We always build the big picture out of little observations and bits of evidence. Here's a couple things I came across this week we all should consider.
Recession on the Way?
I bumped into the business manager of our local symphony. Continuously operating for more than 75 years, this little community orchestra has weathered many ups and downs. Nevertheless, he had lots of concern about a big drop in subscriptions this year. We talked about this for several minutes and came up with a couple of key issues.
First of all lots of money has gone out of households as special donations to disaster relief all around the world. We have seen a raft of tragedies and many extra calls for participation. Some symphony money may have traveled to New Orleans or even tsunami relief this year. More importantly, the audience is comprised of many seniors and many of them on fixed incomes of one form or another. Paying for heat looms large for them this year. My friend himself said that the payment plan for his heating had *doubled* over last year. He has had to adjust his budget very carefully himself having retired a number of years ago.
So what does this mean to funeral service? Pay attention to the economics here. In the past we tended to say that funeral service was fairly resistant to economic downturns. After all people have to deal with the dead. However times have changed since the last major recession.
- Cremation has become socially acceptable in many areas. Economic pressures may lead more people to economize through reduced or eliminated services. That’s bad for cash-flow.
- People may find themselves more receptive to low price advertising than in the past and choose to switch, expecting to economize. You may never see those families again.
- Preneed (particularly preneed insurance) means a lot more to our industry than ever before. I would expect to see a rise in default rates in many regions of the country. If folks have to choose between heat and a funeral, they will probably choose the heat and worry about the funeral later. Watch those charge backs! Could get expensive. Watch those marketing programs. Are they still producing an acceptable return?
- Funeral participation may slack off as people find it more expensive to maintain and run their automobiles. More seniors may decide to stay home. How will you keep them involved and engaged with your families?
- Real estate values may be on the way down. When inflation rises, so do interest rates. When interest rates rise, real estate prices tend to fall. If you were thinking of closing a facility or consolidating with a competitor, and your strategy depended upon a given real estate price. Close now, it may soon be too late.
Keep an eye on that bottom line. We may have much more to think about than we ever have in the past. Plus we have less bottom line to work with due to thinner margins overall.
Glocalization
I saw this term mentioned in a column by Thomas Friedman in the New York Times this week. Basically it refers to a unique property of the internet, that works outside our normal understandings of media and communication. With the rise of weblogs (you’re reading one by the way) and podcasting (audio and video programs produced by individuals or small groups like garage bands), the world has access to millions of new sources of information and entertainment from all around the world. Thing is, none of these individuals need a degree in computer science or need to spend much money to get started. In the process the world gets globally distributed content produced by very local individuals. Combine the two words and you get glocalize. For instance, Friedman talked of a Chinese company that has started cataloging podcasts generated in their country and this is happening all around the world, all at the same time. Instead of West dominates East in terms of media creation and distribution, under these circumstances everyone everywhere starts out on a newly leveled playing field, without media companies or news organizations in the middle.
In the process America along with the rest of the world takes another giant leap AWAY from mass markets and even understandable local demographics. The people in our neighborhoods will continue to become more and more diverse in their media choices, personal opinions and in the social relationships they create. Influences will come from every where and we, along with hosts of other service companies, will have to figure out how to understand, market to and serve an ever increasing range of needs.
Pay attention to the internet. Its influence continues to grow and its impact on our world has only just begun.
Remember, you heard it here first. Just like the term life-caching. [See earlier essay here: Life-Caching? ] Have a fantastic week. BT
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