Last weekend, I was moving my office and came across some notes from a seminar I attended years ago. The presenter said that there were only four ways to grow a business;
- Increase the number of customers
- Increase the frequency of purchases
- Increase the average purchase price
- Increase the lifetime value of the customer
The presenter referred to businesses in general, but let’s see how those four points apply to growing a funeral home business.
#1 Increase the number of customers
In the funeral industry, increasing the number of customers is the same as raising your call volume.
Is it possible to increase your call volume? Absolutely!
One of the easiest ways to increase call volume is to create a low-priced direct cremation package. You won’t make much off of it, but you can increase your call volume.
A better way to increase your call volume is to combine two strategies; become the top-rated funeral home in town, plus make sure you rank in the top 3 of Google listings. If you do both of those things, you will connect with every undecided call in your market.
An undecided call is one in which the decision-maker has no allegiance to a particular funeral home. In this case, they turn to Google, their trusted resource.
They search for “funeral homes near me” and Google gives them a list of three local funeral homes. Your business is on that list, and you have far more 5-star reviews than your competitors. The chances of you winning that call are pretty high.
#2 Increase the frequency of purchases
About a month ago, I wrote a newsletter describing a company called Crumbl Cookies. They are masters at increasing the frequency of purchase.
But this strategy is a little more challenging for funeral homes. There are only so many deaths in a market, and they happen when they happen.
Whether you’re talking about at-need or pre-need, people only need one funeral, so “frequency of purchase” doesn’t apply.
#3 Increase the average purchase price
Is it possible to increase the average purchase price at a funeral home? Absolutely!!
Raising your GPL prices is an obvious way to accomplish this, but most funeral home owners only do that when under inflationary pressure (like right now).
A better way to increase your average purchase price is to have options available for people who want to buy more. For example, you could add Farewell Parties, Receptions, scattering ceremonies, home garden cremation niche, parting stones, and lots of other merchandise.
Also, you want to make sure that you have high-priced options for people who have money to spend. For example, a few $50k funerals can really help to increase your overall average purchase price.
#4 Increase the lifetime value of the customer
Acquiring a new customer cost five times more than retaining an existing customer. That’s why successful businesses focus on finding ways to increase the lifetime value of every new customer they bring in the doors.
You’ve invested in marketing of some form, and you have made arrangements with a new family. Now you need to make sure that you maximize the value of the new relationship.
If you do this right, you should win every call in that family for years to come. You should also be receiving referrals from the family as they spread the word to their friends.
It comes down to your ability to create customer loyalty.
Do low prices create customer loyalty? No.
Does being professional and courteous create customer loyalty? Unfortunately, no. It helps, but it’s not enough anymore.
The best way to create loyalty is to have a superior customer experience.
Can you offer a funeral experience that is significantly better than what is being provided by your competitors? If so, you create loyal customers and increase their lifetime value every time you conduct a service.
Those are the four ways to grow any business applied to a funeral home business. I must have enjoyed the seminar because I kept the notes for over a decade.
But there’s a fifth way to grow a business that I’d like to add to the list.
#5 Increase profits
Strategies #1 through #4 are all ways to increase the revenue, and that’s important.
But revenue won’t grow your company. Only profit can grow your company.
Profit gives you the ability to do things like invest in marketing & advertising, remodel your facility, acquire a competitor, or hire another Funeral Director so you can take a weekend off.
To increase your net profit, scrutinize your expenses and consider whether each line item adds to either the customer experience or operational efficiency.
If you do that, you will improve your profit and have the funds required to grow your funeral home business.
Until next time
John
