Disruption is Inevitable
June 16, 2017
Originally published in Funeral Business Advisor
When I was a kid there was a Burger King not too far from our house that my family would often frequent. It was cheap and had an indoor play place that afforded my parents a few minutes of solitude from my sister and I. One day, my parents took us to this Burger King and softened us up with chicken nuggets, a kid’s meal toy and even ice cream! As I was licking my ice cream and playing with whatever the $0.25 toy of the day was, my parents broke the news: we would be moving to a smaller town a few hours away.
As is the case with many young kids facing this sort of news, I immediately began thinking of all of the ways I could prevent this catastrophe from disrupting my life. The most practical solution my six-year-old brain could develop was plain and simple. I would live at Burger King. The basic necessities were all there! I had chicken nuggets and fries to eat, a play place to sleep in, and kid’s meal toys to play with! My parents could just come by and visit whenever they were town.
Obviously, my plan didn’t work out and I moved with my family. The lesson remains the same, though. Change is hard. Whether you are 6 or 60, none of us like to leave the comfort of the known. Unfortunately for businesses, however, the decision to change isn’t determined by the business, but by its customers. It’s pretty simple when you think about it. If a business doesn’t adapt and change to meet the needs of the customer, then the customer will go to someone else that will. The tech world coined this idea of change with the catchy word “disruption.”
Recently, a study of our industry was conducted by nationally renowned market research company, McKee Wallwork + Co. In their study, MWC conducted 30 minute interviews with over 3,500 individuals (that’s 72 days of interviews, for any of you doing the math) between the ages of 35 and 70 to find out what their attitude and satisfaction with the funeral industry as a whole is. We have been hearing for years now that “the Baby Boomers are coming!” so the goal of the study was to identify exactly what these new customers want, how they might affect our industry, and when these changes might take place.
The summary from the results of the study were shocking, to say the least. 48% of the study’s participants said they were dissatisfied with funeral service as a whole. Think about that! One out of two people you interact with, whether you are serving them directly or they are participating in a service you provided, are saying they wish their experience had been better! On top of that, 63% said they were dissatisfied with their interaction with the funeral home.
Normally when I share this information with funeral professionals, I get one of two reactions. The first views me like the crazy guy on the street corner with the sign that says, “The End Is Near.” And to a small extent, they may be right. It’s very easy to have a doom and gloom attitude when hearing negative feedback such as this, and the easy solution is just to dismiss or ignore it altogether. At the very least, however, it should cause some self-reflection and the opportunity to ask ourselves whether we are serving families the way they want to be served or whether we are serving them the way that is most familiar and comfortable for us.
On the opposite end of this conversation is the group that views me as Willy Wonka handing them the golden ticket. This group recognizes that there is always a massive opportunity for disruption when customers are dissatisfied with any product or service. Instead of taking these statistics personally, they understand that this means that half of their competitors’ families are dissatisfied when they leave their service, and that the field is wide open for them to step in and capture market share if they are willing to make a few changes to the way they do business.
Let’s pause for a moment and reminisce about our good friends at Blockbuster Video. At its peak in 2004, Blockbuster operated over 9,000 locations with 60,000 employees, was valued at over $5 billion, and became a Friday night staple for millions of families across the U.S. It was the king of the movie rental industry with no one seeming to be able to dethrone it. Yet there was this small thorn that bothered each and every one of its customers: late fees. We all remember racking up a week-long late fee that ended up costing us more than if we had purchased the movie outright! The inconvenience of late fees to its customers, however, brought Blockbuster roughly $800 million in revenue each and every year. That inconvenience also opened the door for a small DVD-by-mail subscription service called Netflix to step in and capture some of their market share. Netflix touted what everyone at the time wanted to hear, “No late fees!” Netflix slowly began to pick up steam, but by the year 2000 it still wasn’t profitable. It was at this time that Netflix’s CEO, Reed Hastings, approached Blockbuster about buying his business. Blockbuster turned him down, and the rest is history. Within 10 years, Blockbuster filed bankruptcy, and within 15 years, Netflix was valued at $32.9 billion…over 6 times what Blockbuster was worth at the height of its day.
As we know, hindsight is 20/20. Knowing the fate of Blockbuster and Netflix makes it really easy for us to turn up our noses and scoff at how unenlightened Blockbuster was for not purchasing Netflix when they had the chance. Did they not know this would be the future!? Did they not know that this would save their business!? In Blockbuster’s defense, their operating model was still growing revenue exponentially at the time when Netflix was struggling to stay afloat. And more than likely, a Blockbuster-run Netflix would never have achieved what the fledgling company was able to. They just didn’t have the ability to think outside the box in order to disrupt their own business model.
Ultimately, there are two truths we must hold tight to. First, change is inevitable. Second, change is hard. I’m sure when the car was invented there were plenty in our industry who said things such as “bodies don’t belong in a machine.” Yet I don’t know anyone today who does body pickups with a horse-drawn carriage anymore. As I look back to my family’s move, I see that moving helped catapult my father’s career, which allowed me to receive a great education and also connected me with the people that would help launch my own career. Just because change is hard, doesn’t make change bad.
In the funeral profession, we are currently in the same situation that Blockbuster was over 15 years ago. We have a business model that we are comfortable with and that is profitable. Why rock the boat? However, we also have nearly 50% of our customers who are dissatisfied with funeral service as a whole. We can either turn a blind eye to the reality that we are facing and just “see what happens,” or we can find our equivalent of Netflix and embrace the opportunities that are out there if we are willing to disrupt ourselves. Because the truth is, if we don’t, someone else—someone outside our industry—will.