Preneed

     Just as Wall Street analysts consider a backlog of orders an indicator of future corporate performance, funeral home operators should look to their own preneed programs to help predict what tomorrow holds. The analysist and strategist in New York that are assigned to watching the Funeral Home Conglomerates have now placed a huge importance on the backlog of preneeds, yet many independants have never taken the time to examine their own programs to determine if they're effective, mediocre, or downright poor. Below, I'll explain how to do that kind of evaluation.

     Let's first explain the differences. Effective programs are full of funded prearrangements. To put it another way, programs that primarily have unfunded prearrangements can't be effective. Families, who have a financial commitment to a preneed plan (regardless of how much they have put toward a prearrangement) are much more likely to utilize your services in the future from purely a new business standpoint. Unfunded prearrangements do not have the same sense of commitment, bond or loyalty to use you at their time of need. A funded preneed is one of the most important parts of a prearrangement to lock in and grow market share.

     Good preneeds begin with families that you've never previously done business with, families new to the area or those who have used a competitor's services. Beginning a preneed program with a "new family" can create loyalty chains for future generations that remain in the area - that can mean multiple funerals from the same family (and their friends) into the future.
     I'll describe how to sign them up below. For now, understand that providing good, positive preneed service (no high pressure,& the proper approach) to these families will further enhance your business, creating word-of-mouth with their friends. It is critical to a funeral home's success that it generate a mixture of positive reactions - what marketing people sometimes like to call "buzz."

     The third requirement of a good preneed program is developing average sales equaling (or hopefully exceeding) your current atneed averages. You have to be sure when comparing this to subdivide your atneed averages, separating cremation and traditional service revenues. Try this with your preneed revenues before you do the comparison. Once you've measured, if you find you need to increase your preneed average, you can call or fax me. I'll also be covering that topic in a future article.

     When you don't follow those steps, you end up with ineffective preneed programs. Bad preneeds, of course, are underfunded. You know, the ones sold well below your current averages and sold to your existing families. Bad preneeds are also the unfunded ones. They leave customers' loyalty floating out there for competitors (both funeral homes and crematories) to grab.

     Most funeral homes, however, muddle along with preneed marketing programs that are matomerely mediocre. Such OK strategies include plans arranged with your loyal families at current day averages. That's not bad, but the primary reason to focus on prearranging is to improve customer service and to lock in that family for the future…keep your piece of theatneed pie in your area. The problem is that, in paying for mediocre programs, you are just trading dollars - you hold, protect, invest, and return money to customers in the future when they need to service a funeral. You didn't fully utilize preneed to protect and grow your overall business, just used preneed to keep some of it.

     Two resulting questions for the smart businessperson are

How do I evaluate my current program?

 

How do I get more of the good stuff - the effective preneed strategies? (Caution - With   effective preneed strategies, the increased call volume and profits mean you will have to work harder and pay more taxes).

     There are two ways that we use to determine how much "good" preneed business you have in your funeral home.

     First, for example, at Schoedinger Funeral Home, a survey is mailed to all purchasers. One of the questions is: Has your family ever used our funeral home before? You can then tally and track the responses to judge the effectiveness of your preneed systems.

     Second, an analysis of your current operations will easily show the effectiveness of your program. For example, what percentages of your preneeds are funded?

1. What percentage of your funded prearrangements are made:

   At the funeral home __________%
   In the consumers home __________%
   Other __________%

2. What percentage of your funded prearrangements are:

   Single pay __________%
   Multiple payments over time __________%

     Now these percentages can vary in some areas, but generally, good preneed plans get written in customers' homes, not funeral homes, and there should be an equal amount of installment plans and single cash payments. If a large percentage of plans are paid for with cash and/or written at the funeral home, than you are probably writing mediocre preneed plans. If you'd like specific numbers for your area, since some towns are different, you can fax me your answers to the above questions and I'll get you an analysis based on your zip code.

     If you are writing a good mix of plans - keep doing it. Your business will continue to prosper through loyalty chains and rub-off crossover sales. If not, and you still want to keep your business healthy and growing, then you need to think about how to improve your preneed program.

     As an opener, you'll have to assign someone (it could be yourself) to make sure the plan gets implemented. Systems need to followed. Preneed sales must become as important as atneed sales. Whoever your preneed sales champion turns out to be, he or she needs to be exposed to preneed training, to build the proper skills for selling the product and to develop a method that focuses on getting the good stuff. If your concentration is dedicated solely toward taking care of families who walk-in with a checkbook, or those with a fresh Medicaid payout, you'll never see the benefits of healthy, company-building preneed sales.

     And there are many benefits. 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. In consulting for - and working with - funeral homes around North America, I've seen statistics back up family lore again and again.