Don’t Get Distracted

There’s a story about a Stanford business class who was given the assignment of making the greatest ROI possible on $5 in two hours, at the end of which they would make a half-hour presentation to the rest of the class. Most students tried to buy something for $5 and sell it for a little more within the two hours, making a small return. Others recognized that the $5 was really a distraction and spent their time conducting services like filling bike tires for $1 around campus. They were more successful. But the most successful group recognized that their most valuable asset was neither the $5 nor the two hours. It was the opportunity to present in front of a room of Stanford MBA students, which they sold to a local employer for hundreds of dollars – racking up a return in the thousands of percent.
The point is, don’t get distracted. And definitely don’t get distracted by a dollar figure when you’re considering what you have to sell that’s of value.

I’ve met funeral home owners by the score who shake their heads in frustration and say something to the effect of, “Boy, did we step in it when we positioned cremation as an alternative to the funeral. (And to memorialization, and to ceremony, and to engagement with the funeral home…).” And they’re right. But the good news is, that’s not a mistake we’re stuck with. The trick is not to get distracted. Don’t get distracted by what a family thinks they want to pay. Don’t get distracted by the phrase “direct cremation.” Don’t get distracted by conceptions of yourself as a disposal solution. Don’t get distracted.

The entire concept of “direct cremation” and asking for it as an escape route from your normal offerings is not new. Jessica Mitford was encouraging her disciples to demand it 60 years ago. But there’s some encouraging data that suggests we can still stem the tide.

It Was Never Really About Cost

My firm has conducted more than a million dollars’ worth of research on consumer preferences on death care in the past few years. One of my favorite data points deals with expected costs of death care services. We’ve asked a huge, statistically representative sample of Americans what they would expect to pay for two things: a funeral with a burial, and a funeral with cremation. We can then average all the responses to get a sense of the general perception of cost. When you do this multiple times, in multiple decades, you get to watch how preferences evolve.

Over the past ten years, the answer to the “burial” question has remained exactly the same, when adjusted for inflation, to the dollar. Remarkably, the average American expects a funeral-with-burial to cost exactly what they did a decade ago. But over that same period, Americans’ perception of the cost of a cremation has significantly outpaced inflation. In other words, the gap is closing. And we can expect it to keep closing. Because it was never really about cost.

Americans’ preference for cremation is decreasingly tethered to cost. As with other low-frequency purchase decisions, like houses or cars, cost is simply all we know to ask about. We buy vegetables all the time, and therefore understand to make decisions on cost, but also on freshness, quality, organic, and so on. But we don’t plan funerals often enough to have those reference points, so we revert to the first thing we can think of. That’s why most Americans say the first question they ask if planning a funeral is how much it will cost, but only a tiny percentage of Americans say the cost is the worst thing about the funeral. The $5 is only a distraction. Don’t fall for it.

Consumer-Centric Innovation

Here's another key statistic: only 14% of Americans agree with the statement that, “with cremation there’s no need for a funeral, memorial service, or other form of life celebration.” Fourteen percent! To hear your average funeral pro tell it, it’s at least 50. But only one in seven Americans really sees cremation as a “way out” of the ceremony. Now, more than that, one in seven might not want their local funeral home to have anything to do with the ceremony, which is a value hurdle you need to clear. And more from there might not ever get around to dealing with Aunt Maude’s ashes, which is where your experience and leadership come into play. But it’s vital to recognize the distinction: direct cremation isn’t really what most people want. Not even close.

When Apple launched the iPhone, Microsoft CEO Steve Ballmer literally laughed at them for the price tag: “…That is the most expensive phone in the world. And it doesn’t appeal to business customers because it doesn’t have a keyboard.” Ballmer failed to recognize that while the prevailing strategy of the time was to sell phones business-down, Apple flipped the model on its head by going consumer-up. Today, there’s no distinction between your “work phone” and the phone you use to scroll social media. Not only did Apple give us that customer-centric innovation, they charged a premium for it.

Funeral homes and cremationists would do well to remember that message: when you give the consumer what they’re asking for, you’re providing more value and can charge more, not less. In fact, that’s a pretty solid litmus test for whether you’re actually providing value as a business. Grocery stores discount the stuff they can’t sell otherwise. Department stores discount last season’s styles. If you’re giving your customers a discount, it’s an admission that what you’re selling isn’t really the valuable thing. And they know it.

You Have More To Offer Than $5

So, quit being distracted. In the death care space, your disposition services are the equivalent of the Stanford students’ $5. Making money off of it is enticing, and makes logical sense, but if you step back and take stock of the situation, you might notice you have much more valuable assets than that five-dollar bill. You have a market who doesn’t understand grief, who is hurting, afraid, and burdened, and they’re walking into your business. And you know exactly what they need to heal and how to help their community do the same. It doesn’t take a Stanford MBA to notice that’s worth a lot more than a few hours’ rental of your retort.

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Eric Layer is a Partner at McKee Wallwork and author of The Right Way of Death: Restoring the American Funeral Business to Its True Calling. McKee Wallwork consults with leading funeral homes, cemeteries, and cremation businesses throughout the country on marketing, positioning, research, and cultural health.