Business

What do you see on the Horizon?

Foundation Partners why I partnered

The other day a funeral service professional asked me, “What do you see on the horizon for funeral service?”  Since I have not put out any predictions for over a year I thought I would just give an answer on what comes to mind first for me.  Instead of a long, thought out answer sometimes it is just a good exercise to say what comes to your mind first.

So, here I go.  And one of the things that sticks out to me over the past year is how the Cremation Association of North America (CANA) has described “Rooted vs. Roamers”.  I think that description of people lets us take a good look at the different aspects of death care in America.

First of all, I certainly believe, whether you are a person rooted in a community or a person who has roamed out of the area that you were brought up in, cremation will increase all across the country.  As a matter of fact, direct cremation – that is cremation without any services – will continue to be the fastest growing type of death care disposition in the country.

And, because of the lower revenues associated with direct cremation, traditional funeral homes all over the country will have choices to make.

I believe that we will see rural funeral homes continue to lose margin on services as they continue to see revenues per case decline due to the cremation increase.  This can be stemmed for some time, but if direct cremations continue to rise it is inevitable that revenue per case – because of the loss of casketed cases and cremation with services cases – will decline.  And, as rural cremation prices inch up and farther away from their metropolitan counterparts, it is inevitable that some of your direct cremation client families will not care about being taken care of by a metropolitan funeral home 100 miles away if they can save $1000 or more.

Part of the idea of a going a 100 miles away to save money is the electronic communication phenomena. . . when we communicate only by electronic media then your local “touch” does not have the impact it once did.

It is my belief that rural traditional funeral homes will see mergers and/or the purchase of a competitor on an increased basis simply because the overhead expenses will have to be spread among more services.  I think this is already happening.

As for metropolitan traditional funeral homes, casketed services will continue, but just as rural funeral homes, in a decreased quantity that will make it such that a metropolitan funeral home with high overhead costs will not be able to survive on casketed funerals alone.  These brands will eventually, and already have, need to reach out to cremation families in order to get to a scale that covers overhead.  When they get to that point they will have a decision to make as to whether they want to compete for cremation services on a price point or on a service point (where price is higher, but service is extraordinary).  I don’t think they can try to be both. . .

As for today’s low cost direct cremation providers they will continue to compete on price because there will always be a firm that is willing to sacrifice price to look for quantity.  That is a vicious cycle. . . and one where you have to keep your overhead in check to survive.

As for consumers. . . I think all this is good for consumers.  The one thing that may not be so good for them may be expectations.  They may select a low-cost provider and not know that “service” is not the hallmark of that firm.  Funeral homes have traditionally given service which has spoiled consumers so those that choose on price don’t always realize that they have to fill in their own death certificate information or place their own obituary at a low-cost provider.  This percieved lack of service may rankle some consumers.

As for “Rooted” consumers, I believe  these people that have lived in a community for a long time will be the best friend of traditional funeral homes as they believe in the “rooted” brand in their community.  They will give that brand the benefit of doubt until the firm disappoints them on a service or price level.

“Roamers” – those people who have moved from their traditional community – and especially children of roamers will move more and more into the focus on electronic tools to select a funeral home or cremation provider.  This is where you may see firms such as Funeralocity or ezifuneral make strides in the industry.  I also believe that we are not too far away from an “app-based” smart phone device that would let people put in their service wishes for a pending death and competing funeral homes could, in real time, bid on the services with a quote that would be good for 90 days or so.

You can see that I think there are facets of funeral service that are changing and the business will continue to evolve.  Whether you evolve with it or become like the buggy whip maker in the Model T era is pretty much up to you and how you adapt.  We know death care will be here. . . . How it is done and who does it is the question that we all have.

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