At CANA’s 100th Cremation Innovation, Rick Baldwin and John McQueen took the stage to share their strategies for selling across multiple brands in a high cremation market. Their presentation discussed decades of changes in the marketplace, a history of trials and successes, and business strategies crafted in the trenches of Florida’s dramatically expanding cremation rate.
This post features highlights from John McQueen’s presentation that specifically address market domination via brand segmentation.
Anderson-McQueen Funeral Home
I want to give you a little bit of perspective about where we came from. Our father started our funeral home in 1952. It was a typical traditional family funeral home. He passed away when I was 22. I was very blessed to have a very intelligent brother who was in the business with me. We were two young guys, we were able to figure out “What are we going to do in the future going forward?” We continued to grow our traditional business.
Around 1997, we realized that our consumer was starting to change. The consumer of yesterday was mostly happy with an average product or average service. I even remember when I started in the business, the training program that Batesville used to instruct us for our casket presentation was “This is our average bronze casket” or “our average wood.” Everybody wanted to be average. It was a more product-focused industry in the past. We wanted to sell the casket, we wanted to do all that. Nowadays the products have become less and less important to the consumer.
By 1999, when we were getting ready to open our low cost alternative, we had figured out that the consumers had migrated to the two ends of the spectrum. So it kind of made that middle collapse. Basically, you have the price-seeking consumer on one end and the solution-seeking consumer on the other end. One of the problems with this, in our opinion, is that’s where the traditional funeral home lies—in the middle.
The Profit Zone
There’s a book out there called The Profit Zone, and they talk about how, over the last 15 years, the winners in the marketplace have been the price discounters. Those with the low-cost position. Walmart is the example.
The next is the superstores. Those that have a particular focus, along with a low cost combination. The best example of that would probably be Best Buy. If you want electronics, go to Best Buy. They have everything and anything you could possibly think of, and they have it at a really great price.
The third winner in the marketplace is the high-end specialists, those that differentiate themselves from everybody else in the market. They charge a premium price to do so. The best examples of those would be L.L. Bean, Ritz-Carlton, Harley-Davidson, Starbucks. You could throw Zappos in there.
Think about how scientific jargon and bureaucratic language could have killed the inspiration of the moment if they’d crept in. As a Harley owner myself, you can own any motorcycle out there. I can buy a motorcycle that’s a lot cheaper than that Harley-Davidson—but it’s not a Harley. You gotta be part of that class, part of that family. So they’re able to command that bigger price to do so.
To give you a couple other examples of firms that have used this, you have the Marriott International Corporation. They actually are the largest hotel corporation in the world from a profit standpoint, with the exception of MGM. But then again, MGM has casinos associated with them, so that revenue helps them out a little bit there. At the top, Marriott has their Ritz Carlton, in the middle they have their Courtyards, and at the bottom they have their Fairfield Inns. At every one of their locations, you get a quality night’s sleep. They’re going to assure you of that. But the amenities that go along with each of those tiers vary greatly. To give you an idea, they have 5,400 properties around the world with about 1.1 million room nights. Their revenues on an annual basis are about $15 billion as of 2017.
Another business is Swatch Watch Group. They started out as the firewall brand for Blancpain and Harry Winston, as the top Swiss watch company out there in the marketplace. Those are still their top Swiss watches, but they saw that they were losing market share because these other companies were coming in at a much cheaper price because they were able to undersell them. So they started Swatch. Swatch has grown so big now thought that they actually changed the name of the parent company. Now they’re the Swatch Watch Group, and they’ve rolled out a new low cost brand, which is their Flik Flak, for the younger children, to pull them into the loop. Their revenues last year were greater than $7.5 billion in watch sales. This model works in many industries.
Multiple Firms, One Market
We ended up adopting a similar business model, but we wanted to avoid cannibalization. We have multiple firms in the same marketplace. We don’t want to cannibalize that existing firm at the top because that’s where we maximize most of our profits. How do we avoid doing that? We need to differentiate ourselves – with location, hours of operation, pricing method, marketing and branding, but never staff. It’s just as important that the staff at your low-cost brand is as on-the-game as at the top end of the brand.
I will tell you on my final note for you here that as you move forward into this world, if that’s what you want to do, there’s some roadwork ahead for you. You need to forget some of those things that made you great at your high-end brand because things operate differently in that low-end spectrum. But you do want to borrow from your high-end brand. So you can use your back-end operations, share some of those commodities together. It’s a black limousine going on a funeral. Who cares where it came from, right? You can share that, you can share the crematory, you can share the preparation room. Those kind of things you borrow from one another.
But most importantly, I’ve found over the years, with the low-end brands especially, you have to be able to adapt. You’ve got to be nimble, you’ve got to be able to move quickly. If the market starts to shift or something you’re doing’s not quite working right, then you need to tweak it and move forward. Don’t just stay stuck in the road.
The Kia Effect
I’m going to finish with the biggest failure in funeral service today. It’s what I call the Kia Effect. I read more and more articles and hear more and more new consultants that have come into our industry. They all want to tell us that nobody values a funeral any more nowadays. Everybody wants cheap, cheap, cheap. If you’re not the cheap guy in the market, then you’re not going to be successful.
I’m here to tell you that I don’t believe that. Our high-end brand grew more market share over the last two years than our low-cost brands did. We ended up generating about another additional million dollars out of that high-end brand over those last few years than we were doing with our low-end brand. So, it is growing. But, the difference is, you need to be on your game if you’re going to have that high-end brand. You’ve got to be able to show the value to the customer, explain to them what we do, explain why we do it, how we do it, and really educate the consumer on that. If we do that, we’ll continue to have the business at the top end as well as picking up the business at the bottom end.
This post excerpted from Rick Baldwin and John McQueen’s presentation at CANA’s 100th Cremation Innovation Convention. The full presentation, including Rick’s contrasting strategy of “Simple and Easy,” is available on demand from CANA’s online learning platform. Members can also read a version of the full presentation in The Cremationist, Vol. 54 Iss. 3 titled “Local Innovation: Selling Across Multiple Brands in a High Cremation Market.”
The CANA Convention is known for highlighting local innovation each year. At the 101st Cremation Innovation Convention this summer in Louisville, Kentucky, Gwen Mooney and Michael Higgs of the historic Cave Hill Cemetery will discuss how the cemetery and its foundation work strategically to actively sell cemetery property and build community engagement – all through the "Art of Story.” Learn more about this session and what else CANA has planned and register now: GoCANA.org/CANA19
John McQueen is a 2nd generation funeral director and embalmer in Florida. Like many next gens, John started out working in the family business at an early age. Upon his father’s untimely death, John took over running the funeral operations when he was 22, along with his brother Bill and sister Maggi. In 2010, John bought out his siblings and together with his wife, Nikki, continued to grow the operations into the largest family-owned funeral home in Florida. Known as the “idea guy,” John and his team are always on the cutting edge of innovation within the profession. John has been active in numerous state and national associations serving in all capacities.
John sold his company to Foundation Partners Group in August 2017 and is excited about being a part of the FPG family. John and Nikki just released their book, Lessons from the Dead: Breathing Life into Customer Service which shares many of the customer service techniques they use, as well as some from other well known companies, to deliver exceptional service.