Do you have a product problem at your funeral home?


“I haven’t had a paycheck in three months.”

That’s what a funeral home owner told me recently. He called to ask about my marketing services, and we had a long conversation.

One of my standard questions is to ask about cash flow because a business without cash won’t last long. He swallowed hard and told me that he was running off his line of credit and hadn’t paid himself in three months.

Unfortunately, his situation is not unique. That’s especially true amongst firms that haven’t upgraded their funeral experience in decades.

Many funeral homes have a fundamental problem with the products they are offering, which has led directly to a decline in sales and profits.

In this newsletter, I’ll describe the current product problem and what you can do about it (before it’s too late).

By the way, when I say “product” I am not referring to your caskets, urns, or any other form of merchandise. Those are all important but they are not the priority.

Your most important product your funeral service. Whether it’s a traditional funeral, a celebration of life, or some variation, the funeral or whatever you call it is the key.

Most funeral homes offer two main products; traditional funerals and direct cremations. The traditional funeral may end in burial or cremation, the body may be present for the visitation or not, but it’s still a traditional funeral with some minor variations.

The primary objective for any business is to generate a net profit. If your funeral home doesn’t do that, then you have a charity, not a business.

But to generate net profit, your products must have two attributes; they must be in demand and have a high gross profit margin.

Are traditional funerals in demand? Somewhat but the demand is in decline. Do they have a high gross profit? Absolutely.

Are direct cremations in demand? Absolutely. Do they have a high gross profit? Definitely not.

The demand for your most profitable product is going down while the demand for your least profitable product is going up. No wonder so many funeral homes have cash flow problems!

So what can we do about this situation? Here are two steps I would recommend.

Step 1 – stop lowering your direct cremation prices.

Too many funeral homes are caught up in a race to the bottom with discount cremation firms. The discounter offers a direct cremation at $695 or some other ridiculous price, and the traditional funeral home feels compelled to match the price. That’s a recipe for disaster.

Instead of lowering your price, raise your price to the point where you’ll make a profit and then innovate your service so that you can justify the price.

I have many clients who charge between $2,500 and $3,500 for direct cremation. That’s not gouging because they offer a far better overall experience than someone can get at a discounter.

Step 2 – launch a new product.

Just because someone says they don’t want a traditional funeral does not mean they don’t want anything. It just means they don’t want the first product you offered. What else do you have?

The easiest path to restoring the net profit of any funeral home is to offer a new product. You need to create a new funeral experience specifically for people who do not want a traditional funeral.

Families who want a traditional funeral will still buy that product from you.

But families who do not want a traditional funeral currently have only one option, direct cremation. A significant portion of those families would like to do something if you had something to offer.

Foundation Partner’s funeral homes all offer a ShareLife experience.

Many of my clients offer a Beautiful Farewell experience.

One of my clients offers a One Last Party and sells more of them than traditional funerals.

All of these products have prices and profit margins comparable, if not higher, than traditional funerals. That can really help your bottom line!

If your funeral home business is not generating the net profits that you expect, take a hard look at the products you offer. There’s an excellent chance that a few changes to your products can restore your profits and put you back on the right track.

Until next time

John

John Callaghan

Fractional Chief Marketing Officer for Funeral Business Builders

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