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The Real Reason the Cremation Rate is Rising

Article Provided By: FuneralOne

Previously, I predicted that in 5 years from now, the national cremation rate will hit 57%. Today, I’m going to explain to you where that prediction came from.

Over the years I have heard many explanations about why the cremation rate is rising. Shifting demographics, incomes, religious affiliations, transient society have all played an alleged role in the downfall of the traditional burial service. However, focusing on these issues has not produced a solution to pursue. I would like to propose a different way to look at this, one that hopefully yields insights that will help shape a new direction.

I believe that our families or consumers, in general, pursue the best value they can get. This does not mean the cheapest or the most elaborate but it means they seek value based on their personal perspective.

Consumers seek value in one of two ways:

1. They attempt to reduce the price of the offering or;

2. They look for more benefits for the same price

The challenge in our industry is that our families have almost no idea what benefits they want, much less what they need. The obvious result is a focus on price and the pricing pressures we face.

The Shift to Cremation

So what caused the initial shift that started the search for value? Why weren’t families satisfied with what we, the funeral service industry, have always offered? Well their perspective changed and it changed rather dramatically. Meet the Baby Boomers and all their challenges to the status quo.

Consider these facts:

• Up until about 1965 the cremation rate was pretty flat at around 4%

• And since that point it has risen dramatically to today’s average above 40%

• In the early mid 70’s the first Baby Boomers turned 30 and began making funeral decisions for their parents

• By the mid 90’s they started to turn 50 and in 2005 over half of the 78 million Baby Boomers were 50 years or older

• The shift in perspective represented by Baby Boomers is unprecedented in the world

And how did funeral service providers respond? We basically did nothing! And even worse we were woefully inadequate in explaining the benefits of what we did! Combine those two issues and we have a recipe for tremendous price pressure. And the only way families knew how to get a better price with the same provider is to cremate.

The Value Found in Cremation

I believe that families have an innate need to honor and remember the life of their loved one. This need was not met for Baby Boomers by the traditional funeral service offering. But, an interesting thing happened as they used cremation to find value via lower prices; they discovered that cremation liberated them from the traditional views of the industry.

They no longer had a 7-foot box with a body to deal with, and they could now have their remembrance service, when they wanted, where they wanted and how they wanted—without a funeral director making them feel bad about their decisions.

In spite of funeral directors and the traditional views of the industry, Boomers found better funeral service benefits on their own in the form of family gatherings and memorials in locations relevant to the life that was lived.

The Pricing Pressure

We have looked at how value perception has changed through Boomers. Now, let’s take a look at how funeral prices compared to inflation during this time period.

A study from the past decade shows the increase of funeral prices matched the increase of medical prices, which was over 50%. This was only exceeded by the increase of higher education, which almost reached 90%! All of which were much, much higher than the Consumer Price Index increase of around 30%.

To add insult to injury, consolidation has grown at an unprecedented rate. There is an unsettling parallel between the growth of consolidators and the increasing cremation rate.

• In 1965 Cremation Rate = 4% and Consolidation = just beginning

• In 1995 Cremation Rate = 20% and Consolidation = 13% of the rooftops owned

Typically consolidation leads to higher pricing not only in the purchased property but to increases in pricing of the surrounding funeral homes as well. Combine this with the growth of Baby Boomers using the funeral industry and you have a perfect storm that served to fuel Baby Boomers’ search for value.

 

While I believe that cremation rates would have risen without these inputs, I believe these trends are at the core of the dramatic increase in the rate of cremation. But more importantly, this analysis suggests the direction of a sustainable solution: provide benefits that meet the needs of the families we currently serve at a price they consider a good value. Pretty words but more on that in a later post!

 

 

What do you think is the real reason the cremation rate is rising? If you have any questions or want to comment on this topic, please share your thoughts below!


