Every year the funeral trade magazines post numerous articles written by a handful of funeral home financial and marketing consultants like David Nixon, Dan Isard, Alan Creedy, Glen Gould and Bill McQueen just to name a few of the better known. They have provided the funeral home owners with vast amounts of great information through the years about sales averages, how to set up budgets, break-even analysis calculators and the like. We look to these folks to help us figure out what the future might look like and give us some “Normal” numbers to compare our numbers to. They have access to what people are doing around the country that most funeral home owners don’t have access to and we have come to depend on them to give us a “pulse” of what’s happening.
Over the last ten years the funeral business has been changing so much that I don’t believe that we can say what is “normal” any more. Thirty years ago when the cremation rate was below 20% all over the country and most funeral homes provided the same type of service and merchandise to nearly every family they served it was pretty easy to say what was normal and average. But now with new low cost cremation providers, online funeral arrangements sites, and competition from hotels and reception facilities taking a larger piece of the pie every year what’s normal for me may not be normal for someone else.
I think it’s time for all of these consultants to go back to the drawing board, put their thinking caps on and come up with some New Normals for us to compare things to. They need to realize that there are now multiple sets of normal numbers depending on cremation rate, market population, religious and ethnic background, and the number and type of competitors in your market. There is no “one size fits all” any more.
What is normal for a town of 50,000 people with 50% cremation, 3 traditional funeral homes, 2 low cost cremation providers and a large population of church members?
What is normal for a college town of 120,000 with 65% cremation, 2 corporate funerals home/cemetery combos, 3 independent funeral homes and 4 low cost providers and 2 online arrangement providers?
What is normal for a 600,000 population big city with Ethnic firms and Religious firms and corporate firms and independent firms of all shapes and sizes? How many low cost providers can exist in a town like that? Do Online arrangements sites really work or are they just the latest thing the vendors are trying to convince us all we need.
The places in the country that have been dealing with 70% cremation for a long time are the folks the rest of the country should be hearing from and learning from. What is their reality? What kind of average sale do they have? How are they surviving and thriving? What did they do when their call volume remained the same but their annual revenue dropped by 25% because people were choosing less expensive options? I’m guessing that over 50% of the funeral homes around the country saw their average income per call decrease last year (that’s all calls, cremation and burial calls, combined). SCI just reported that their average income per call dropped last year.
With all due respect to the folks in the middle of the country who are still doing 80% burial or big city ethnic firms where people drop $15,000 regularly on a funeral, I don’t even want to talk to them. They are not in the same business as me. And I’m not so sure the start-up guys in the big cities that are carving out a “hip and new” niche market for themselves can really relate to what it’s like in a market with a steady population and a blue collar income where people are just trying to get by. There are only so many deaths in most markets and only so many dollars that people have to spend.
So…. All of you Mr. Smarty Pants people out there what is the new normal???
I’m Dale Clock. Thanks for listening.
Dale-Time 
A few weeks ago I saw a chart which showed the distribution of wealth in the United States. The bottom 40% (127 million people or so) of our population has a *negative* net worth, no savings whatsoever. The next 40% had all of 12% of the wealth. These disparities only continue to grow.
That’s our normal. A few privileged people with tons of resources, and a vast majority who will struggle to pay for our services. Structure accordingly.
As the founder of one, low cost cremation provider and the manager of a second, new start up, we are dealing with the folks “BT” speaks of…people having to literally take up collections to raise $1,000.00. It is a dynamic time in our world. On a lighter side….glad to see you publish something.
Ray, I know it’s been a while. We had some challenging times last year; Staffing, Financal, Buildings yada, yada. yada. At times I would like to share it all, but somethings are better kept quiet until the dust settles for a time.
I am Not a Funeral Home or Mortuary business man. I am an HVAC contractor. Businessmen leaders, Religious Leaders, Media leaders, Education Leaders, Family Leaders, Community Leaders, and Government Leaders all need to get educated as to who should be doing what and take their lead and quit pointing fingers at the others for what they should be handling. That is how this country was intended to run. You keep letting the Big Corporations, Families and Government take over and the disparity is only going to worsen. It is actually 5% have 95% of the wealth and the other 95% have 5% of the wealth and it could be worse by now. It is education that is needed to drag us out of this. If we stay on this road there will be less of the pie to go around.
I’ve been saying for years that counting the number of calls that you do in funeral service doesn’t have the same weight as it did years ago. If your firm is doing 150 calls a year, what does that really mean? Sure you want to serve the families of your community, but at the end of the day you still have to pay bills.
I agree Joe. In the past a 75 call place could make a comfortable living for a funeral director but now it’s going to take a lot more than that. What I’m asking for is that the consultants start looking at the realities that we in blue collar land are experiencing and help us figure out what an accurate picture might look like 5 years down the road. Individual firms don’t have access to actual numbers and trends around the country.
In my experience, the pundits want to be in the rainbows and puppies business, not talking about the troubles of running small businesses in blue collar areas. Creedy, Isard, Johnson, they don’t want to hear about hard times. They cater to a different clientele and mentality.
Small town funeral directors, like the small town grocers before us, will become fewer and farther between. Those that remain will find ways to run lean, efficient, low operating cost businesses that can scrape together a profit margin on sales averages that steadily dwindle. Self-service funerals will have to be the model in many areas. Low volume specialty buildings will become a thing of the past.
I’m working on some new tools and resources for our funeral homes with the aim of improving the experience of cremation families without requiring much additional staff time and attention. Will let you know how I make out.
