Testing our product

During this week we have continued trying to find potential clients to obtain new insight.to support the development we have created a short video that explain our product. On the video you will be able to see what is the problem that we are solving and also some prototypes so people can understand better our product and also we could use it like an analytical tool to understand if people like or don't like the idea or if they give us new comments.

A look in the Undertakers Shop

 On Thursday the 13th ( thank God it was not Friday the 13th, otherwise it would have made things a lot creepier) Lorena and I went to visit the Undertakers shop in Wateringen.
We just missed out on the Undertaker himself, but we were able to meet with Barry, a 25 year old who prepares almost everything for the Undertaker.
I guess we could say that this was a lucky accident, since we could now ask him questions and get feedback from a young persons perspective, who was working in the industry we were trying to get access to.

As we were driving to the shop, the first thing that caught our attention from the outside was a apple green coffin. When we entered the shop, we saw a coffin, fully painted with sunflowers. When asked why this was done, Barry told us that clients nowadays were seeking customization and with these options stalled they were trying to make the clients aware that customization was available at their shop, though very limited. When asked what kind of customization was provided, he said that their options till date are limited. They are able to provide colored coffins, which are spray painted. Apart from that they provide stickers and crayons for people who want to customize the coffin themselves. According to Barry, there is an increase in demands for the crayons as he notices that grandchildren and children want to sign, or write a message for their (grand)parents on the coffins.

More customization and creativity can be seen in coffins meant for children. This is an existing market we are not looking to focus on, but it is good to know that the techniques out there exist. Mainly for children there were eco coffins with etchings engraved in them.

Lorena and I carefully inspected the form of the coffins, because we are going to meet with someone to make some miniature prototypes. We soon agreed to a basic coffin which we thought would be handy for paneling and printing (see David's blog). After verification with Barry we were happy to know that most clients chose for that type of coffin. When we had a look in the garage afterwards, we could see that the stock consisted of mainly this type of coffin.

For us it was interesting to see how the process of selling these coffins is taking place. Apparently the producer of a coffin, places one in an undertakers showroom. He then provides the undertaker with a booklet or folder and some materials. The undertaker takes this with him when selling to a pre-planner or the family of the deceased.

Standing there in the showroom made us realize that there is much to be done in this industry, because its still very traditional and boring. Initial thoughts that come to our mind is

• create incentives for the Undertaker to do some push selling on your coffins : underlying business model must be refined
• Equip your representatives (undertakers) with I-pads so they can immediately show a 3-d model to their clients, what the coffin would look like

We have to find out the possibilities and costs for this. Of course software would also be needed

Meeting with Pre-planners

I met with a Dutch Catholic woman in her late 60s who had actually discussed her funeral requirements with her son.  She communicated that she wished to be cremated and not buried as she did not want to place a future financial burden on her children, as the maintenance of the  burial plot has to be paid for every 10 years.  She was against customising her coffin with a sleeve.  She felt that any personal affects should be placed in the coffin.  

The second person I met with was a Dutch Catholic man in his early 70s.  He was very much against the customisation of his coffin as it was not traditional - the requirements for his funeral.

The third person I met with was a Dutch man in his mid-40s who thought the concept was childish, and did not like the idea of images on the coffin.  He also preferred a traditional coffin.

All were shown the printing machine and examples of creative and designer coffins, but were very much against them.

Required Sales (to make us Happy)

To achieve a target of €100,000 per year in profits for the partnership, we would have to sell around 820 caskets per year.  This is assuming that we can sell them for at least €500 each, have variable costs of €350 per casket, and annual fixed costs of €23,000 per year.  

The variable costs were determined as follows: 

 - €250 per casket (which is what the undertaker pays for the caskets he sells to his custumers for €500);

 - €50 per casket for paint / printing material (W.A.G.)

 - €50 per casket for marketing (using Google Adsense) 

The fixed costs were determined as follows: 

 - €17,400 annuallly for the rental of workspace

 - €4,000 annually for equipment depreciation

 - €1,600 annually for interest on loan to buy printer (note: if we want to pay off the loan, we will need to spend an addition €3,400 per year to pay down the principle of the loan)

Based on these numbers (which I explain in further detail below), if we sell 1,000 caskets, our Earnings Before Taxes (EBT) will be €127,000 and the earnings per casket (epc) will be €127. If we sell 750 caskets, EBT will be €89,500 and epc would be €119.  If we sell 500 caskets, EBT would be €52,000 and epc would be €104.  To get an EBT of €100,000 we would have to sell 820 caskets.  

