They made him an offer he couldn’t refuse…
One of my clients recently received an email from his website vendor. Tribute Technology had acquired the company he had trusted to create and support his website for the last ten years.
If you haven’t received an email like that yet, count yourself lucky.
So far, Tribute has swallowed up SRS, Frazer, FrontRunner, FuneralTech, CFS, Funeral Innovations, and more. Naturally, this type of business activity creates a lot of questions for my clients.
In this week’s newsletter, I will discuss what the website vendor consolidation trend could mean to your funeral home. Even if you are not using one of the Tribute companies, the ripple effect of this trend will impact the entire industry.
You might be wondering why I am even remotely qualified to write about this subject?
Long before creating Funeral Success, I spent ten years in various leadership roles at a 50-person technology company. During those ten years, we were involved in twelve mergers and acquisitions.
A Private Equity Consolidator was involved in most of those deals. After each merger, there would be a staff meeting in which the new owners would say the same line of bull, ”nothing will change.”
Whether they like it or not, the funeral home website vendors who have been caught up in the consolidator’s web are going to face some changes. Unfortunately, some of those changes will impact their customers (i.e., you).
Based on my experience with technology mergers & acquisitions, here’s what you can expect.
Impact #1 – Customer Service Problems
We’ve already started to experience problems in this area with some of the website vendors I listed above. Customer service teams who used to turn around an issue within hours now take days, or they don’t respond at all.
When you talk to a Customer Service person on the phone, they often sound exhausted and demoralized. It’s not surprising because they hear the same questions all day long from their customers, and they don’t have good answers.
Plus, when you try to elevate an issue to the company management, it’s almost impossible to find someone who cares about the problem. It feels like everyone is playing the “not my job” game, trying to fly under the radar so they can hang onto their job a little longer.
Impact #2 – Product Surprises
It’s already happened to a couple of my clients. They received angry phone calls because flowers didn’t arrive in time for services even though the website guaranteed that they would be delivered on time.
We contacted the website vendor and learned that they had rolled out a new “shopping cart experience” over the weekend. This new product feature promised the impossible just to maximize flower sales.
We can also expect future product development from the website vendors to change pretty significantly. Consolidators rarely build anything new. They integrate existing things into something that looks new but is held together by duct tape and a marketing brochure.
The impact on your funeral home website is that you can expect to see new product features that don’t work well together. The seamlessly integrated website solution you hoped for will be an ill-fitting mixture of parts from various vendors.
Impact #3 – Vendor Consolidation
I know the website vendors will hate me for saying this but remember, I’ve been through twelve acquisitions, and I’ve seen the pattern play out many times.
Providence Equity Partners bought a handful of funeral home technology vendors and created Tribute Technology. They did this to create something big enough to be sold to a major investor.
Once assembled, they sold it to the Carlyle Group, whose focus is generating a return on investment. Yes, they want revenue growth, but the real key is EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
To maximize earnings, they will take a hard look at the organizational efficiency of each business unit.
Do they need half a dozen separate vendors? No.
I can guarantee that some bean counter at Carlyle Group will look at duplicate executive teams, development teams, sales teams, customer service teams and see lots of room for improvement.
Realistically they will pick one of the website vendors to take the lead and consolidate the rest of them. By the way, the word “consolidate” in this case is just code for cashing out the stock options held by the former owners and layoffs for everyone else.
I predict that Tribute Technologies and the related companies will be in a state of chaos for years. This is going to create opportunities for new entrepreneurs with a new style of funeral home website.
Hopefully, future funeral home websites will enhance the experience for families rather than just push flower sales.
Until next time
John