Dale:
Your post and thought direction is spot on. I’m working on a post about the results of the South Carolina primary last Saturday. The constituency and the consumer has changed, yet the establishment continues to pour in cash to sell their stale message. Yes there will be “voters” that still go for the past, however the major swing is toward new messages and methods. As my partner thought BT shares in his comments, the consumer is struggling, I am ALL in the numbers from the lending and economics of this business…yet. the talking heads and soothsayers continue to love the music as the ship takes on water. Let’s talk because the message is clear…
Jeff the analogies between the this years political landscape and funeral business is very true. What do the majority of “voters” really want? Are we listening to them or trying to tell them what they should want because it’s what we have to offer. One of the similarities is that I don’t think the voters really know how to articulate what it is they want, they just know they aren’t completely happy with the way it’s been, whether it’s about the Washington political scene or funerals.
Consumers aren’t visionaries (for the most part), they feel what they feel and they react. We can’t expect them to lead us.
Consumers didn’t give us Walmart, but when consumers saw the difference they flocked there. Consumers didn’t give us the iPhone, but once it appeared on the scene consumers flocked and every phone maker in the business copied the concept. Consumers didn’t give us Disney World. A man with a vision did (and let us not forget that he nearly went broke putting that vision together–not easy being on the leading edge). We have a lot of experimenting to do in order to find a service model that works effectively in the modern era.
The social needs are very different than they were 40 years ago. Our core consumers are not multi-generational local the way they once were, families are smaller and scattered, marriages dissolve and reform, the church has much less authority over the survivors (more confusion about service direction and purpose, more infighting etc.), intermingling of religious traditions, people have much less in the way of savings or future financial prospects, on and on.
The challenge becomes facing these changes in a way that can leave people with a meaningful experience without getting lost in providing services that families are glad to have but for which they can’t pay. Lots of modifications in policies and procedures, lots of rethinking of the service models (I suspect the LifeStory.net approach is a time sink that you can ill afford, for instance), simplicity, self-service to a greater degree, jettison buildings and help people better utilize the club and church facilities in the area. Combine revenues as much as possible (gas stations don’t work financially these days without big convenience centers attached–do your state laws allow for add-on businesses). Meticulous time and cost management will be critical for most of us. If there’s a growing ethnic population, how do you engage this group either directly or by helping someone get started in the business, with you as the lead business partner or owner.
Most of those solutions will be specific to your state and area, and will require a lot of soul searching to boot. The traditions passed down to us have nearly evaporated as a source of business continuity. But there are still deaths, and there ought to be a sense of dignity that goes along with those deaths. The challenge is making that happen when more and more of your consumer families arrive with little or no savings with which to work.
I’m experimenting and rethinking every day. Most of it is blind alleys, but as with Edison and the lightbulb, I also know hundreds of ways that don’t work, and that represents learning as much or more than having hit on an answer that works.
BT, It’s always a pleasure to read your insights. I too have tried dozens of different approaches to serve the families that entrust me to the care of their loved ones. Pieces and parts of them have worked and helped me improve in my profession. Other parts have come and gone. Such is life and I’m sure there will be more of the same.
The following book is a little academic, but overall is approachable and worth reading by business owners as they try to think about and plan for the future. http://www.amazon.com/Rise-Fall-American-Growth-Princeton-ebook/dp/B0131KW67U/ref=sr_1_1?s=books&ie=UTF8&qid=1456400687&sr=1-1&keywords=the+rise+and+fall+of+american+growth
I think Gordon lays out the underlying economic challenges that all businesses face moving into the future. A lot of uniquely special things happened in the 30s 40s 50s and 60s which created both enormous economic growth, and the conditions which allowed the economic improvements to improve lives at every income level. Those conditions have changed significantly since 1970 and we as a country still struggle to figure out why our glorious past didn’t just go on and on forever. We live in a much more competitive environment globally speaking (most of the first world was decimated by WWII, which gave us a huge but temporary advantage which has waned in the decades since, not a surprising turn of events if you step back and look at the big picture).
Given current circumstances, the American economy will slog along at a very slow pace for years to come. This will not lay the foundation for the kinds of broad based savings people will need to pay for privately arranged funeral rites as we have done in the past. For those who are churched, the collective efforts of charitable organizations will suffice (as they did for centuries prior to the rise of the funeral home in the US). For those who are not churched, other places will serve as the gathering place of funerals and memorials.
Not all at once of course, but steadily a retreat as economic activity and savings wane in the more marginal parts of our economy.
This does not mean we have no purpose as funeral people. It just means that fewer of us will be doing it for the money.
BT
As a past consumer of funeral services and probably one in the making here at my older age, I thought this article was so well written and definitely food for thought for me too, as the person who may be making the call to the funeral director. I will say, costs just have risen to such sky high levels, it is about impossible for us who would like to do so, to use all the services offered now by funeral homes. There are too many frills and too many guilt trips laid upon the consumer if they don’t want all the “extras”. Dale, the funeral you created for our friend, The River Runs Through It, should be a reminder, finding the absolutely correct music, the lovely sermon you gave right from your heart…well, no amount of money could pay you enough for that. Not many directors have the ability to embrace the family and their needs with such intelligence, grace and personal empathy. Don’t ever lose that instinct. Julie George
Julie, Thank you for the kind words. I will continue to do my best to provide those kinds of services. And I and my other funeral director readers truly appreciate your honest comments on funeral service.
Latest from the NYTimes. http://www.nytimes.com/interactive/2016/02/24/business/distress-cities-counties.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=photo-spot-region®ion=top-news&WT.nav=top-news&_r=0 Lots of areas not seeing recovery after the housing crisis.
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