Demographics The value of demographic analysis and revenue forecasting in market positioning and financial management Like many industries this year, funeral service is in flux. COVID-19 has impacted the profession in ways that may permanently alter the way business is conducted. Fortunately for those trying to stay afloat while meeting the changing demands of those they serve, tools exist to help manage these turbulent times. Two of these business management tools are demographic analysis and revenue forecasting. These tools of analysis provide an idea of where you are regarding marketplace position and strategy, and where you are going in terms of total contract revenue. So, what is demographic analysis? Demographic analysis, at its core, helps businesses understand their place in the market by understanding market potential. Marketplace is one of the four fundamental areas of focus for successful funeral home businesses, along with customer service, workplace and finances. Improving your firm’s position in the marketplace though strategies such as advertising, business promotion, marketing plans or active pre-need programs starts with fully understanding the market itself. Demographic analysis helps us understand current and future demand for funeral home services by gaining insight on population composition, distribution and overall marketplace trends. Many independent funeral home owners have a strong sense of the demographic trends in their area because of their long-term relationships with the communities they serve. Four, five or six generations of service in town certainly provides a good perspective of the marketplace trends of the area. Yet the best business decisions leverage concrete data alongside these solid ground-level perspectives. This is where a thorough demographic analysis can pay dividends in your marketplace strategy decisions. For example, we dissect a map of concentric rings extending 10 miles out from the place of business. Further analysis helps us know important data in the marketplace within each of these rings, such as population trends, how many people are in the 65+ age group and changes in median household income. Generally, the 10-mile radius gives us a clear picture for most funeral home markets, but this must be tailored to a firm’s specific market. Demographic trends can influence the market death rate and a funeral home’s market share. These important metrics can and should impact marketing strategies and advertising budgets. We use demographic analysis to understand the historical and current size of the marketplace “pie” and the recent trends help us understand what the future may look like. All of this information can be employed to strengthen a funeral home’s position in the marketplace and increase their market share. Firms can use the information derived from demographic analysis to implement marketing strategies and improve the strategies they have. Knowledge of local demographic data can have specific applications such as search engine optimization (SEO) strategy, setting parameters for digital marketing campaigns or targeted community involvement programs. This data improves the precision of these initiatives and helps firms gain the most for their spend. Ultimately, demographic analysis helps funeral home businesses make better decisions in improving their marketplace position so every dollar spent is a dollar spent wisely. How revenue forecasting helps you prepare for the unexpected In the uncertain times we’ve experienced recently, a clear financial picture has become even more important for managing expenses and maintaining cash flow. For many businesses, in any given year, an annual operating budget acts as a guide for financial decision-making throughout the fiscal year. It is a financial plan that can be consistently referenced throughout the year to keep business expenses on target. But COVID-19 has changed our business rapidly. Drastic shifts in case mix, average sale by case type and overall volume can leave anyone wondering what the future looks like. www.ogr.org | The Independent® 13
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