The third and final post (still keeping within NFDA's football theme this year, I might add) to "3 things heard loud & clear @ NFDA2015", my review of #nfda2015 in Indianapolis focuses on:
3 :: KNOWING YOUR COMPETITION TODAY AND TOMORROW!
Well first step is to understand what competition means...So what is competition anyway? I liked this definition from Merriam-Webster...
noun | com-pe-ti-tion | \käm-pə-ˈti-shən\
the effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms
The latter part of the definition, "...of a third party" is easy to figure out. The third party is any person looking to plan a funeral whether on an at-need basis or pre-need basis. Now for the more interesting part of the definition, the first part... "the effort of two or more parties acting independently to secure the business..."
When I work with funeral homes, I try to understand the full picture of their business, so the conversation of competition comes up quite frequently. I ask the following questions to a funeral home...
Who is your competition?- Traditional v. non-traditional sources of competition.
Traditional sources = other brick and mortar funeral homes
Non-traditional sources = other sources that a family may outsource part of funeral services or merchandise to (examples include casket stores, cremation societies, Internet casket/urn sales, etc.)
What market share do they hold versus you?- Unit volume v. revenue volume v. profit volume
Most funeral homes define market share by unit volume, ie. # of calls. Have you ever thought to also think of your market share in terms of estimated revenue market share and profit market share? Sure, some of these will be estimates... an estimate is better than not knowing at all!
Why is this important? ...because you might just find that even if you are behind in # of calls, you actually could be more profitable. As an example, what if the cremation society is skimming off some of your direct cremation calls which are breakeven or maybe even non-profitable. Is this really a bad thing for your business... no! However, if we solely measure on # of calls, it could look terrible!!
Figuring out estimated market share by revenue and volume is relatively easy to do if you know the competition's split between burials, direct cremations and cremations with a service; and then also have a copy of their GPL (or rough price estimations of the aforementioned services).
What is their market strategy and most importantly what is yours?
Too often I get an answer similar to "he serves the white collar, she serves the blue collar". This is not a market strategy, these are target audiences. Take this scenario:
If there two other funeral homes and a cremation society in town... Funeral Home A is promoting cremations because he owns a crematory, Funeral Home B recently started promoting cremation packages because they usually follow Funeral Home A, and the Cremation Society has always promoted low cost cremation.... All audiences in the market are hearing nothing but cremation!! The families in your area are getting inundated with cremation talk!
In an effort to adapt your strategy, you can certainly revisit the old cremation packages you have been using for the last 6 years... and you should do that, but that won't differentiate you. A simplistic example of what will differentiate you would be if you added post-service grief/aftercare support and an event/catering area and paired these services with your updated cremation packages.
Who is your competition?
Will your competition change in the future? What will traditional v. non-traditional sources look like?
The landscape will change if the funeral industry does not change at the same rate as consumer preferences. Scratch that... the landscape is already changing!
Traditional = funeral homes, casket stores, cremation societies, the Internet, etc.
Non-traditional = churches that allow visitations for little to no cost? restaurants? hotels? wedding venues?
As an example... What would prevent a wedding venue who does not typically do any business on the week days from offering week day only life celebrations? What prevents a company like Marriott from filling empty meeting rooms/space with the grieving - hey and they already got the catering thing figured out!
As quoted by Dan Isard in his seminar at NFDA... "There are 2,000 less funeral homes today than there were in 2005."
I would venture to say there is the same amount of competition, just the form of our competition is changing!
a) define who your competition will be (next 5 years, 10 years and 20 years)?
b) what you want your market share to be (revenue, profits, and calls)?
c) plan a market strategy that will to not only survive, but thrive alongside your current and future competition.