Less is more: The case for fewer funeral homes in the U.S.

Funeral service has been teetering on the brink of a major consumer, service and economic shift for the past few years. Never before has our profession experienced so many challenges, at one time, from so many different sources. From rising cremation rates to casket stores, "consumer watchdog" groups to consolidators, flat or declining death rates and profits to increasing personnel costs. All of us in deathcare are now faced with issues that our predecessors only considered minor "bleeps" on the radar screen.

Any deathcare professional in a competitive market should look at these challenges with a sense of urgency, and choose to use them as an opportunity to make positive changes in his or her company. Those in smaller or less volatile markets should come to grips with the fact that change is just over the next hill, and heed the lessons of leading-edge firms that have failed to adapt. Shifting consumer desires and demands have many people wondering, "What type of business are we are really in these days?" What ever happened to the good old days when everyone had a 2 o'clock funeral and bought a burial vault? Anyway, change is inevitable, but we do have the choice of how we react and serve our client families.

I think that this consumer, service and economic shift has started to create an industry-wide, intellectual epiphany: Funeral service seems to be going the way of hardware retailers and drug stores. What was once a cottage industry now needs the efficiencies that other businesses have had to embrace to remain viable. This is not a story of big vs. little, but one of professional Darwinism.

In short, there are just too many funeral homes and cemeteries, which causes a dilution of families per funeral/cemetery provider. The fact of the matter is, there are too many providers to get the financial support needed from the funeral-consumer client base. A "culling of the herd" would create a healthier economic environment and allow economies of scale that would help providers better absorb their many fixed costs.

Not long ago, I had a conversation with Glenn Gould of MKJ Marketing, Largo, Fla., and we discussed the future of our profession. He stated that the United States was saturated with 6,000 to 10,000 too many funeral homes (out of about 20,000), and that the majority of this over-saturation is in the Northeast. Consider a state like Pennsylvania, where the average funeral home operates at a 60-call level. Think of communities of 60,000 that divide 480 annual deaths among seven funeral homes. This lends itself to funeral-service professionals who are operating their firms on a part-time basis or just getting by, without the wherewithal for needed updating. Glenn acknowledged that the other factor in the Northeast is that many retirees go south and don't return home when they die.

Small margins often create a status-quo mentality when it comes to idea development, facility improvement or service enhancements. So many operators find it hard to reinvest in their businesses if their lifestyle is challenged by a lack of cash on hand to take that trip or buy that new car. They're less likely to dedicate the funds needed to train and educate staff – and provide a superior funeral/cemetery product that will be contemporary and meaningful.

Beyond the direct economic issues associated with the excessive number of providers is perhaps an even more compelling and critical issue: bad performers. What they are doing to the deathcare consumer? I truly believe that one half of all the funeral homes and cemeteries do a bad job and need to go away. They infect the funeral consumer with an inferior product. They offer inadequate facilities, under-trained staff, and an unwillingness to be flexible with the funeral consumer's needs and desires. That hurts us all.

I have read that 80% of the general public believes that all funeral/cemetery operators do the same thing. The vast majority of consumers do not understand that there is a huge disparity – in quality and professionalism – among firms. So what happens when unknowing families use funeral homes or cemeteries that are in a convenient location but do a very mediocre or substandard job? That family might say, "That service was fine for Dad – but when I die, I don't want a funeral." Next time there is a death in that family, they have a compelling argument to try something different. For example, the family might choose a direct cremation with a memorial service at the church or country club followed by the scattering of cremated remains on the 18th green.

And who can blame them? People pay a lot of hard-earned money for funerals and cemetery services. They expect the Superbowl and many times get a junior-varsity scrimmage. The bad operators are giving our future consumers the impression that all of funeral service operates at a disappointing level of performance. Unfortunately, the vast majority of deathcare providers think they are outstanding operators when, in fact, they fall short of a persuasive standard. We only have to look at the restaurant business to understand how poor service, facilities and product affect their clientele.

How many funeral homes or cemeteries is the right number? What minimum call volume would be the correct target, so that the surviving firms would have the resources do a better job of helping each client family value that event we currently call a funeral? I still contend that half of the operators need to go away. In competitive areas, maybe a call volume of 300-plus would encourage operators to take their "funeral experience" to a higher level. Maybe the answer in some communities is for a couple of firms to join together to achieve the critical mass needed to operate a better facility and "step up their game," so to speak. Hiring, training and retaining an outstanding staff is key to the creation of a better funeral product. A great staff is worth the investment, and people must be fulfilled in their job, or they move on. Without such rewards, good licensees often become new competitors, which can add to the problem of too many funeral homes with too little volume.

So, what does the future hold? Unfortunately, there will be quite a number of funeral-home operators that will not have anything to sell when the time comes for them to retire. Their facilities will be out of date and their low volume will make it easy for a new, contemporary facility that has begun reacting to consumers' changing preferences to simply take "their calls" away. Ask the current funeral-consumer decision-makers (women between 40 and 65) whether they prefer "Victorian elegance" to a modern, single-level facility that has a bright, open feel, provides food & beverage, plus offers state-of-the-art, multi-media services. What do you think their answer would be?

Is there a clear-cut answer and action step to a bright future? No, but Charles Darwin and John Locke were right about natural selection and the marketplace dictating who will be the survivors. Funeral service, like everything else, evolves with every generation. Our branch of the tree will survive, but it could use a little trimming from time to time.

Mark Krause is President of Krause Funeral Homes and Cremation Service in Milwaukee, Wis., which serves 1,200 families annually at 4 locations, including its Informed Choice lower-cost alternative. The firm's web site is www.krausefuneralhome.com You can reach Mark at 414-464-4640 or mark@krausefuneralhome.com