Sample Conversation in Selected's Forum

Competitors Undercutting Your Prices

For the last couple of years we have had two competitors undercutting us and until recently I have not worried about it. I have followed the advise of consultants and others in the industry, but now I am beginning to second guess them and myself. I have lost three calls in a month to one of the other funeral homes. This area is struggling economically and people are looking to save anywhere they can. In one of these cases the family drove 15 miles to save $200 on a $7,500 service. This funeral home is beating whatever price we give the family. In talking to a colleague recently who is facing the same thing in his community he said that he is directing people to his website for prices and then asking them to shop around and if they find a better price bring it to him and he will beat it. He went on to say that he was not raised that way (and neither were any of us), but he feels like a used car salesman and has to do something to keep from losing families. Loyalty is gone and people are out to get the best price regardless of service. As little as five years ago this was not a problem in many areas of the country, but today it is and it will only get worse. What are you doing? I am looking for ideas. Thanks.

Response 1

Value. You have to communicate why you are more expensive. The key to this is differentiation. What makes you special? It cannot be answered with nice building, heritage, been here for 100 years. So has your competition. Challenge yourself, what is truly special about you? Hopefully you have several key things, uncover those and communicate them in all of your marketing. Let the other two slay each other over pricing. You will then own those looking for quality, these services will hopefully be enough to keep you profitable. By no means, in a tough economy, is this easy. But in the long run, own the quality position. After all you are a Selected firm and we are all the best & be proud of that! Don't let those price focused competitors bring you to a lower level of service. Lastly, I wish you the best of luck in winning the battle.

Response 2

There is no silver bullet for this challenge. Any time a family you've served in the past chooses another provider, it hurts. There is absolutely no conciliation and you have to go to the mattresses. In a free market, the other provider is simply trying to survive. He/she will do anything it takes to serve that family. To funeral service providers of ole, these are unscrupulous business practices. To my generation, entitlement is the slowest funeral home killer.

If a family is willing to travel 15 miles to save $200, there's probably more to it than just the money. What is it that sets the two funeral homes apart. Is it the facility? Technology? Marketing? To diagnose this differentiation is key for funeral homes to thrive.

I spoke with one of my coworkers this weekend who served as quality control for a large manufacturing plant in our area. In order for the company to continue to grow and prosper there were several key elements to factor. One element they would concentrate on every two quarters is cost. The key managers and employees would come together and offer ideas to cut operating costs. Once the ideas had been vetted, they would be implemented. Keeping the cost in check was/is key to retaining their clients. Again, there is no simple solution to aggressive competition. But we as funeral service providers must find a competitive advantage.

Response 3

Great points from all!

Last year our good friend recommended we read the book "Differentiate or Die" by Jack Trout and Steve Rivkin and look at how we are truly different in the services we offer from our competition. I would encourage all of us to read and take this back to our team members to re-look at how we serve our clients families and if we are meeting their needs. Then ask ourselves, is there more we should be doing? Take a look at our marketing materials and how our staff verbalizes the differences and find a way to clearly communicate our message in a better and more
concise way.

Response 4

I certainly agree that is the long term and best solution. A short term solution might be to create a discounted package well below their prices. You could certainly remove a few service items and limit the merchandise choices (minimum steel casket, etc). Make sure to present it to any shopper. If they are price shoppers you will know.

We used a similar approach several years ago. This will give you time to strengthen the long term survival tools.

Response 5

Another book worth reading is "The Fred Factor" by Mark Sanborn. Easy read and it is focused on being exceptional instead of ordinary. Everyone needs to be a "Fred".

Response 6

If memory serves he just came out with a second book to that one. They both look pretty good.

Response 7

This is a great discussion...the low-cost provider scenario presented is similar to what we are facing in our community. Following are words I shared with my staff a few months ago. We all need to remind ourselves why we take the high road at times like these.

What’s It Worth To You?

