By Glenn Gould, CEO of MKJ Marketing

Owners of funeral homes and cemeteries often question why their businesses are not performing to the level they expect. They employ consultants to divine solutions, but they often overlook a more direct approach: market research.

Market research is a $40 billion industry globally simply because research is cheaper than trial and error. This is particularly true in funeral service, as the response to an effective advertising or promotional program is so protracted that most advertisers will discontinue the campaign long before it has had time to succeed. Conversely, it will also take a long time to determine if an advertising campaign has failed. In either case, the business lost valuable time and financial resources attempting to solve a problem they didn’t understand.

In the past, market research studies commissioned by funeral businesses fell into two categories:

  • Prospective trade area studies for site selection and to project the success for a new facility.
  • To explain why business was down, determine the opportunity for market share development, and to lay out a marketing strategy to bring about the needed growth. 

In recent years, a new category of research studies has evolved as a result of accelerated industry consolidation. When families are selecting a funeral home, convenience can be an important factor. An important reason for many acquisitions is to achieve geographic balance within a community. For example, a funeral business with a single location on the north side of a city might naturally consider an acquisition on the south side – or in any part of the city with a growing or aging population.

As important as location can be, most acquisitions also consider the brand image of the firm being acquired. A high-volume firm with a seemingly good image can have image liabilities that will cause business volume to decline in the future. Market research answers questions an acquirer should consider before committing millions of dollars.

Today’s most senior generation is the largest generation in American history. Many of these aging business owners are transferring their businesses to the next generation. Millennials and Generations X and Z are often better educated than their parents and are well aware of the cultural changes impacting funeral service. Many of these evolving business owners are investing in research to gain a firm grasp of the business’ long-term prospects and short-term challenges. 

Another critical aspect a new owner should understand is the importance the consumer places on the present owner. Many funeral businesses are driven by the local notoriety of a staff member, often the owner. What impact will the departure of that individual have on case volume? It has been well documented over the past three decades that many families will shift their funeral home preference when someone the know and like leaves a business, particularly when the departure is due to an acquisition.

In these types of situations, it’s good to know which name the firm should be operated under. If the acquirer’s name is well recognized in an area and has a generally positive image, it can be better to include the new owner’s name on the shingle. Perhaps it’s best to eliminate the previous name altogether. This is particularly true when the call volume declined precipitously under the previous management. Clients will often refer to the firm’s volume in the distant past; the truth is consumers’ memories are not that long. They are more likely to refer to the most recent five years or decade than they are the preceding era. 

With growth, either through acquisition or new facilities, the objective is to extend the brand beyond its current boundaries. For example, if a consumer goods company, such as the Gillette razor, has image liabilities, such as being too expensive, the negative image of that product will carry over to any new product that the company introduces. Even if the original product continues to sell well due to necessity or consumer habits, the new product will have a greater challenge in creating a customer base.

Branding is the most powerful driving force in business. It is proven every day that consumers are willing to pay a premium for a branded product, which is why selecting a name for an acquired business is so important. The brand equity is measured by how much more people will pay for a branded product versus an unbranded product – or a product with image liabilities. Brand equity can only be measured by research. Understanding a business’s brand equity is really the first step in evaluating its opportunities for growth. A weak or misunderstood brand can encounter significant obstacles.

Many funeral businesses are successful in their primary community but experience failure as they expand into new neighborhoods and communities. Typically, firms will do 60 to 70 percent of their volume from their original location, with branches often not exceeding 100 to 150 cases. The reason? Over time, they learned how to serve the families in their immediate neighborhoods, but they lacked that knowledge when they expanded into new communities. Opening a facility in a new community without the benefit of market research has proven to be a high-risk venture.

The research industry experienced a significant downturn during the previous decade as households were disconnecting their hardwire phones for cellphones. During that time, cellphone billing was based upon minutes. Fortunately for cellphone users and the research industry, cellphone billing is now based upon features instead of minutes. As such, consumers randomly selected for research calls are more likely to accept the call and participate in the study as a respondent.

The most important function of market research is not in reporting what will happen – but in revealing what is on the consumers’ minds. Understanding the impact of funeral home websites cannot be understood by asking if the respondent has ever visited a funeral home website. Instead, we gain insight from how few people today would refer to the Yellow Pages.

Similarly, business growth potential is not based upon how many people live in a community, but instead, how many of them are without a funeral home preference. The greatest opportunity for growth for most funeral businesses is from consumers who really do not know which funeral home they would contact if/when the need arose. Attracting that business comes from the knowledge of what is important to those consumers.

Want to learn more about market research? Click here to view all the services that MKJ Marketing offers and to schedule a consultation.

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