Lajos-Szabo-cremation-rate-risingAbout the Author: Lajos Szabo, a licensed funeral director in Ohio and Architect by training, has been involved in funeral service since 1988. His portfolio of work includes, PMP Rooms, Cut Caskets, Meaningful Memories, Funeral of the Future research and several US patents specific to our industry. Recently, Mr. Szabo partnered with the Schoedinger organization to create a virtual funeral home business model named Funeral Choices. Subsequently, he served as Chief Strategy Officer for Schoedinger Funeral and Cremation Service, a 2,500 call 14 rooftop firm in Central Ohio. There, he was responsible for realigning this 150 year old firm to more effectively respond to the changing funeral service consumer. His role included refining company infrastructures, implementing information systems, resource allocation, MourningStar arrangement implementation, website development, social media integration and initiatives impacting the creation of healing experiences for those touched by death. Currently, Mr. Szabo has joined funeralOne as President of Funeral Operations where he will use his industry perspective to provide organizational leadership and develop several key projects in pursuit of his personal mission; changing funeral service to more effectively meet the needs of people touched by death.

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  • Glenn Gould

    The increasing cremation rate is a complicated issue with many contributing factors, including the points raised by the author.  However, as opposed to the consumer seeking value, I believe the consumer was driven to cremation by two equally significant forces.  First the FTC; the new world order was a priority of the first Bush presidency; part of that conversation was reducing the American standard of living to bring the US in line with the world economy.  This was accomplished through NAFTA, importation of product from lower cost of production nations, and increased productivity in the US.  Reducing the cost of dyeing in the US came about through increased competition, which has propelled price advertising and alternative disposal businesses such as minimum service cremation businesses. 

    The second influence has been the cemetery industries failure to “market” memorialization.  Note the term marketing versus sales.  Cemeteries continue to be very efficient at selling cemetery space to people that want it, but have made no effort to market memorialization to families that see no value in the concept.  Families that do not own cemetery products at time of need typically select cremation as a cost reducing measure but families that own graves, mausoleum and niches at time of need opt for traditional services.  Stabilizing the cremation rate is dependent upon selling baby boomers memorial products which demands a national advertising effort espousing the value of memorialization.   

    • Lady Funeral Director

       I agree with Glenn, not with this article. Lack of affordable cemetery space is what is driving cremation, especially in states like California. The recession is also to blame. Lack of life insurance etc. There are more economic pressures that lack of adequate funeral services.

      “They no longer had a 7-foot box with a body to deal with, and they could
      now have their remembrance service, when they wanted, where they wanted
      and how they wanted—without a funeral director making them feel bad
      about their decisions.”

      Really? Is this article written for funeral directors? Does not seem to hit the mark. Ask Paul Rahill, of Matthews Cremation what he thinks. I’m sure he will have a much more informed history of ths process.

      • Lszabo

        The primary point of the article was that we should focus on the things we have the realistic ability to impact and do something about rather than point fingers at all sorts of external demons. The only apparent result  of pointing fingers elsewhere is the creation of industry inertia.

        Further, the statement regarding affordable cemetery space does not correlate with any of my experiences.  I have worked as a funeral director in a market where affordable cemetery space is avaialable and the cremation rate continues to dramatically increase. And my experience as the individual resonsibile for marketing and sales strategies, the cost of cemetery space is rarely part of the initial decision process.

        We as an industry need to focus on what we CAN do NOW to improve the value offering rather than wait for the world to change to where we want it to be.

    • http://www.perceptionisparamount.com/ Mark Davis

      I must say that I agree with Glenn’s “second influence”. Merchandise and services that promote remembrance are… and will be the most significant revenue stream for funeral homes in markets with cremation rates of 30% and growing. Cremation is not a trend, rather it is the core component of your future income and the destiny of your funeral business. Embracing the opportunities that cremation provides and executing a plan and marketing strategy to enhance your cremation offering is the only way forward. Those that do will thrive, those that don’t will evaporate. Today is the day to begin reinventing your business.  

  • http://twitter.com/funeralwordsbt BT Hathaway

    It’s not just memorialization Glen. It’s memorialization *with the body present* that keeps value in our industry.

    Without reverence for the human remains, our facilities have to compete with every park, beach and back yard in the nation. All those free offerings lower our pricing capacity because an urn can can go anywhere, any time while a casket requires lots of special handling.

    Why doesn’t anyone understand that casket handling is still our primary value proposition with consumers–and that everything else is dramatically less profitable?

