By Wilson H. Beebe, Jr.
Not since your great-great- Setting the Stage for an Evolving Model
grandfather converted his
furniture and livery business
to a mortuary and added a
funeral service charge to the cost of the casket has the funeral
profession been poised for so much change. The alignment of
an aging population, industry economics, consumer
preference changes, and labor demands have formed a
crucible out of which the business and practice of funeral
directing is expected to emerge in a fundamentally altered
form.
Current funeral home roles and consumer needs suggest
that what funeral directors “know” about the business of
life when a death occurs can complement the traditional
body-centered activities of what they “do.” For example,
the death of a senior family member often marks a
crossroads for a family as it makes important decisions
about how “Mom” will maintain her independence, health
and finances now that “Dad” is gone. By integrating elder-
care and senior support capacities into current funeral
home offerings, the funeral director can position himself to
provide valuable guidance for surviving family members
long after the funeral.
Because of their vast experience and community
knowledge, funeral directors have much more to offer
families than just a “good funeral.” They have knowledge
about the “business of life” that can be turned into a
valuable service for families. The development of a new
business model — the “Knowledge Based” model of
funeral service — can create new value for licensees while
diversifying the workforce with new skills and alliances.
The “Knowledge Based” model provides a road map for a
new generation of services that will help reposition the role
of funeral directors in the social and economic fabric of
their communities.
60
Changes in consumer needs have given rise to subtle shifts
in disposition and ceremony preferences, creating a climate
that is highly conducive to the evolution of the profession.
These preference changes are driven by the need for
convenience stemming from more dispersed families, two-
income households, and ever weakening formal religious
affiliations. Price competition and lifestyle changes are
resulting in diminished merchandise margins and fragmented,
unpredictable and oftentimes reduced service requirements.
The continued expansion in cremation rates is the most
apparent barometer of this phenomenon.
While the majority of families continue to adhere to the
basic model of body-centered activities, they are not averse to
challenging the traditional, expected rules upon which those
activities are based, whether that means different or shorter
calling hours, non-religious celebrations, or a diminished
perception of merchandise value. The introduction of new
types of merchandise such as creative keepsakes, casket
inscriptions and a plethora of other “add-ons” is not going to
make up for steadily deteriorating margins on caskets and
facilities usage. On average, funeral home gross profit as a
percentage of sales is about half of what it was 20 years ago.
There is also a distinct and discernable movement away
from body-centered activities altogether by what may be
referred to as the “opt out” consumers — those who are
tethered to what a funeral home provides only by the reality
of the body. These trends pose significant challenges to the
industry’s standards of labor and facility utilization, pricing
and fulfillment; in short, the existing business model may be
on the verge of crisis.
Efforts to articulate these changes and promote alternative
models have been championed by the National Funeral
Director’s Association (NFDA). The NFDA is promoting a
American Funeral Director • April 2005
model that relies on the funeral director’s traditional role
being supplemented by and extended into an “event
planning” model. Its value is that it assumes a more people
intense, less traditional “cookie cutter” approach, challenging
practitioners to integrate their traditional services with related
services such as catering, flowers, monuments, video tributes
and the like, so as to create a “celebrationist” message to the
public. These are all positive directions.
The “celebrationist” model does have its limitations,
however; it does not intrinsically distinguish the funeral
director from other providers of hospitality services. While
some personalization directions may add marginal revenue,
increased training and emphasis on personalization is not
really a breakthrough opportunity. Additionally, the risks of
commoditization, national branding and affinity marketing
may lead to low-margin, price-driven business models. While
this may adequately serve some segment of the market (and a
large one at that), the greater and longer-term risk lies in the
absence of alternatives that are capable of breaking through
consumer perceptions of the funeral business as little more
than a conduit for the disposition of the remains.
There is a need for a cohesive business and social model
that is perceived as offering something that is not only
different, but also necessary and valuable in ways that even
the consumer himself or herself may not have considered.
Think about it — “What services can the funeral director
provide that are of large, perhaps hidden economic and social
value, not easily duplicated, and not body-centered?”
Introducing the “Knowledge Based” Model
Funeral directors are uniquely positioned at a point of crisis
that typically generates a cascade of needs for the survivors.
However, what funeral directors currently cater to are those
immediate needs as they relate to the care and disposition of
the dead body, which is their heritage function. But in a world
where the “business of life” for survivors has become

Universe of Offerings
The current model of funeral service range of products, services and influence.
encompasses the opportunity to offer a range of
The recent focus on expansion as it relates to
goods and services and/or referrals traditionally
the event planning and celebrationist model
associated with the care and custody of human
is a positive development and does create a new
remains, and the ritual associated with
sphere of influence.
disposition.
But relative to the size, longer-term relevance
The key to long-term funeral service viability
and unmet needs of today s survivors,
and opportunity is to expand that
the potential of the

