Our Family Loyalty Chain

The Underestimated Value

of Preneed

BY QUINN EAGAN

     Ever read the death notices in the newspaper and see a member of a family you have served using a different funeral home? Ever wonder if you'd lost not just that one funeral, but an entire generation of potentially loyal customers, and maybe some of their friends?  I do all the time. In fact, one key to success of my family's business is our efforts to maintain a chain of loyalty, not just between our funeral home and our clients, but between our funeral home and entire communities.

     Why is such a chain important? When two funeral homes compete in the same area, many customers choose one over the other because of prior experience. Common sense suggests that a family that turned to a particular home at the time of a loved one's death is likely to remain loyal, as long as the home met their needs. But studies, in this case, back up anecdotal experience. According to a recent survey by the National Funeral Directors Association, respondents deemed location the most important factor in choosing a home. Not far behind, however, were reputation and prior experience, which about 70 percent of those surveyed cited as their reason for selecting a particular funeral home.

     Those numbers make sense for two reasons. A successful funeral home provides the kind of service that brings repeat business. And those customers, in turn, recommend the funeral home to other families.  

     In my family's funeral business, which dates back to 1854, I was taught that for every preneed sale, we got three atneed services....so an increase in preneed sales would translate into an increase in atneed calls. Statistics now back up family lore. In consulting for - and working with - funeral homes around North America, I've seen similar results over and over.  

     You can clearly see from the graph that as preneed sales increase, they push up at-need sales up as well. In fact, successful preneed systems produce a multiplying effect underestimated by many. But preneed advertising and marketing efforts can also help push at-need sales and get more families to use your funeral home or homes, while a misdirected preneed marketing program may very well be stunting the growth of those homes - or worse, turning families away. It takes some time and effort to track, but the most successful homes do it continuously.  

     At all of our client funeral home locations, we consider a series of factors, from both the preneed and at-need side of the business, to measure the effect of our preneed services. This analysis helps discover strengths and weaknesses of the funeral home and also confirms hunches that the owners have.  

     So what's the true value of a preneed customer? With the correct preneed approach and marketing systems, it's obviously more than the profit from the initial atneed service. It's far greater - maybe even worth $60,000 of additional funerals!  

     Follow this logic, if every preneed customer had two siblings, and you got their business, the customer base multiplies exponentially. Say each sibling is satisfied with the original customer's preneed experience, and you do your job well, maintaining contact with the family and providing exemplary service without appearing opportunistic.  If each sibling had a spouse, and, as most American families do, about two children, than the Funeral Home could get as many as eight funerals generated from that one preneed sale.  

     But, say your original customer was matriarch of a three-generation family. Then you can easily imagine how her sibling's children, newly pondering mortality and impressed by the preneed product and funeral home service, might also want to use the same funeral home for their own deaths. If those children are married and have children of their own, the initial preneed sale could eventually bring in 32 funerals.  

     Now, you don't always get 100 percent of those people. Some may be too geographically disparate. Some may have other plans already in place. Some may sign off with a rival, who breaks the loyalty chain - probably by writing preneed plans through effective marketing systems. Ultimately, we estimated that we got about 20 percent of that influential circle back. But that doesn't even include friends and other at-need business generated by word of mouth through a growing chain of satisfied customers, like concentric rings on a pond surface after you throw a stone. A loyalty chain, so to speak.  

     In addition, the effects spread outside your particular geographic area. When I started out, most of our clients came from a radius of about three to five miles from our funeral home, which I know now is fairly typical. Once we'd begun to implement successful preneed marketing strategies, I figured out that we were getting clients from further and further away. The chain had extended beyond our local municipality and into surrounding counties.