    In which case funeral homes (particularly in the NE where we cannot participate in the ownership of cemeteries and crematories) become a vestigial habit of our Judeo-Christian past, not a compelling need for the present day. This doesn’t mean we will go out of business over night, but it does mean a long slow consolidation of operations as we amass volume under a much smaller number of rooftops.

    A “got milk” campaign is not going to fix this. There isn’t enough margin in memorialization to justify the expenditure. We mostly have to surf this wave and make the best of it as it runs, and realize that funeral service will never look the same. 

    Will someone blame this on the boomers? I suppose they will, but not me. This cultural transition is much bigger than 76 million boomers. And please stop blaming this on funeral directors. Again, this cultural shift is much bigger than the 20,000 (and shrinking) funeral homes across the country.

    BT Hathaway

    • Lady Funeral Director

       Agreed. There needs to be an end to blaming funeral directors for everything. Didn’t we have enough with the Anderson Cooper 20/20 mess?

  • Guest

    Increased cremation rate is not the problem. Opportunities abound for funeral homes to add value around cremation services – and this is where the challenge lie.  In the Philippines, funeral homes provide full body/casketted viewing AND cremation services for the same case. It is normally not an “either or” proposition but and “AND” decision. Surely, there are families who now go for direct cremation and take care of the post-cremation arrangements themselves. But this is a minority as families realize the value of having a professional funeral director (or funeral service planner if you will). 

  • http://www.donmorris.ca/ Don Morris

    Sadly, truly, because death denial culturally goes unchallenged… death and dying doesn’t matter much to most anyone in these “modern” times thus little need for more elaborate, assisted funeral directing services and products.  
    Green burial (a very slowly emerging trend) is wise to consider for it’s connected to ecology and ecology matters!  People are finding meaning through giving their corpse simply and directly back to nature, leaving a considerate legacy and a place for generations to come visit.  Green burial here in Victoria BC is on the rise!  Hey… and you get to sell a casket.  Let’s
    get green cemeteries and green cemetery sections opened up already!  Thanks!

    • Lady Funeral Director

       and green/natural cremation. Saves 90% carbon emissions, 75% energy costs & is a gentler, kinder return to nature.

  • Sheesh!

    CD is not owned by a lisenced Funeral Director, and FuneralOne is not either?  Why would we expect anything different from this site?  Holy funeral director bashing batman…

    Did this guy collaborate with Anderson Cooper and the 60 minutes crew?

    • Lszabo

      Well Robin, keep blaming, CD, F1, me, affordable cemetery space, Anderson Cooper if that helps you sleep at night. You seem a tad sensitive to a point that wasn’t really there. Again, the article was written to create a framework that would allow us to make progress towards a more positive future. And there is a huge difference between assigning blame and taking resonsibility for your situation. Play the blame game if you must but I prefer to look for and try things that I can do today to try and make things better for myself and the industry I have worked for and in for the past 24 years.

  • Loweringdevice

    I am from the Pacific Northwest where the cremation rate exceeds 80 percent and rising. Funeral homes and funeral director folks are not bad people but let’s get truthful. The public, in this day and age, sees little value in your fancy cars, lavish facilities and the scam of a protective casket, along with embalming, viewing, wakes and visitations.

    Over fifty years ago I had the opportunity of assisting a family with a cremation and a no body present memorial service, my first, at a local church. I stayed for the lunch that was served at the church and couldn’t help but notice the number of people who said such things as, “Say this was great the way Harry took care of Ruth. “No procession and no wet rainy cemetery visit to catch pneumonia.”I returned to my firm and told the staff, “A train wreck is coming down the track.” You know something? I had it right.  Cremation with a memorial service, often without funeral director involvement, is like a contagious disease. It spreads through the population like a wildfire.