Equipment: 

For these calculations, I assumed that we would only utilize machines that were capable of printing pictures on wood (see a video of an example of one on YouTube: http://youtu.be/DrJhL2WOudg).  For a rough estimate of what one of these machines would cost, I looked at Alibaba.  The prices of similar printers on Alibaba.com vary from US$13,000 to US$20,000.  To be conservative, I used the most expensive printer for my calculations.  On top of the price listed on Alibaba, we would also have to pay for shipping and handling and import duties.  Therefore I assumed that one printer would cost €20,000.  As well, I am assuming that the printer's useful life is only 5 years, and that one printer can meet a demand of 1,000 caskets per year (or around 3 caskets per day).  For an example of this printer on Alibaba, click this link: http://www.alibaba.com/product-detail/plane-table-printers-multifunction-large-format_1965119375.html

Interest: 

The interested was determine from what I pay on my line of credit, prime plus 4%.  If we were to secure the loan against the printer, this financing cost will be much cheaper.  

Pivot or Proceed: Reviewing our Business Model

After three weeks of work and having meetings with stakeholders, we paused to review what we've learned and to decide how we will continue with our model and determine what our next steps.

Based on the book stages outlined in “The Startup Owner's Manual: The Step by Step Guide For Building” we know that we are somewhere between the “Customer Discovery” and “Customer Validation” stages.

We continue to test our hypotheses through interviews and web searches, and have had a few new insights.

As per the Customer Discoveries section, we reviewed our Business Model Hypothesis and made the following updates: 

1. Updated Value Proposition Canvas

The first update was pivot our VP Canvas and make some changes which is below:

2. Update the Business Model

We reviewed our four models and decided to go with only one that we believe is the more accurate and close our MVP.

Based on our initial hypothesis, we can say the following:

Our first Business Model Canvas was:

However, after reviewing what we have learned, we updated it as follows:

3. Market size Hypothesis:

Total Addressable Market: Every person who dies in Netherlands and requires a coffin. Within our finding was that almost everyone in the Netherlands orders their coffins through an undertaker, except for the gypsies.

Served Available Market: Every person who pre-planned his/her death which corresponds approximately to an estimated 30% TAM

Target Market: Every person who pre-planned and also like customized coffins

Moreover it is important to know who will be our earlyvangelist, for the moment we think that they are people who like to buy different things like a customized coffin, but we need to continue reviewing through  interviewing final clients. 

4. Customer Segments:

1. The Customer Problem

According to our hypotheses and our research we think this is a problem because the number and types of coffins is limited. Therefore we believe that our customers are people with a Passive problem (They know of the problem but aren't motivated) and an Active Problem.

2. Customer Types

Even though we will go through the undertaker, our customers are the end users: people who pre-plan their own funerals (ie: they are old or are suffering from a terminal illness). It is also important to note that there may be influencers and recommenders that correspond to their family or closest relatives.

At this point we need to continue interviewing to know about who makes the final buy decision.

3. Customer Archetypes

Someone who: 

• wishes to plan his/her own funeral
• is elderly or has a terminal disease
• wants a non-conventional coffin and is willing to pay more for it

4. A day in the life of customer

5. Channels

For the moment we know we have to get our product to the undertaker office and the office must deliver the final product to the final client within 24hrs in some cases.

Meeting with a Second Undertaker

Meeting with a 2^nd Undertaker

In order to further test the various hypotheses we had formulated, a visit was made to a second funeral home namely the Crematorium & Uitvaartcentrum Waerdse Landen, located in Heerhugowaard.   To determine if funerals differ across the country, a funeral home in a different region to where the first interview was held was chosen.  HHW being located in the North of Holland seemed an ideal location, as the majority of the population is predominantly native Dutch with a Catholic background, which is in contrast to the first interview whose focus was on the Surinamese population in the southern part of the country.

The interview was a very pleasant process, it was held in the crematorium and the interviewee, Leonie, who is the Location Manager of the crematorium, was open and accommodating.

