Welcome to 2023!!
You’ve probably heard all the warnings about a recession coming this year. Some news outlets are reporting that we’re already in a recession.
Are you worried about how a recession will impact your funeral business?
Past recessions have not had a major impact on the funeral industry. In fact, it’s generally considered to be a “recession-proof” industry which is why so much investment capital has moved into the industry over the past decade.
I believe that the funeral industry may have been recession-proof as long as the Greatest Generation and Silent Generation were making the purchase decisions. But with Baby Boomers in control these days, I think it’s naive to think that a recession won’t impact your funeral home’s bottom line.
I read an interesting article discussing three business tips to survive and even thrive during a recession. It was a general business article and not specific to the funeral industry, yet I think the points are still worth considering.
Tip #1 – Lipstick Theory
During a recession, lipstick sales go up while the sale of more expensive personal care items decreases. Consumers will buy more small luxuries since they can’t buy big ones.
How can your business offer a product that feels luxurious at a relatively low-cost item yet with a high-profit margin?
Tip #2 – Resist the Herd Fear Mentality
During recessions, the herd mentality says that you should lower your prices. What if you go the opposite direction and create exclusivity and scarcity around your products so you can increase prices?
Tip #3 – Flip the Narrative
Instead of echoing the doom and gloom that everyone is talking about, how can you make people feel nostalgic, warm, safe, and comfortable? During a recession, people always gravitate to businesses that make them feel this way.
Now, how can we apply those “recession survival tips” to your funeral home business?
Tip #1 – Lipstick Theory
Obviously, you don’t sell lipstick, but what low-cost items can you sell?
How about cremation merchandise?
During a recession, more families will choose cremation instead of burial simply because of the cost difference. Sometimes, this will leave some money to buy some small but luxurious items.
That sounds like a perfect time to offer products like parting stones or cremation jewelry. If you don’t have a small luxurious item to offer families, now would be a perfect time to add some to your product mix.
Tip #2 – Resist the Herd Fear Mentality
When inflation took off this year, many funeral home owners used that as an opportunity to do something they hadn’t done in years…increase their prices. That was reasonable at the time, but you would be hard-pressed to justify another across-the-board increase in 2023.
But you could create a package using exclusivity and scarcity to offer someone who has the money but needs a reason to spend it with you.
One simple way to do that is to start charging a different price for funerals on different days and times. For example, you could offer a low-cost visitation in the morning, charge a higher price for afternoons and evenings, and a higher price for weekends.
Yes, that complicates your general price list. But it would allow you to create both a low-cost and premium offer for families to choose from simply by letting them pick the day and time of their service.
Tip #3 – Flip the Narrative
The point here is that during a recession, people will gravitate to businesses that make them feel nostalgic. It is tempting to think that this means Baby Boomers will want traditional funerals.
They won’t.
If you want to make Baby Boomers feel nostalgic, create a funeral service that celebrates the life they lived, not the life their parents lived.
You can do simple things like fill your funeral home with memorabilia and props that remind a boomer about their childhood. Some of my clients have created prop rooms filled with all sorts of items that they can use for families to help tell a life story.
Also, remember to play music from the 60’s and 70’s. It’s time to replace Amazing Grace with Let it Be by the Beatles.
The bottom line is that if you can help Boomers feel nostalgic, you will win more Boomer calls!
Will a recession hit us hard in 2023?
Personally, I tend to believe that it’s just the press blowing things out of proportion. But I also believe in being prepared.
If the doom and gloomers are right, you can use these three tips to guide you through the recession and maintain a healthy bottom line.
Here’s to a great 2023!!
John
PS: Most owners will do nothing. If you are proactive during a recession, it’s a great opportunity to win new families you can serve for years.