Industry Labor
Economics

Demographics Consumer
Preferences

American Funeral Director • April 2005 61

increasingly complex, funeral directors are often information
traffic controllers, guiding families about what to do, whom
to see and where to go on any number of issues related to the
care, comfort and maintenance of the elderly and bereaved.
When formalized, extended and professionalized, such
services, for survivors working on a long distance basis, for
those lacking sufficient social knowledge to adequately
navigate the systemic requirements of social service programs,
for two-income households with insufficient time, for
widows/widowers with inadequate resolve, may well possess
intrinsic utility and value in the contemporary marketplace.
This concept proposes to make funeral homes a recognized,
community-based resource of critical information, advisory
and consulting services for families either anticipating or
confronting a death, and those who might continue using
such services after the initial crisis intervention. The
“Knowledge Based” model of funeral service is focused on
helping survivors navigate the business of life when a loved
one has died, following on the unique ceremonial
acknowledgement of a life lived.
From a competitive standpoint, this is a model that would
be difficult to replicate for groups outside of funeral service,
and that is consistent with the non-commodity, personal and
customized service approach that is the direct heritage and
franchise of funeral directing. Being an information gateway
to elder care and senior support information and other
information-based services is a potentially viable, profitable
and credible model that does not abandon the commitment
to perfecting existing services and developing other non-body
centered activities.
Labor and Professionalization
How does the “Knowledge Based” model provide
solutions to the industry’s labor dilemmas? Currently there is
a quantifiable shortage of funeral directors, and the rate of
new entrants into the market is insufficient. Additionally,
there is a need for significant change in labor resources,
training and education as the marketplace moves from a
merchandise-valued environment to a more service-valued
environment. The increased customization of individual
ritual and service needs requires more versatility in the labor
force, not less. The the lack of post-licensure curriculum and
training has done as much to diminish labor versatility in the
profession as any other one thing.
The cost of inadequately trained personnel is probably
greater than is appreciated and bears directly on the negative
price/value relationships experienced by consumers and the
ability of funeral firms to deliver in an environment where

• Prepare required paperwork,

permits
• Retain and care for remains
• Facility, staff and equipment
overhead
• Obtain expanded biographical
data
• Coordinate with required third
parties
• Prepare and place notices
• Orchestrate memorial and
religious services
Variable Non-Declinable
Service Fee Pricing Structure
• Prepare required paperwork,
permits
• Retain and care for remains
• Facility, staff and equipment
overhead

• Conduct life transition • Obtain expanded biographical

assessment to identify
independent living challenges
for survivors, eligibility for
assistance, and potential
solutions to ensure continuity
of care
data
• Coordinate with required third
parties
• Prepare and place notices
• Orchestrate memorial and
religious services
• Prepare required paperwork,
permits
• Retain and care for remains
• Facility, staff and equipment
overhead

Expanded Non-Declinable Standard Non-Declinable Minimum Non-Declinable

A variable non-declinable service fee system would allow funeral homes to have multiple offerings with different a
about what is provided for in the charge for Basic Services of Funeral Director and Staff. For example, a funeral
have three offerings: a stripped down Minimum that it associates with its direct dispositions, a Standard that it
with a more typical funeral, and an Expanded offering that, in this case, is used to present gateway elder care