Dela, an insurance company who have been in business since 1937, owns the crematorium.  It is one of sixteen that they own and run throughout The Netherlands.  The other crematoriums are located in the South of the country e.g., Leiden.  They are currently expanding and building in places like Utrecht and Nijmegen and plan to build in a few other places over the next few years.  The idea to enter this business began with a few people who thought that burials ought to be respectful, and available for everyone and not just for those with money. They are a co-operation, with their members being the owners of Dela, and their goal was to build facilities for them. They enable this by allowing people to save for their funerals.  This point is in contradiction to what we learnt in the first interview, in that insurance companies were not involved in the funeral process.  This has shown that not to be true.  In fact the three largest insurance companies who partake in the funeral business include Yaarden, Monuta and Dela. They all have similar places to theirs i.e., crematoriums.  Yaarden has a crematorium in Schagen, not too far from the one in HHW.

The site consists of a set of beautifully interconnected large buildings with flat roofs and high ceilings, and is tastefully decorated with lots of wood with the purposeful use of bright colours throughout, to create an experience that is a celebration of life, and not a mourning of death. In general they cater for both funerals and cremations.  This building however, only performs cremations, but has the ability to provide both services.  One side of the building takes care of the burials and the other side takes card of the cremations. They also clean, prepare and clothe the bodies.    Although they only cremate, the bodies are prepared for the cemetery next door to them. Those having a burial can use their facilities and then they go on to the cemetery.  Since they opened in August of this year, they have had 164 cremations and 6 burials held at the local cemetery. 

When an individual with an insurance policy with Dela passes, the family member calls Dela.  Dela assigns a person, called an entrepreneur to visit the home in order to assist them in making the funeral arrangements. This may include the type of coffin, the date for the cremation, a visit to the crematorium, ability to test the music, prepare pictures and visit the deceased.  50% of the entrepreneurs come from Dela and a smaller percentage come from a company in Wormer. Individuals who are not insured with Dela, can also use them, but can and also choose from other companies and and this can also include sole undertakers.  A local uitvaartverzorging – Peter Dekker also uses their facilities.

They only opened this site in August of this year, and in order to market themselves to the local community they held an open day on October the 3^rd – 4000 people with their families, including children turned up!  Not my idea of a day out I must admit.

Leonie was taken with our idea of the sleeves and immediately mentioned that the seller of our product could be the person arranging the funeral i.e., the entrepreneur. These people would be in a position to sell our product directly to the family who were responsible for arranging the funeral.

A large percentage of the population in this area of Holland is Catholics, albeit in many cases non-practicing. Traditionally Catholics would be buried.  So when asked why so many people were opting for cremations, and what had caused this change, she explained that they were performing more crematoriums due to a trend that has been progressing over the last 5 years. Research has shown them that there has been a significant increase in the number of older people, that we are living longer and that until up until 2030 the number of cremations will increase. Part of this change is due to financials.  With cremation you only pay once for the funeral, whereas with a burial every 10 years you have to renew your contract and pay for maintenance.  She mentioned that religion appears to have nothing to do with this change in trends. Religion had something to do with it in the early days – Catholics would not choose for cremation, however, it is no longer so strict.  In the North of Holland they have a number of organisations (volunteers in the little communities) that arrange burials within the community, but they are now also approaching Dela for cremations.  These individuals are volunteers who look after the local cemeteries.  However due to this trend, they are now offering their community members the option for cremation with this site.

She mentioned that a few years ago all funerals were identical, that is now no longer the case.  People now arrive on site with ideas on how they would like to bury a deceased family member; it is no longer one size fits all.

The organisation arranges cremations and burials for a wide age range.  Recently they cremated a large number of people aged between 50 and 60 years old.  Other days they can be 80+ but they also have a lot of younger people.

She also mentioned that the law states that the deceased needs to be buried within 6 working days.  Should they die at the weekend, they are given a few extra days grace.  The 6-day period can be extended, but they have to apply for permission from the local gemeente explaining why they need the additional time.

When asked whether people planned their own funerals she stated that most people make plans for themselves.  These are individuals who know they are going to die and pay a visit to the location to take a look around, after the visit they find someone else to arrange the funeral on their behalf by providing written details on what they require upon their death. 

