Death might be the only thing more inevitable than taxes, but a rapidly-growing trend toward cremation in America has many funeral directors scrambling to make up for lost revenue by finding new ways to charge families for services.
Their concern was on full display at last weeks National Funeral Directors Associations annual convention, held in Charlotte. Seminars included Making Cremation Profitable. Posters on the trade show floor advised funeral homes to Conquer Cremation.
Cremation has changed funeral service. Were feeling it. We dont want to be an Eastman Kodak, Fred Kitchen, of Henson Mortuary in West Virginia, told a crowd of funeral directors during the seminar, Successfully Converting a Direct Cremation to a Personalized Cremation Service.
Less revenue in cremation
The difference in revenue from a cremation compared to a traditional burial is stark. The average cost for a traditional funeral is $4,877. Thats over $3,000 more than the $1,816 average cost for direct cremation, according to research and planning firm Everest Funeral.
In 2011, 42 percent of American deaths were cremations. Thats up from 27 percent in 2000, and the number is expected to keep rising. Funeral directors said more families are also down-mixing, an industry term for trying to choose a less-expensive mix of services.
The number of funeral homes in the U.S. fell 7 percent from 2000 to 2012, according to the NFDA, despite population growth during the same time.
Down to business
The funeral business, despite its somber subject matter, is at heart a business, like any other. Funeral homes have payrolls to meet, rents and mortgages to pay, and all the same operating expenses that go into any business.
Kitchen laid out a scenario: A typical funeral home, years ago, might have averaged 110 calls in a year. With 100 burials, at an average gross of $7,500 each, and 10 cremations averaging $1,000, the funeral home would take in $760,000 in a year.
But if the number of cremations increases to just 20, and the average gross remains the same for each service, the funeral homes revenue will be cut to $695,000 a year 8.5 percent less, for doing the same number of calls.
These are real numbers, said Kitchen. This is whats happening in communities across the country.
So funeral directors are looking to steer customers to purchase other services, such as a viewing, urns which have a high markup and merchandise like videos and blankets to make up for the lost revenue.
Anytime we convert a family from direct cremation to a service, its good for them, said Becca Temrowski, a funeral director from Michigan. Also, its good for us.
Such efforts can yield a big payoff. Temrowski told the funeral directors about a recent service she did with a family that originally wanted a direct cremation. She ended up selling nine videos, five blankets and an urn, for a revenue increase of $1,000.
Convincing a family to hold a service instead of a direct cremation has other positive effects, Temrowski said. It also gets the family into the funeral home, allowing her to show off improvements to the building and hopefully get future revenue from some of the attendees. If no one comes to my building for services, how can they ever see that? she said.
Don Brown, a funeral director from Lynn, told the audience how he keeps an urn on the table, video of his most recent funeral playing, and commemorative blankets out and ready to sell when he has a family come in to talk about a direct cremation.
Although funeral homes are required to give prices over the phone, William McQueen, owner of Graystone Associates funeral home in Massachusetts, advised funeral directors during the Making Cremation Profitable seminar to keep such conversations going as long as possible.
If the first question out of their mouth is price, you dont have to go right to price, said McQueen. Keep the clients talking, and ask questions to lead them to decide to have a service, he advised.
Questions suggested for grieving family members include: Do you want to control the time and place when people will express their condolences to you? and, Do you want the lasting memory of your dad to be the way he died, or the way he lived?
In the end, said Kitchen, the funeral business will have to keep fighting for sales as families look for ways to save. Consumers are pretty well dictating our industry, he said. Weve got an economy thats pretty grave.