  • http://www.perceptionisparamount.com/ Mark Davis

    The cats been out of the bag for at least the 34 years that I’ve been in the funeral business. Rehashing cremation rate increases and theorizing the causes are simply redundant diatribes that offer no real benefit. Many funeral home owners are frozen in their tracks not knowing how to shift gears and reinvent, reorganize and reinvigorate their business. Bold results require bold moves. This might mean new staff roles, new location, new responses to phone price shoppers, new arrangement conference presentation and so on. Every major industry has reinvented itself at some point in history to capitalize on changing consumer wants and needs. Look for companies that provide real solutions, real direction and real results. Stop listening to the statistics and the theories as to why we are where we are as an industry…and start finding solutions that will ensure your success now and in the future. Henry Ford, father of the modern auto industry, once said, “If I had asked people what they wanted, they would have told me ‘Faster horses.’ ” It’s one of my favorite quotes. That one sentence shows you the big advantage that truly great entrepreneurs have: consumer vision. Consumer insights are all about what consumers are already using. Consumer vision is all about what they’re going to use next! So, back in 1900, long before people who were driving horse-drawn carriages knew what their transportation needs were going to be in the year 1920, Henry Ford had already figured that out. Just like, in 2001, before people knew what their music needs were going to be in 2012, Steve Jobs had already figured that out. Both men had something the consumers didn’t have: the vision to identify, not just what people needed right now, but what they were going to need next. That’s a kind of creativity most people don’t develop: the inspiration to see past what’s accepted, what’s normal, what’s familiar … and find a better way of doing something.

  • Loweringdevice
  • Richard Hervieux

    OK….One more time….This
    generation is not finding value in cremation per se, for the
    most part, the issue is……

    1.  They think of death
    as unpleasant, and there is no reason to keep something unpleasant around any
    longer than one has to. 

    2.  They value their time;
    they tend to look at their job as a necessary inconvenience, and do not want to
    spend time doing anything they do not want to do. 

    3.   For the most
    part they lack the fundamental respect for their parents and loved ones while
    alive, let alone when they are deceased. 

    4,   They very frequently fail to consider the repercussions
    of their actions.

    This is not a guess or summation and I
    can and will gladly supply the reference material upon request. 

    In
    fact, if you read the latest issue of The Dodge Magazine there is an article
    quoted that speaks exactly to this subject.

     This is a very me, me, me generation we are dealing
    with.  Older people making the decisions are being greatly influenced by
    their grand kids and kids.  Anyone who owns a business and employs the
    generation I am speaking about already knows exactly what I am saying. No
    loyalty, little work ethic.  BUT there is hope. It goes to the issues
    these folks will have with grief several years down the road. They need to be
    educated.  The APA has a shaded map that show the people per 100,000
    undergoing treatment for depression due to grief.  Guess what. If you
    overlay the map over the United States, you will see that the lowest number per
    100,000 is around Allegheny County Pa., where the most traditional funeral
    practices are still intact.  The highest is the west coast, Arizona, Fla,
    S Texas, and the areas with the HIGHEST cremation or should I say DIRECT
    CREMATION rates are.

     

    It is important to educate
    the families of the importance of of having a service, with the body
    present, in order to acknowledge that a death has occurred, to celebrate the
    life of the deceased, and mentally start the process.  Anything less and
    the person or family stands at a much higher risk to suffer from moderate to
    severe issues dealing from the lack of properly going through the grieving
    process. 

     

    Besides being in the business
    for over 30 years, I also own several companies, one of which develops and hosts
    websites for funeral homes.  I did NOT write this to get free advertising
    and to that end will only say that without exception, every funeral home that I
    am involved with has actually turned the trend around, albeit slightly, by just
    having the educational material available for families to read.  On a
    removal or first call have a nice packet full of information, from
    psychologists specializing in the area of grief, nicely put together along with
    the GPL.  They can still have cremation and final disposition and yet have
    a funeral service with a viewing.  Unless you happen to own a cemetery, it
    is a win win.

     

     

    Rstinnpeace

  • Hannah

    I am part of the “me me me me” generation (supposedly.) I chose cremation for my parents because my parents wanted it. They thought a burial service and all the hoopla was a giant waste of money. My mom said save the money, throw a party, play some songs she loved, and remember her with love. That’s what we did, and that’s what we’ll do any time anyone in our family dies. It’s not about being cheap, but about not wasting money. 

    For the record, my mother died before the economy sucked. We will cremate either whether we are flush or destitute. 

  • Glenn Gould

    BT:  if that’s what you believe, and i’m not saying you’re wrong, you had better start looking for a consolidator. The cost of operating will continue to increase as will the consumer’s reticence to pay higher prices.  Most funeral facilities in the NE are too old to serve any other productive function; so selling now while your business has value is the only escape route.