When discussing our idea of coffin sleeves, she said it had a lot of potential and that it would depend on the right pricing. She believes the market would be interested in this product because if you have a plain coffin, you can place the sleeve on top of it to make it unique –she couldn’t give a price for how much we could sell it for though.   She also mentioned that there are a lot of companies who have entered the market for funeral products, e.g., Green Coffin, that offer different coffins and various products.  They themselves also have a shop with many different products e.g., an urn that dissolves in seawater, and one that decomposes when buried in earth. Over the last few years there have been companies similar to ours who have entered this market.  She states that there is a big market for these products.  Money is important but fundamentally a funeral is an emotional event, and family member want to do the best they can for their loved ones. 

An important point made is that there is an organisation whose role it is to approve products that can be used in cremations, and to decide whether or not a particular product meets the necessary requirements.  This is important as it pertains to safety and that all products that will be used in the cremation oven are bound to meeting a set of safety requirements, for the following reason.  The cremation oven becomes very hot, approx. 900 degrees.  If they have many cremations in one day, the stones in the coffin become very hot and the doors then have to be opened. When placing the coffin into the oven, the end of the coffin may start to burn before the entire coffin has been placed into the oven, and the heat and flames generated from this may injure the workers.  In order to protect the workers, only flame resistant materials can be used.  Obviously the sleeves need to eventually burn away but should not do so immediately.

Our product has to be flame resistant and basically in line with what is required for furniture.  They circumvent this issue by either spraying the coffin with water or placing a wet sheet on top of it.  These are important points for us to take into account when designing the sleeves. The material we use would have to delay the process of burning.

An interesting fact she shared was that many people are now building their own coffins, from materials they’ve purchased from Gamma and Praxis. This is not necessarily from a financial perspective, but the need to add a personal touch – a step in the process of saying goodbye to a loved one. 

They themselves do not sell coffins, only services. However, they offer customers the ability to order coffins through them as part of the service. They order the coffins on behalf of the customer from a company called Borga located in Hoorn.  This company offers a wide range of coffins in many different colours, and not only the traditional black, white and brown.  Alongside the choice of colour they can also select the fabric and the colour of the inner fabric.

A week before the funeral the body will rest in state in an open coffin in one of their rooms, where people can come to say goodbye to the deceased.  She made a suggestion that we could consider making designs for the material inside the coffins – perhaps an extension of our offering?  Depending on the type of sleeve we propose, it may only be visible when the coffin is closed, and not be visible when the coffin is open. 

A new trend it seems is the signing of coffins. Often children draw on them with crayons, and on the inside of the lid, people write messages.

When asked about a budget funeral, similar to the No Frills Low Cost BMC created last week.  She mentioned that there are some who have no money and therefore have no choice.  There is a colleague company, that offers a budget version (PCHooft) but it was not a big success, because there is no choice.  They pay little, but can’t choose when the cremation occurs, or have a farewell process that involves spending time with the body.  In terms of our product offering, she believes it is good to offer a wide range of prices so from cheap to expensive would be perfect. 

Dela’s most expensive service costs E1195 but they have cheaper options depending on what is required.  They also sell remembrance items, e.g., they take a thumb print of the deceased and imprint it on wax or jewellery- or put the ashes in a piece of jewellery i.e., earring or a necklace. There are a lot of options.

When asked what in her experience she think customers need, as the sleeve is just one idea that we believe is needed, however the end customer may not see value in it, so what could we offer? She believes hospitality is underrated in this business.  You need to understand what hospitality means.

When pushed for what we could offer as a business, she emphasized that the sleeve being personalized, is what is nice about our idea!

When asking about the time involved in producing a sleeve for a funeral, she mentioned the following: When someone dies the first thing they do is to arrange a date for the cremation and the service. The deceased will be in the coffin the next day so if we make a sleeve that fits inside the coffin it has to be made within 24 hours.  The sleeve that covers the coffin can be used if the coffin is closed.  This is often the case when the deceased is disfigured. Also not everyone wants an open coffin.  However, in the majority of cases closed coffins are used for the ceremony.

