How Pre-need Sales Can Increase the Profitability of Your Funeral Home


how-pre-need-sales-can-increase-the-profitability-of-your-funeral-home

Funeral homes that actively communicate the benefits of advance funeral planning are doing right by their communities by empowering them with information about a service they want and need. When you provide what your client families want, you’ll have an important opportunity to increase the profitability of your funeral home.

High customer satisfaction

According to a 2013 survey of Homesteaders policy owners, virtually all respondents said they are “completely” or “very” satisfied with their decision to prearrange. Policy owners also provided positive qualitative responses about their experiences, commenting that prearranging offered “peace of mind that nobody will have to take care of that for you,” and that “everyone should do it so it doesn’t fall on somebody else.”

In the same study, 98% of policy owners said they would at least consider recommending it to someone else – and more than 40% of them already had. This high level of satisfaction and high likelihood to provide a referral could have huge implications for your funeral home business. What is the effect on your brand when offering consumers something that gives them high levels of satisfaction and that they are willing to recommend to others? Besides the positive brand interactions, the benefits of pre-need sales include:

  • More referrals: Policy owners have indicated they’re likely to recommend prearranging to someone else. If a person reports a positive experience with your firm, you’ll be in a good position to earn future business from their friends and family members.
  • Lower advertising expenses: By generating word-of-mouth referrals, you’ll reduce the need to boost your funeral home’s brand awareness and brand preference through traditional advertising activities.
  • Greater loyalty: Serving one of “your” client families in the future is no longer a guarantee. You can secure families’ business by providing exceptional service (whether serving them pre-need or at-need) and by educating them about the full range of your firm’s offerings.

Leveraging fixed costs

There’s a reason thought-leading funeral home owners seek a large pre-need backlog for their firms. Their firms embrace any opportunity to plan funerals, regardless of whether the services happen tomorrow or many years in the future. Instead of focusing on their business on a transactional level, they view all their funerals in terms of how they affect their business in aggregate.

According to a 2012 study conducted by Federated Funeral Directors of America, approximately 77% of a firm’s expenses are fixed. Examples include facilities, operating permits, salaries for full-time staff members and livery. No matter how many families you serve, fixed costs remain the same. The key is leveraging fixed costs and increasing the number of services you perform in a given year.

Protect and grow market share

Your pre-need program can help to establish your firm as an authority on funeral planning, if for no other reason than your staff does more of it. There is tremendous value in making potential client families aware they can plan funerals in advance – and just as importantly – explaining why they should prearrange with your firm in particular.

The success of firms with active pre-need programs is enough to speak volumes about consumer attitudes and preferences. Corporate funeral home competitors have demonstrated that they’re taking pre-need seriously, and this should cause independent funeral home owners to take notice – and action – today. With many firms demonstrating the positive effects of an active pre-need program, your competitors could be doing so at the expense of your business.

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