When Eric Vandermeersch returned to funerals two years ago, he was determined to transform the industry. Vandermeersch, a former funeral director,...
When Eric Vandermeersch returned to funerals two years ago, he was determined to transform the industry. Vandermeersch, a former funeral director, remembers taking phone calls and hearing the same complaint over and over: "Why do I need to leave my family at a time like this to meet with someone when all I want is a basic funeral service?"
The answer was as simple as it was distasteful: because an in-person meeting allows a funeral director to apply sales pressure to get the family member to spend more. "It's very discouraging," says Vandermeersch, "because you get into the business to help families and, unfortunately, the most important thing to the employers is the numbers." By his mid-20s, he had abandoned his career in frustration.
Now the 29-year-old is back and redefining customer service as the CEO of Basic Funerals and Cremation Choices, Canada's first online provider of funeral services. The company, based in Mississauga, Ont., has applied an e-commerce model to an industry that for centuries has exploited a captive market. Now that's changing, as tech-savvy baby boomers with fewer hang-ups about tradition are demanding convenience, customization and affordability as they arrange their parents' final affairs - a trend that Basic Funerals is cashing in on.
Just like a traditional funeral home, Basic Funerals arranges visitations, burials and cremations. But unlike a funeral home, the company owns none of the venues in which services are held, and it receives more than 90% of its orders through an automated system on its website, BasicFunerals.com.
The idea was hatched in November 2008. At the time, Vandermeersch owned a successful gym in Mississauga. That's where he met 39-year-old Dominic Mazzone, a serial entrepreneur with a background in investment banking and e-commerce who would go on to become the chairman of Basic Funerals.
Vandermeersch and Mazzone got to know each other and, one night over dinner, Vandermeersch pitched his idea for a no-frills funeral company. He explained that 80% of funeral clients were looking for nothing more than a basic service, yet they had to contend with sales tactics.
Mazzone suggested they take the idea further. Instead of competing on the same level, why not take advantage of lean e-commerce strategies to minimize overhead? Many cemeteries have on-site chapels that can be leased, and personalized venues such as golf courses can also host services. Ordering could be automated. Staff could be mobile. And all those efficiencies could be passed on to the consumer in the form of a big discount - typically, 45% off the industry average.
By January 2009, Basic Funerals was up and running. The company has grown at a phenomenal rate, with year-over-year revenue rising by more than 500%. In just two years, Vandermeersch and Mazzone have hired 12 employees, including eight home-based funeral directors who can be dispatched to serve clients across southern Ontario. This year alone, the company hopes to arrange 1,500 funeral services.
Not that there's anything cutting edge about Basic Funerals' e-commerce strategy. Customers go online to select among available cities and venues. Then they choose from an à la carte menu of funeral options. They might choose simple cremation-an increasingly popular option that accounts for 70% of funerals in Ontario and 98% of Basic Funerals' customers' preferences-or more extravagant options, such as a catered family gathering with a graveside memorial service. Finally, clients decide on followup communication. That could be an in-home consultation from a funeral director, a phone call or, if all the details have already been sorted out, no followup at all.
This is a fairly standard 21st-century e-commerce configuration. But for the funeral industry, in which a sense of obligation compels customers to submit unquestioningly to exorbitant prices, it seems radical.
"I think the industry knows that it has a captive audience," says Mazzone, "because when somebody walks into a funeral home, they're in distress. So, why would you change that? The model has worked for [traditional funeral homes]. They know they can make people feel bad about not buying something."
The boomers, however, are changing all that. As their parents reach the end of their lives, the demographic bulge is leading yet another revolt. Funeral clients today, says Mazzone, are far more comfortable buying services online, and they're not afraid to break away from traditions that they think don't make sense.
"We're at a time when everything must be instant," says Mazzone. "So, if you cannot get answers, you're going to move on. The back button is always there on your Internet browser."
High barriers to entry are also to blame for the lack of competition in the traditional funeral business. The industry is heavily regulated, and new entrants have to make big investments in real estate, embalming facilities, vehicles and licences. As a result, 80% of the traditional industry - which generates revenue of $1.3 billion per year - are independent operators, many of whom are inheritors.
By using an e-commerce model, however, Basic Funerals has circumvented those obstacles. It has embalming done by licensed, home-based funeral directors. And, while provincial regulations stipulate that cemeteries cannot operate funeral homes on their own land, these rules don't prohibit cemeteries from leasing their chapels to third parties.
When Basic Funerals arrived on the scene, many of its rivals were put off by this loophole. "They all put in complaints about us that, once investigated, were found to be completely false," says Vandermeersch.
In January, Basic Funerals expanded stateside, leasing a facility in Chicago similar to the firm's industrial headquarters in Mississauga and hiring a funeral director to cover Illinois. Mazzone says the company has the right ingredients to continue expanding rapidly. By 2016, he says, Basic Funerals will be providing more than 12,000 services per year in multiple provinces and states - "Or we're doing something wrong and we should fire ourselves."
Vandermeersch, for his part, is just thrilled to be doing what he loves: "Going back into it for me was about creating a new definition of how to serve families, one that Dominic and I created together. So, it was a very different angle, and I'm very glad to be back."
Information is current as of the original date of publication.
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