A few websites that Leonie provided, one includes the organisation that approves funeral related products.

http://www.dela.nl/uitvaart/wat-is-mogelijk/kist

http://www.lvc-online.nl/

http://www.vtu-online.nl/

Summary

In summary, we have received further confirmation of our assumption that there is a market for our product.  We have identified an unforeseen channel through which the products can be sold, and confirmed that insurance companies are involved in the funeral arrangements via the representatives they send out to arrange the funeral. Furthermore an outcome from both interviews has identified that our customer may not necessarily be the final user, but an intermediary such as the insurance company representative and/or the undertaker i.e., the individual who is responsible for assisting the family with the arrangements for the funeral.

Next Steps

Going forward we need to take into account that we are now half way through the course and should be focusing on what we wish to achieve in the time we have left. We are now in the 4th week and realistically have only two weeks remaining. In the final week we have to be in a position to give the presentation.  

I think we are now armed with information about who our customer is, and given that, we should be focusing on tangible and definable goals that we can achieve in the remaining time.

Creative Coffins

Someone once told me that there's a 99.9% that any idea that anyone comes up with has already been thought up by someone else, and a quick Google search shows that we at 'Six Feet Under' aren't the first to start a company that helps people be a bit more creative at funerals.  The purpose of this post is to highlight that our idea does indeed have potential.

Source: http://www.creativecoffins.com/coffins/spitf

Creative Coffins was the first site that came up during this search.  Creative Coffins provides picture coffins, offering a wide selection of designs.  The company is based in The Channel Islands and only ships to the UK.  

What this company does is similar to what we wish to do as well.  However, rather than shipping the entire coffin, we want to just focus on printing the photo and laminating it on the exterior of an inexpensive coffin. One of our assumptions is that people would be willing to pay for this service as it would be much more meaningful than a traditional expensive heavy-wood coffin.  

Colourful Coffins is another company that helps people celebrate their unique lives, by offering customizable designs.  The company is also based in the UK and has a simple, intuitive website that customers use to design their own coffin.  The company appears to have a network of funeral directors as partners, and distributes the coffins exclusively through these funeral directors.  

Source: http://colourfulcoffins.com/2013/05/religious/

One advantage of going through funeral directors is that most people choose to go through a funeral director (at least that's our assumption), and by assuring the funeral directors that they will only sell through them and not directly to the customer, it is more likely that Colourful Coffins will be promoted by the funeral directors rather than Creative Coffins.

Overall, I find that the existence of these companies encouraging rather than discouraging.  Too often I hear people dismiss an entrepreneurial idea solely on the basis that a similar company exists. However, I believe that an existing company proves that there is a market for the idea.

At Six Feet Under, we plan on differentiating ourselves from companies such as those mentioned above by providing a service that only ships the laminate material (ie: the photo that's glued to the casket), and applying it to coffins already available at the funeral home.  By doing this, we believe that the casket could be customized relatively inexpensively and within short notice.  Further, by only needing to ship the laminate material, the costs of express shipping it to the funeral home (or undertaker) will be significantly cheaper than shipping the entire coffin.

In addition to photos, we plan to also offer fabric and leather options. 

Moving Foward

There are a few assumptions that we need to verify:

1. Is there a market for similar coffins in The Netherlands? If so, how large is it and what is the customer archetype?  
2. Will Dutch undertakers work with us to sell this service / product to their customers? 
3. Can we provide a quality product by laminating prints onto coffins?  How do we do this?  
4. How much is the customer willing to pay for this product?  

Some other possibilities: 

• Contact both Creative Coffins and Colourful Coffins and explain that we are interested in setting up a similar company in The Netherlands and ask them if they'd be willing to share some facts and figures and possibly their experience in starting up the company.  

Meeting With the Undertaker

To test our different hypothesis' and assumptions, we had to get in the field. Through one of our friends it was relatively easy to meet an undertaker, who was willing to help us out with our questions. The meeting was very friendly and informal.

First we were curious about the process an undertaker has to go through, once called by the family of the deceased. He explained that it was his responsibility to arrange for all the details of the funeral: the priest, a coffin,the invitation, the flowers and the cars. The Insurance companies did not take care of anything other than the pay out of the Insurance money. This explanation took away one of our main assumptions, where we assumed that the Insurance scheme's included some basic types of coffins, depending on the sum that would be paid out. It also gives us a choice of neglecting the Insurance companies completely or the possibility of proposing schemes with our designer coffins for them to sell. This is something we would have to discuss further in the future.