62 American Funeral Director • April 2005

families increasingly demand differentiation. In the absence
of staff that is sufficiently flexible and resourceful, it is
difficult to meet the varied and diverse demands of
consumers and to then justify the large, single-unit price non-
declinable professional service fees that funeral directors are
accustomed to charging.
The “Knowledge Based” approach will create the
environment and training structures necessary to expand
upon the skills of licensees and divorce the funeral director’s
license from its exclusive reliance for value on making funeral
arrangements and embalming. This provides an opportunity
to professionalize the license so it includes supervisory
responsibility for new entrants from other professions, such
as social workers, who would bring skills critical to the
integration of a “Knowledge Based” set of services. Such a
scenario could create the opportunity for licensee capacity to
be “tiered up” to include competencies involving advanced
educational requirements in the social services, rather than
being “tiered down” as would be the case with strategies such
as a split embalmer/funeral director license.
Price Flexibility
and the “Knowledge Based” Model
In addition to expanding educational and career
development opportunities, the “Knowledge Based” model
provides further support for an oft-discussed new pricing
model — the variable non-declinable service fee. This new
pricing structure has received industry-wide attention of late.
NFDA has petitioned the Federal Trade Commission to
convert the current non-declinable fee of “Basic Services of
Funeral Director and Staff” from a single-fee approach to one
that varies depending on the type of arrangements being
made.
The reason for the proposed change is that the inflexibility
of the single-fee structure threatens the long-term interests of
funeral directors everywhere. As funeral directors continue to
rely on a single, non-declinable service fee as the core of the
industry’s pricing system, they run up against barriers that
induce them to avoid meeting emerging consumer needs and
expectations of value-added service. Rather than finding
different ways to communicate price and value, it is
sometimes easier to say: “The government makes us do it.”
Under the variable service fee concept, a fee would still be
“non-declinable” and a part of every arrangement, however it
would enable funeral homes to scale this fee according to the
services they actually provide rather than basing it on some
increasingly mythical, high-margin, traditional funeral. For
example, the arrangement service fee for a graveside service
could be less than the arrangement service fee for a funeral that
includes public visitation, a church service and cemetery
committal. The arrangement service fee would more clearly
reflect the complexity — or simplicity — of the funeral and
American Funeral Director • April 2005
Research & Development
As part of a joint venture between the New Jersey
State Funeral Directors Association and the
Metropolitan (New York City) Funeral Directors
Association, a multi-year research and
development project was undertaken in 2004 to
explore the viability of the Knowledge Based
Model. The overarching goal is to redefine and
expand the role of funeral directors in the 21st
century and develop new professional
opportunities for association members.
Several phases of consumer research explore
different models and assumptions in an attempt
to identify the best of the existing body-
centered practices and how they can be optimally
supplemented with new services. The project will
validate and develop the Knowledge Based
model, relying upon consumer, labor and
internal industry attitudes, capacities and
guidance.
Initial findings indicate that the Knowledge
Based model has merit. While the majority of
consumers are satisfied with current funeral
home offerings and desire the use of
personalization techniques, when given the
opportunity to purchase value-added services
such as those described in the Knowledge
Based model, two-thirds expressed a desire to
Consumers Who Like/Dislike The Prospect of
Funeral Homes Offering Value-Added Services
Such as Having Fully-Trained/Experienced Staff
Assist Families with Services Ranging From
Legal, Financial, Business Matters and Offering
Emotional Support
63
disposition service the family selects.
A variable service fee would continue
to provide a mechanism for overhead
recovery and would allow a firm to
begin the process of unbundling the
levels of service that we take for granted
as either being necessary or expected in
all cases. The current rigid method of
overhead assessment interferes with
transmitting the values of uniqueness
that we purport to cherish. It negates the
consumer’s desire for choice and
selection and impedes the development
and distribution of new, high-value
products and services, i.e. “Knowledge
Based” services, which could become
part of an expanded, variable non-
declinable fee.
While the variable non-declinable
service fee pricing structure has merit
without the “Knowledge Based”
business model, it becomes even more
useful and relevant to both consumers
and funeral directors with the inclusion
of “Knowledge Based” services. They
complement one another — each
making the other stronger.
Consider the Impact
of Success
The success of the “Knowledge
Based” model and introduction of the
variable non-declinable service fee will
support the continuous evolution of
funeral service. Labor will depend upon
“tiering up” licensee value rather than
regressing to some older model like the
split funeral director/embalmer license.
The new model allows for the
integration of other labor competencies
and provides a natural path for second-
career individuals. The new model can
provide career “headroom” for existing
licensees to manage both body-centered
and knowledge based functions. At the
same time, it will stimulate the demand
for, and help support the economics of,
substantive continuing education
programming that will reinforce and
elevate the basic skill sets already
required of individuals seeking to
succeed in the industry.
For a majority of consumers,
resources within the “complicated
64
society” appear to be segmented and
difficult to identify. The “Knowledge
Based” model of funeral service
provides consumers with a “one-stop
shopping” scenario. They can use their
trusted funeral director as a continuing
source of guidance, information and
hands-on assistance in navigating the
confusing road ahead, including
attending to financial details, finding
qualified professional referrals and
expert elder care services, which also
helps to address the socially driven
dilemma of an aging population.
Finally, industry economics will be
significantly improved with higher
margins stemming from viable revenue
replacement sources that smooth out
earnings and labor utilization better
than preneed ever could. The
“Knowledge Based” model and variable
non-declinable service fee will help to
establish a system that provides the
flexibility we need to adequately engage
in real price communication and
product differentiation that contributes
to families choosing to “opt into”
funeral service for reasons other than
the obvious. The end result will be
significantly improved public
perceptions, longer customer
relationships, and greater economic
participation in an industry that
maintains its core function while
evolving to be something better.
AFD
Wilson H. Beebe Jr. has served as the
executive director of the New Jersey State
Funeral Directors Association for the past
19 years, and concurrently as the executive
director for the Metropolitan (NYC)
Funeral Directors Association for the last
11 years. Prior to that Beebe served as the
assistant executive director with the New
York State Funeral Directors Association
from 1980 to 1985. Beebe also serves as
president of Thanexus Inc., the only
funeral practice management cooperative
in the United States, providing human
resource, financial and marketing services.
Beebe is a director of the National
Cooperative Business Association
(NCBA), and a trustee of the Association
Master Trust (a health insurance benefits
provider for over 12,000 participants).
American Funeral Director • April 2005