A local manufacturing company in our community seems to have found a way to compete with their low-cost competition by producing a superior product and deliver it faster - all at an affordable (but not the cheapest) price. They found a vendor in Starbucks willing to look past the buy-it-for-less mentality and considered the intangibles like quality, logistics and loyalty first.

We have seen this scenario take place in funeral service as well. It is no secret that caskets can be made for less in China and delivered to our doorstep. If it came down to a decision based on price alone, we would all be in the import business. However, there are other factors to consider and we continue to believe that those factors give us value when we buy from an American company.

What we do at the here is a little different because we tend to focus on the service we provide, not a product. Locally, we are faced with competition willing to do a job for less. I have always taken the path that we should be raising the standard – not lowering the expectations. Regardless, there seems to always be someone willing to perform a service for less.

When purchasing a product or commodity, everyone wants to pay less and get more. This is why Best Buy is struggling to sell its merchandise from its stores. Consumers shop at the “big box stores” where they can see, touch, feel and use everything on display but then rely on an online retailer to make the final purchase. Who blames them – the same product can be purchased for less.

Service is different. Sometimes when it comes to shopping for a service, you really do get what you pay for. It becomes more difficult to make a comparison and know that you are getting the same value; everybody provides a service at a different level. Sometimes, when selecting a lower cost provider, it is possible to spend more money or get less in return than if you used the superior provider. Did you have to absorb some costs yourself? Were some aspects of the service not done right and need to be corrected at a cost? Was the service conducted at a lower expectation? All things we should consider.

We have elected to continually raise the standard of funeral service in our area. We provide the very best combination of service, merchandise and facilities we can in hopes that people value what we do and how we do it. Obviously, there is a cost to conducting a business this way and it warrants a higher price. We just need to make sure we earn it.

That being said, in this area and during this economic downturn, we must continue to find ways to do more with less. How can we continue to provide A+ service while controlling the cost of doing business? Can we use innovation and experience to our advantage? Let’s not forget the role of plain old hustle and hard work, too. Here lies our challenge for our company, its staff and its future

Response 8

Here! Here! You clearly get it.

Invite a decorator, event planner, or the like to view your service and it may open your eyes.

Those of us that have found ways to add value and increase service while decreasing/maintaing our costs/overhead are going to survive.

The market will change. The market share may diminish more for burials; however, we can still make a solid living on those if we do something now.

The reality is that conditioning society takes years. We have our forebearors to thank for taking their collective eye off the road, so changing culture isn't an option -- listening to their needs and adapting is.

Case-in-point: How many of you have seen an increase in the number of families that opt to have visitation an hour before the service so it can all be done in one day?

One last thing: I'm a visual guy. I look at our traditional 2 tents and 21 chairs model and ask why. You should too. Most of you will say that's all we've ever done or bought. What you're really saying is that's what they sell me. We are in an industry that is dictated not by those in service, rather by manufacturing and sales.

We can change. We can adapt. I will but will you?

This is a great discussion gents

Response 9

I have been competing with 1 national discounter and 1 local discounter for several years. The main discounter has our prices on their wall and their business has grown to 1200 calls. (Our business has also grown year after year.)

There is a good book called "The Fred Factor" by Mark Sanborn. We read this several years ago and decided we need to be a "FRED" in our business and personal life. This will not address the specifics of how to compete but it will put your staff on a path of being exceptional instead of good or average.

As far as specifics I would encourage your staff to ask more questions. When you think you're done ask another.

Is cost going to be the main factor in selecting a funeral home? It is a closed in statement that puts you on the right path. If not....what is?

Along with an adamant attitude that you are not going to lose a family to a competitor 10 miles away.

Ask more questions!

Response 10

Thank you to each of you who took time and effort to weigh in on this discussion. Many good thought and ideas. I have ordered the two books recommended. I also like the idea of having a budget service. We devised one a couple years ago, but I need to look at it again and see if we can do more with it. Happy Easter to all.

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Member firm Porter Loring Mortuary

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