Jardines del Tiempo (“JT”) is the leading funeral services company in Mexico, targeting the middle- and upper-middle-income segments. As a brand, it has an operating track record of more than 130 years and enjoys significant brand recognition, offering a complete range of death care products and services. The Company’s funeral service and cemetery operations consist of funeral homes, cemeteries, mausoleums, cremation services and related businesses in 14 cities across Mexico.
JT’s business model consists of two core business units and service offerings:
Pre-need: The pre-need business consists of a wide combination of funeral, burial/cemetery, cremation or mausoleum products and services as described above that are purchased in advance of the time of death. Pre-need customers are typically referred to the Company through an independent sales force. Customers that seek preneed contracts are usually between the ages of 45 and 60 and desire a pre-need contract to alleviate the burden on their family members of having to make these arrangements. Pre-need contracts are commonly, on an installment basis, with the average installment period being 30 months.
At-need/upgrades: The at-need business consists of (i) products and services purchased at the time of funeral or burial/cremation and (ii) products and services purchased as upgrades in connection with the redemption of pre-need contracts. At-need customers consist of family members and friends of the deceased who approach JT for immediate products and/or services following the death of the deceased or family members and friends who redeem a pre-need package previously purchased by the deceased. The incremental sale of products and services generated at the time of redemption of a pre-need contract, referred to as upgrades, consist of the purchase of additional products and services that were not included in the original pre-need package by the person who redeems the pre-need contract. Sales of upgrades are an important part of the business for Jardines del Tiempo, because the sale allows the Company cover a portion of the cash cost of goods sold incurred to perform the pre-need package being redeemed. Upgrades include items such as flowers, cafeteria services, larger wake rooms, better facilities or a higher quality casket.
JT’s business units are very different from each other, and require customized approaches. As described by the Company’s CEO, a seasoned manager and HBS alumn, the at-need business is similar to a hotel, primarily a “pull” business where Jardines del Tiempo has to maximize capacity utilization and provide a service for its customers. On the other hand, the pre-need business could be compared to selling time-shares, where a specialized sales-force will need to “push” the product to customers who do not require the service at the time of sale, and who will not receive anything but a promise of future service at this time.
Due to these apparently inconsolable differences among the two product and service offerings, most funerary companies around the world focus their operating model on only one of them, or have a very independent approach, in which the two businesses are almost completely disconnected from each other.
JT’s success in the last few years derives from its ability to develop an operating model that recognizes the complementarity of the two different business models and allows them to be a catalyst for the other’s performance. With this objective in mind, Jardines del Tiempo cross-trained the historically service-oriented employees in the at-need business, giving them sales tools. This way, while an at-need service is being provided, an employee respectfully approaches members of the outer circle of the deceased, denominated wanderers, and is able to get them interested in purchasing a pre-need package. This process, if carried out properly, has very high yields and serves as a high-conversion lead provider to the pre-need business, the same way that a time-share sales-rep is able to sell you a vacation program while you are enjoying the beach in Cancun. Similarly, pre-need employees in charge of redeeming pre-purchased contracts have also been cross-trained to offer customers what management denominates a “grief-upgrade”: as family members redeeming the contract have not paid anything for the service, they are usually willing to purchase an upgrade for it. These upgrades usually consist of flowers, cafeteria services, larger wake rooms or better facilities, and are paid at the at-need facility, increasing the at-need business sales and gross margins, while also improving its capacity utilization.
Jardines del Tiempo is a good example of a Company who understood well how it created value for its customers, and was able to integrate its different business units to complement each other and create an effective business cycle that allows the Company to extract value from its customers in the most efficient way.
Company Website (names has been disguised for confidentiality purposes)
Jardines del Tiempo Offering Memorandum, April 2013
Interview with Charles Lucio, CEO of Jardines del Tiempo, May 2015