Guest Article By: Jeff Harbeson, Funeral Finance, LLC
The subject matter of finances continues as I meet and converse with funeral directors across the country. As most have shared with me, pre-need sales are stagnant or “not what they used to be”. With the shaky economy and consumers paying close attention to expendable dollars in their household budget, this should not be a big surprise. Additionally, consumers arriving at funeral homes with life insurance are decreasing as well. As reported by the Life Insurance Marketing Research Association; “the proportion of U.S. adults with life insurance protection has declined to an all-time low with 41% (95 million) of all adults have no life insurance at all” (1).
So if a consumer did not pre-pay/plan their funeral goods and services with a contract, the surviving family members that remain behind are making decisions for funeral goods and services with lingering thoughts:
- If the deceased had valid life insurance, is the amount enough to pay for the goods and services that we desire?
- If the insurance is not enough, should we pay the balance out of pocket or just spend only the amount of the policy?
- If the deceased had valid life insurance, how much should we spend on funeral goods and services?
- If the deceased had valid life insurance, should we use some of that money for other bills (medical, survivor needs, etc.)?
Of course, the above questions arise only in the cases that life insurance exists. So with no pre-paid contract and no life insurance, what thoughts exist?
- How much are the funeral goods and services going to cost?
- We have savings, but should we dip into those funds?
- Do we have enough credit card balance to charge the funeral goods and services?
- What can we get for the amount we have…or willing to spend?
A funeral director must tailor the funeral goods and services to the budget that a family desires to spend. And this is where the quandary begins with two sometimes opposing forces at work:
- Satisfying the family’s desires for honoring their loved one within their budget.
- Collecting funds for goods and services rendered that provide profitability for the funeral home.
Just like any other business, funeral home owners are being forced closely scrutinize their operating expenses and make decisions for sustainability. A thorough evaluation of fixed costs, personnel management and cost of goods should be conducted. Upon gaining a firm grasp of expenses, of course projections of revenue is essential. As with most firms, the revenue projection process is like nailing Jell-O to the wall.
What is abundantly clear to most funeral home owners is that many consumers are making significant changes how they choose to provide final rites for their deceased loved ones. “Traditional” burial is decreasing and cremation is increasing…no surprise there. However; competition of getting the attention of consumers for how they can better budget their “funeral dollars” is rampant…within our industry along with outside of the funeral industry influences.
What does a firm offer for the growing demographic of funeral consumer that has little to no life insurance or limited funds for goods and services? What strategies and training are in place to increase revenue along with cash flow from these consumers that meet the financial needs of the funeral home? What are the messages and how are they sent to attract this growing market segment? Are these conversations even taking place…or is the firm ignoring what the marketplace is telling them? Times and consumers are changing. The good old days of yore are long past the funeral industry.
So food for thought…what does your firm do to capture the consumer market that is making funeral decisions because of financial constraints? When that consumer does choose your firm, what do you have to offer? What training is taking place with your staff to meet the needs of both the consumer and the firm? And finally, is your firm recovering enough revenue from these cost conscious consumers to not only to sustain, but grow the business? I certainly would solicit your thoughts, experiences and ideas on this growing trend; “Is it about honoring the life of the loved one…or paying the bill?
(1)Facts About Life 2011, Facts from LIMRA; Life Insurance Awareness Month 2011
About Jeff
Jeff Harbeson is a founder and developer of Family Choice Funerals & Cremations™, TouchPoints ™ (a funeral service operating platform), Preferencia Familiar™, and a former Batesville Casket Sales Representative. Jeff is the Executive Vice President and Chief Operating Officer of Funeral Finance, LLC. jeff@FuneralFinanceLLC.com , Twitter: twitter.com/funeralfinance, Facebook: http://www.facebook.com/funeralfinancellc
Jeff is also a featured expert for ConnectingDirectors.com’s “Ask the Expert” column.
The thought “no insurance and no-prepaid funeral” is a day to day REALITY in my town… In my opinion, when people have money to spend its a no-brainer! Since 2009, 1/2 the clients we serve is really about – how do they pay the bill, and unfortunately cremation me be the only affordable choice to often. We need those door-to-door insurance salesman back….
I think that life insurance will never be what it once was. Offering families options is our only choice. Whether that be options of financing, or other service options – we must be proactive in dealing with the realities. Waiting for the economic situation to return to what it once was will only spell disaster. Sobering article, but information that we need to confront…
There is no question that families are increasingly “buying down” to stay within their budgets. The more flexible payment alternatives that we can provide to them will help our client families better memorialize their loved ones and help us keep our businesses healthy.