Feature Editorial: Embrace Cremation

“The knowledge that current cremation rates continue to increase within the funeral industry is nothing new. However, in order to stick with the times, funeral homes must discover new ways to market for cremation and produce services around the alternative to burial that can counteract the decrease in revenue. There are many different benefits to cremation as a service and those need to be embraced by the industry to further the future of the funeral business.”

The benefits of cremation are still being discovered. It’s not a new service for consumers, but it has just become a hot commodity among those looking for simple funeral services. “In some regions the cremation rate is as high as 66 percent,” said Darren Crouch with Passages International. “Since the average funeral home generates less revenue from cremation families than burial families, cremation can be seen as a threat to funeral home revenues.” However, the idea is to break away from the threat and move towards allowing it to benefit funeral homes. “Funeral professionals are learning to deal with cremation and cremation families, but many have a long way to go,” Crouch continued. “The constant struggle is how to maximize revenues from cremation families.”

About 80 percent of cremation families use immediate, direct or minimal cremation while only 20 percent use full public services followed by cremation. This impact could create a higher amount of cremations and unless the industry discovers a way to push more families towards the full public services, the funeral industry may struggle. “There remains little doubt that funeral homes have only two choices for survival: increase revenue and/or reduce cost,” said Gerald Davis, the president of Starmark Funeral Products. “Burial revenues will not be sufficient to cover the revenue shortfalls from most cremations. Just as funeral directors are increasing the pressure on casket manufacturers to provide better products at lower price points, similar measures will also impact cremation products.

“Funeral directors will find it critical to improve cremation revenues either by offering more creative services or offering lower priced cremation products. One large hurdle is that most cremation consumers do not know that cremation container products are available, or in some cases even necessary.” The lack of knowledge by the consumer has been one of the major impacts among the cremation service. Therefore, the consumer may withdraw a little from the process if the funeral home attempts to raise prices. Instead of increasing revenue, the hometown funeral homes could become involved in a price war while they both suffer equally. “An increasing trend of consumer preference for cremation is having a profound effect on the funeral industry,” said Bill McQueen with Anderson McQueen. “Just 25 years ago, according to CANA statistics, only 14 percent of all deaths in the U.S. involved cremation. Today, we are at 36 percent and projected to pass the 50 percent mark within the next decade. With cremation, typically there is less gross revenue. So, from a financial perspective, this rapidly increasing shift is having a noticeable impact on many funeral providers.”

Nectar Ramirez, the general manager for Options by Batesville, said cremation has given families the permission to forgo the elements of the grieving process. “One of the challenges we are facing as an industry is the lack of value attached to a funeral,” she said. “The biggest challenge we face is that in this day and age, everything is being done so quickly and humans wanting to avoid grief – cremation has given permission for that to happen.”

“Successful funeral homes embrace new products and services,” Crouch said. “Funeral directors are starting to understand that growth of cremation came from the rejection of traditional funerals. When they come to terms with this they start to understand that cremation consumers see little or no value in the same old products and services.”

The Cremation Advantage

The basic solution to increasing profits among cremation refers back to marketing. Although, funeral homes have spent years mildly marketing their cremation services, the time has come for those in the business to focus more on cremation and less on traditional services. “By creating and marketing cremation products and packages, funeral homes can emerge as local leaders in the cremation field,” Crouch said. “This positions them well to take advantage of the growing cremation rates.”

One of the major ideas around the industry is for funeral homes to embrace the cremation change. “For most funeral homes, aggressively embracing cremation will increase call volume,” Davis said. “To embrace cremation, a funeral home must offer extraordinary value and change industry suppositions from ‘disposal thinking’ to ‘dignity thinking.’”

Funeral homes must change their thought process and maybe have a slight cosmetic make over. Davis suggests that funeral homes change their sign out front to include cremation, display cremation products alongside burial products so future client families know that you’re in the business, update your Web site, embrace and promote ‘private cremation services’ and empower your staff to create exceptional services as opposed to cookie cutter services.

The easier aspect of cremation is the multiple services it allows. “Cremation provides families with far more choices than traditional burial,” Crouch said. “Marketing of cremation should focus on the alternatives available to families, from the burial to the scattering of remains, to blasting into space and the production of precious stones. These ancillary sales make cremation profitable.”

The Industry Must Know

The truth is, there is money to be made in the cremation business. However, in order to boost cremation revenues, funeral homes must begin to think outside the box and do anything and everything to boost sales. Possibly increasing cost isn’t enough to assist the cash flow.

Funeral homes need to figure out how to make money away from the cremation process itself. Possibly look at rental caskets for the service. It is estimated that profit margins for a rental casket can range between $700 and $1,000 per use. Funeral homes can attempt to boost this profit margin by causing cremation families to use a hardwood casket that has a rental value of about double that of the original margin. “Burial families expect to purchase a casket and cremation families don’t,” Davis said. “Rental caskets generate consistently higher net profit margins than cremation oriented hardwood caskets.”

How Cremation Can Boost Revenue

One of the major reasons cremations haven’t shown a large revenue increase among funeral homes has been the lack of determination within the industry. It has been shown that the majority of funeral homes don’t want to push the idea of cremation and therefore don’t encourage services that could accompany cremation.

Davis discussed how the services could help impact the funeral industry if funeral directors would learn to embrace cremation and use it as an advantage. The secret behind building revenue through cremation spurs from services incorporated.

Crouch explained that cremation provides families with many more choices as opposed to the traditional burial that can be relatively straightforward. However, cremation has the same potential as the traditional burial. Funeral directors need to market the possibilities of services that can accompany cremation. They need to allow the families to see how services can still exist even when cremation is the chosen options.

“From our first hand experience, if someone is interested in burial, they are not going to change their minds because in visiting your funeral establishment they see cremation-related products and information,” McQueen said. “Thus, it is important that the funeral establishment tout the fact that they are there to help and serve all individuals in their community – including those who deserve cremation. Otherwise, typically other providers will come to their market to solicit to the portion of the community interested in cremation, and they will position the cremation offering as one for the ‘price seeker.’ So, before the heritage funeral provider of the community knows it, cremation services become a commodity item where the lowest price wins.”

Like was discussed in the earlier sections, funeral homes should incorporate the idea of casket rental. Renting high-end caskets for viewings prior to cremation can help boost the revenues while allowing the caskets to be reused.

If funeral homes pushed cremation more, they could be able to focus on services and prevent losses to local churches and other places that may take away their service business. Also, urns that are used for cremation can cut major costs of purchasing caskets.

Although this is an out-of-the-box idea, funeral homes could really focus on cremation as a solution to decreasing revenues throughout the future of the funeral industry. People in general are beginning to be more progressive and the traditional services don’t seem to be weighing as heavily anymore. Therefore, funeral homes must start thinking about cremation as the future solution. They need to develop marketing plans and sales packages that can help customers select services based on numbers, rather than what they desire.

Funeral directors could develop packages that are similar to photography packages. They could explain certain services and the benefits of those services for a certain price. The prices shouldn’t be negotiable and the customer should be able to point or mark an ‘x’ in a box to select which package they would want.

For the funeral industry, cremation can do one of two things. It can either continue to be harmful for funeral homes and cause the industry to suffer; or, funeral directors could begin to embrace the idea of cremation and the future of their consumers. The second option should be the idea that every director attacks.

Without the proper plan, implementing cremation can only cause a revenue shortage for the funeral home. However, if the funeral home embraces the concept and begins to market these ideas fully, they should be able to rope in customers by the dozens. The process will be easier on the funeral home and could potentially make the funeral industry stand out as one of the more progressive businesses in today’s market.   FBA

By Tyler Montgomery