The funeral plan industry, with advance payments totaling 10 trillion won, is moving to differentiate with "membership services." The aim is to extend everyday touchpoints with members and boost market share. Like the telecom market, where pricing and product differentiation are limited, funeral plan companies are also using memberships to lock in customers.
According to the funeral plan industry on the 16th, Boram Group is preparing work to upgrade its membership services, including new program planning, operations, and analysis. It is devising strategies to refine its revenue structure by not only partnering with outside corporations to expand membership benefits, but also segmenting sign-up and activity data. New business models and differentiation measures based on membership are also reportedly under review.
In the past, the funeral plan industry competed on the size of advance payments. The scale of advance payments was regarded as a yardstick for corporations' credibility. According to the Korea Fair Trade Commission, as of the end of March last year, total advance payments stood at 10 trillion won, with Woongjin Preed Life (advance payments of 2.6221 trillion won) topping the industry. Boram Group (Boram Funeral Development, Life, Leaders, People, Anycall, Siloam, Plus) had 1.5676 trillion won in advance payments, and Kyowon Life had 1.4907 trillion won, respectively.
As the expansion of advance payments hit a ceiling, funeral plan companies put forward "conversion services." A conversion service allows the accumulated advance payments to be used for services other than funerals, such as travel or weddings. Each company rolled out conversion services that younger customers as well as seniors could use, in an effort to increase market share.
With the market so saturated that people said "everyone who would sign up has signed up," companies are now seeking to differentiate their membership services. While conversion services use funeral plan contributions, memberships provide immediate discounts upon joining based on membership status alone.
They are widening customer touchpoints before funerals through membership services. Boram Group became the first in the industry to form a strategic partnership with the parking specialist corporation Hi Parking. Boram Group customers can receive discounts at more than 1,400 Hi Parking company-owned and partner parking lots nationwide. Car washes and airport valet services are also offered. A collaboration framework has been established to provide services in related fields such as legal, tax, and accounting.
Among Woongjin Preed Life members, the "Hanwha Resort preferential service" is the most popular membership benefit. For five years from the date of membership, members can use Hanwha Resort facilities nationwide at discounted rates on weekdays during off-peak periods on a first-come, first-served basis each year. Partner health checkup centers provide health screenings at preferential prices, and "home care services," including move-in and move-out cleaning and appliance cleaning, are also offered at member-preferential prices.
The industry expects membership services to function as a "lock-in strategy" to prevent customer churn. By providing everyday, tangible benefits such as partner discounts and rewards, companies aim to increase usage frequency and strengthen incentives to keep contracts. There is also a view that in a market with limited differentiation, customers will leave unless there is membership-based customer management.
An industry official said, "If the initial focus of membership services was on increasing partner corporations, now is the time to achieve qualitative upgrades that raise service usage frequency and satisfaction among members."
The official added, "If benefits are not refined through analysis of member data, only expense will rise and the effect may be limited," and, "The more services that can repeatedly create touchpoints before the funeral stage, the higher the contract retention rate and brand loyalty will be."