Another one of our assumptions was that undertakers must have a space problem, because in the Netherlands there is no space to store all the coffins. The information we got did not confirm that. Some undertakers have a shop in the outskirts of big cities. This is meant for people who shop for their own funeral. This group of people is willing to drive outside of the city to choose a coffin.
For the rest of the funerals, the undertaker has a number of coffin suppliers he can contact to deliver a coffin within 24 hours. As far as the custimization of coffins go, these can be painted and dried in a specific color by the supplier, within 24 hours as well. With this information we know that we should design a product in such a way that a customizable and designer coffin would be available within 24 hours. Our initial thoughts  towards sleeves and/or palleting can be a potentially good answer to thos.

When going to a family, the undertaker has a book with some sample materials available, so that a coffin can be chosen. He emphasized on the fact that the niche market that he was mainly hired by, Surinamese people, always chose for the basic coffin, because the emphasis was on the rituals instead of on the coffin. With this information available, we know that we don't have to put a lot of energy into marketing our product to this group.  David and Vandana allready had a discussion about the catalog that should be available for undertakers. There is even a possibility to provide the undertakers with an Ipad so they can show the customer a 3D model of what the coffin would look like.

When asked about the materials a coffin was build with, he said it's very simple chipboard, because this is easily decomposable. There is a small group of people who want a massive wooden coffin and are willing to pay for it. He also gave us the information that the margins of his coffins range from 50% to 100%, on the chipboard coffins only. He markets his services through different schemes and he even has one scheme where the coffin is 'free' and customers only pay for the services. This is interesting for his target group, because he focusses on a very select group of people who emphasize on the rituals and not at all on the coffin. For us it would be interesting to work with the chipboard coffins, because this would make our margins more interesting.

During our investigation we found that it is a very simple process to order a coffin online and have it delivered within 24 hours, without intervention of an undertaker. We were curious to know what percentage of people ordered the coffins without the intervention of an undertaker. It seems that almost everyone in the Netherlands orders their coffins through an undertaker, except for the gypsies. The reason that the gypsies don't order a coffin through an undertaker, is that they want to decorate the coffin themselves and they put a lot of time into it. There are no coffins available for this special niche. With this information we can carefully conclude that there is a market for designer coffins, even if it would be for a small niche group.
 
We wanted to know who we should market our designer coffins to. Should it be directly to people shopping for their own funeral, or should it be to undertakers who sell to the family of the deceased. According to the undertaker, the proportion of people shopping for their own funeral is 30% vs. the 70% of people who arrange the funerals of their family members. As a reaction to this question he offered to display our designer coffins in his shop, when they were available, for people shopping for their own funeral. He admitted that he was very excited about the product because as he said ...' there is nothing more frustrating and boring about the job of an undertaker, than offering the same boring coffins every time...I personally certainly believe that there is a market for this product'... This enthousiastic reaction is a big motivator for our group.  The undertaker also suggested that we would have a look in his shop and also at a coffin producer in Katwijk. These visits have yet to be planned in, but we are sure it will give us more insights about coffin materials and the production process.
 

Week 2

Week 2: Problem-Solution Fit

Step 2.1: The Value Proposition Canvas
During the past week we worked on Value Proposition Canvas and started to “get out of the building”.

We are trying to understand the following questions:

• Who are our customers? What jobs are they trying to get done?
• What pains and/or gains do they experience while they are trying to get this job done?
• What is our product and service offering (our Value Proposition) going to be? What will be its features?
• How does our offering result in pain relievers and/or gain creators? A powerful way to describe this is to tell two stories: (1) how does the day in the life of the user look like before they bought/started to use your product; and (2) how does the day in the life of the user look like after they bought/started to use your product.

Further Value Proposition Canvases were created based on the following BMCs.

• Freemium:

• No Frills Low Cost

• Pets

Step 2.2: Testing the Problem

During this week we started applying "going out of the building" for that we have interviewed an undertaker.

For more information you could check it in our blog "Meeting With the Undertaker".

On the other hand we have started preparing the questionnaires to be done to final clients and also undertakers.

After the interviews we will continue reviewing our hypotheses and also our model.

Step 2.3: Testing the Solution

By this moment we are not with our final model and we have 4 preliminar models.

Then after review our analysis we will define our final model to be worked.
 

Step 2.4: Your Rules of the Game