in the funeral home in which they prefund, this loyalty isn’t a sure thing at death.
The point of interest to me is the question of the degrees of consumer loyalty, and the affects on ritual.