Traditional Funeral Homes with Separate Cremation Companies














 
 
 
 

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How many funeral homes are creating a new cremation arm to optimize the market place?

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We all know that cremation is on the increase in the United States.  Cremation only accounted for 4% of dispositions in the 1960’s, whereas industry observers forecast the rate to reach 60% by 2025.  Not only is the cremation rate on the increase, but also cultural attitudes have shifted.  The lavish, full-service ‘traditional’ funeral is not as popular as it once was, more people are opting for simplicity, be it by choice or financial limitations.
 

The cremation ‘revolution’

Industry critics have often likened the funeral industry to a dinosaur, referring to its metaphorical nature to be archaic, slow to adapt to change, and possibly under threat of extinction if it does not adapt.  However, the industry is changing I believe, albeit slowly, and more funeral homes are adapting to embrace the demand for cremation, simplicity and lower costs.

Having been involved in the funeral industry online for over 12 years now, we have witnessed some significant changes in how the industry has adapted to the Internet.  It is not so many years ago that many funeral directors we spoke with claimed that they did not need a web site,

that their core business came from word-of-mouth and press advertising.  Now today, not only are more and more funeral homes ensuring that they have an online presence, some funeral directors now even have Facebook pages and Twitter accounts.

The demand for cremation is hitting many funeral homes bottom line hard, with less incremental products and services required when a cremation is performed. There is no need for an elaborate casket, grave plot, grave liner and gravestone. Even embalming is most often not required, and some families just opt for a very simple cremation with no service, preferring to conduct their own memorial or ash scattering at a later date.  Industry watchdogs have reported that revenue for funeral homes is down by 27%, due largely to the shift to cremation. 

So how is the death care industry responding to the rising demand for cremation? 

Setting up a separate cremation business

Many are attempting to adapt their business model, seeing that they have to compete in the “no-frills” cremation market place, and that where sales numbers decline, then volume sales have to increase to meet the shortfall.  Service Corporation International (SCI) has their own budget cremation arm National Cremation Society (NCS), a national network of funeral homes offering low cost cremation services.  Their NCS web site is constructed to appear a separate entity, it does not share the Dignity Memorial branding, yet it is a catch-net for consumers searching for a cremation society.  SCI’s creation of the National Cremation Society demonstrates the business model of creating a separate entity to serve the rising demand for cremation and no-frills funerals.  In recognition of the growth in the direct cremation market, especially amongst baby boomers, SCI also acquired The Neptune Society in 2011.  This brand allows them to market to the niche, and less price-conscious, boomer audience. 

A number of independent funeral homes have also founded separate cremation and “affordable” funeral business entities, operating a separate arm to their traditional full-service funeral business.  Their cremation and budget-targeted business is branded independently and will usually disclose prices and packages for simple cremations and burials, clearly competing in their local market place.  They are adapting to need and demand, are still retaining their high-end funeral business, but also eliminating competition from those funeral professionals who are choosing to set up in the cremation business without even operating their own premises.

Jardine Funeral Home in Strongsville, Ohio has adapted in just this way, and operates Cleveland Cremation out of the same premises.  Cleveland Cremation guarantees to “save families up to 40% of the cost of using a traditional funeral firm”….and yet, of course, they ARE a traditional funeral firm!   Cleveland Cremation even offers a “No Cost Cremation”, something now growing in popularity during these tough economic times by partnering with anatomical donation programs that offer a free cremation to the family.  By offering full-service, simple cremation and no-cost cremation the Jardine’s can truly meet all funeral needs of their community.

Similarly Hann Funeral Home in Chicago also operate Care Memorial Cremation Solutions, and even extend their services to “cremation of Illinois services”, moving into the wider regional services that many who operate a crematory now offer.  Care Memorial even go so far as to boldly highlight on their home page their direct cremation price at $975.00, as do Cleveland Cremation with their highly transparent “Simple Cremation” package at just $1,045.

Does price matter?

We at US FUNERALS ONLINE have long advocated for more transparency in the industry, understanding that consumers using the Internet today to research funeral costs absolutely want to know how much the actual costs are.  We find it extremely frustrating to find funeral home web sites that spew content about centuries of history, and detailed staff profiles but fail to give customers information about funeral prices.

What funeral businesses like Jardine and Hann Funeral Homes are doing is providing the customer what they want, and meeting the changing demand within the death care sector.

Not all funeral homes are seeing this as the way forward, in fact, it is reported that two of the largest publicly traded funeral home businesses in the U.S. warned their investors over the last two trading quarters that this upward trend in cremation is negatively impacting on their revenue and turnover.
 

Is Up-selling the answer?

Some industry leaders are attempting to steer families away from immediate cremation by trying to focus on our cultural need for ritual.  So how can a request for a simple cremation be up sold to create more profits?  According to staff from Dimbleby, Friedel, Williams and Edmunds Funeral Homes in New York State, the answer is to encourage families to have a viewing prior to cremation.  This can then require additional services such as embalming, use of a visitation/chapel room, 
and a casket for the viewing.  Funeral director Mike Nicodemus from Hollomon-Brown Funeral Home in Virginia Beach even claimed that they manage to up-sell to as many as 60% of families who walk into their funeral home inquiring about a cremation.(1)

Up-selling can play a key role in maintaining revenue when you consider that the average cost of a funeral (with a vault) is now $7,755, whereas the average cost of a direct cremation is $2,070. (2)

Creating new incremental cremation industries

Some funeral homes are investing more into elaborate cremation urn display rooms, expensive customized urns or even lavish ash scattering services.  SCI and other corporate cemetery chains have converted a number of cemeteries into memorial gardens.  Many who recognize the cremation trend are already converting large buildings into columbaria.

On a daily basis we are witnessing new industries emerging to meet this trend for cremation. Cremation Solutions launched their ‘Holyland Ash Scattering’ in 2012, and offer funeral homes that affiliate and refer clients a $250 fee.  The cremation diamond industry is gaining popularity, and when you consider the 10% commission fee paid to a funeral home when the diamonds start at around $3,000, you can quite see how funeral homes are eager to participate and push these products and services.  The memorialization market that accompanies cremation is expanding daily and now you can blast ashes into space, embed ashes into a coral reef, create a memorial firework…the possibilities are endless, and the commission is all incremental.

The DFS Memorials network of low cost cremation and funeral providers

The DFS Memorials network was also borne out of the demand for cremation services at an affordable cost.  It provides a service by signposting people to their nearest “low cost” cremation provider offering a direct cremation for between $495 and $1,395. All members of the network are independent, licensed funeral homes who are representative of providing a ‘quality service at a fair price’.

Marketing funeral and cremation services has always been a somewhat problematic task.  For those funeral businesses that do create a new cremation entity, they can clearly promote cremation and benefit from the trend, without jeopardizing their existing funeral business.

Expert Author: Sara J. Marsden

Sara is the Editor in Chief for US Funerals Online and has been researching and writing about the death care industry in the US for the last 5 years.

Related Articles:

Resources:
DFS Memorials – Network of affordable cremation providers
Sources:

1 – BBC ‘Funeral homes turn cremation into hot new business
2 – National Funeral Directors Association (NFDA)

Last Revised:  03/11/2013

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