At one time, direct cremation was not considered a viable business. It was regarded as “bottom feeding” and conjured images of “that-dude-with-a-van.”
Now, not only is direct cremation a viable business, we’re seeing the rise of low-cost direct cremation companies like Tulip and Solace taking over the market.
What’s making low-cost cremations so successful?
- Cremation companies are built to scale with technology to:
- eliminate steps in the purchase process,
- offer low-touch transactions,
- simpler arrangement options,
- and lower overhead costs while offering more services per staff.
- They’re also not tied to a specific location, so they can offer virtual services and may only need to travel to pick up the body.
Depending on your business model this is either a profitable trend or a frustrating fad for you.
Whether you’re a low cost-cremation business or a more traditional funeral home, here’s how to ride this wave of change.
If you’re already running a low-cost cremation business…
If you’re in the low-cost cremation business already, you’re probably busy, processing a high-volume of services. Your small number of staff are busy working the phones, supporting customers and ensuring good service.
You know that with lower overhead costs, your business can be highly profitable. Just how profitable can low-cost cremations be? Tulip, to give an example, is making over $12 million in annual revenue. While your business might not have revenue in the millions, here’s what to do next to ensure you’re making the most out of low-cost cremations.
Focus on getting positive online reviews
Online reviews are one of the best ways to build trust with potential customers. If a potential customer looks at two websites, one with 100 four-star reviews and another with just a few in the three-star range, they’re likely going with the higher-rate and higher-reviewed option, because they know that other people have had a good experience.
Read our article, “The Complete Guide to Online Reviews for Your Funeral Home” to get deeper guidance on how to get online reviews for Google, Facebook, and Yelp, and learn what to do if you get a negative review.
Use Parting Pro to help you streamline your business
Parting Pro’s software helps low-cost cremation providers streamline their cremation business. Want to close more “price shoppers” without being pushy? Our one-click proposal generation and automatic email follow-ups make that simple. Increase your average contract total with an easy-to-use online store.
Marco Cannestra, a Parting Pro customer from Cremation Society of Milwaukee says, “Our earning sales have gone up from using the previous website as well as things like credit cards, memorial videos. Then just traffic in general…it’s been increasing quite a bit.”
If you’re running a traditional funeral home…
If you’re a traditional funeral home feeling frustrated by losing market share to low-cost cremations, it’s relatively easy to add this service to your offerings.
You already have a good relationship within your community, you just need the infrastructure support to add direct-cremation to your business. Here’s what to do next to ensure you don’t miss out on this revenue stream.
Use the brand you’ve built locally to reach a new audience
You know your community, but the way new competition generally enters the market is through price. Before you know it, half of your traditional business is now going to the new player on the block. The way to combat this is to offer low-cost cremations through your well-known brand.
According to John McQueen, a successful funeral home operator who simultaneously grew brands at the high and low ends of the market, traditional funeral homes typically serve clients in a 3-5 mile radius. Cremations extend your reach, typically to something like a 25 mile radius.
Differentiate your services to keep your existing customers
If you decide to offer direct cremations, you might be wondering how to avoid cannibalizing your existing services. Here’s a useful metaphor from John on how to keep your services differentiated and create two revenue streams. It’s called the “profit pyramid.” Think of the Marriott hotel chain. Ritz Carlton, their priciest and highest service option is the top of their pyramid and does the least volume. As they move down the pyramid, the hotels, like Marriott and Fairfield Inn do more volume at a lower cost.
For a traditional funeral home the profit pyramid looks the same, with traditional services that are higher cost and higher touch at the top, and direct cremations at the bottom. John explains, “The way most competitors come in to compete against you is based on price. Over time they climb that pyramid and start to charge more and more.” Having a low-cost cremation option is what John calls a “firewall brand” because it makes it harder for new entrants to come into your marketplace and compete against you.
Use Parting Pro to start offering low-cost cremations
The cost for you to take on this service is nominal and Parting Pro makes it simple to get set up. For example, we make sure you’re in compliance with FTC’s Funeral Rule regulations when you’re offering cremations online. We can help you set up a website within 24 hours, including a personalized online store that accepts digital forms and signatures.
Bottom line: Low-cost cremation is popular and profitable
Cremation rates in the U.S. are on the rise, so it’s good business to offer low-cost cremations. In 2016, 50.2% of Americans chose cremation over burial. By 2035, the National Funeral Directors Association projects the rate of cremation to reach 78.8%.
Whether you’re offering only low-cost cremations or you’re adding this service to your traditional offerings, there’s one thing in common: building trust.
Building trust with your buyer, particularly a price sensitive buyer, will encourage them to purchase additional items like urns. They might even be more likely to purchase more than they would in person, if the items are presented in an easy-to-discover way.
If funeral homes and direct cremations businesses showcase their trustworthiness and willingness to help up front, people are willing to buy more. The lower overhead costs and more services per staff that low-cost cremation allows for will help your business stay profitable.