What is a preneed perspective and why is it important to your firm?

For almost 10 years I published Preneed Perspective as a monthly newsmagazine. During the past 3 years it has taken a hiatus for many reasons. Now it returns. If you start to follow this feature monthly at FuneralWire.com, then you will understand what a preneed perspective is. You can then choose to adapt this perspective in full or in part, or ignore it totally. A preneed perspective is a simple matter. Every funeral director and funeral home owner today has an 'at-need perspective' (ANP), but only about 10% have a preneed perspective ('PP').

There are big differences between funeral homes that have only the ANP and those that have also adopted a PP. You'll typically see huge gaps in their at-need revenue and profitability as well as their preneed performance. Firms with only an ANP tend to have:

• Stable or decreasing case count. Those with a PP see their volume steadily rise.
• Rising accounts receivable (A/R) and more bad debt to write off each year. Those with a PP see declines in A/R days and dramatic reductions in bad debt.
• A recalcitrant staff that resists customizing funerals. Those with a PP show greater creativity in all arrangements.
• A rise in cremation calls as a percentage of total cases and considerable anger about that trend. Those with a PP are also seeing cremation cases increase, but they're working to maximize revenue from every call, regardless of families' choice of disposition.
• A preneed inventory equivalent to about 140% of their most recent annual revenue. Those with a PP have grown their preneed inventory to anywhere between 300% and 600% of yearly sales.
• Prearranged calls accounting for 15% to 20% of their total at-need volume. That number climbs to between 30% and 50% for firms with a PP.
• About four preneed contracts being added to the books for every 10 at-need calls performed, or a 40% preneed-to-at-need ratio. (Example: 200 at-need calls and 80 preneed contracts per year.) Those with a PP write one preneed contract for every at-need call they perform, or a 100% ratio.

So, which should you be? Well obviously, firms with a PP are more profitable and enjoy better cash flow than those that cling to an ANP. So the choice is yours.

What can you do to develop a PP? Start by changing your choice of professional colleagues. Hang out with funeral-home owners and managers who have a PP. Be their rookie. Listen and learn. See what they do in their staffing to make sure they hit the numbers. Here are some other things to do to develop a PP:

• Try alternative methods of advertising to get leads. You can't sell preneed without leads. Firms with a PP use their web site for lead generation. Use your restrooms for lead generation by placing preneed reading material there.
• Be willing to try marketing ideas that will fail. They might. But not doing anything is an even worse failure, because you're not testing any lists, formats or messages that might work out. When you send out a direct-mail package, you need to be willing to live with a 98% failure rate to get a 2% reply and for most mailings, 2% is a great rate of return.
• Take more time to get educated on preneed. Know what makes one insurer different from another. Know when to use trusts instead of insurance.
• Train your staff on selling tools and techniques. Funeral directors take orders from a selection room. Preneed success requires good prospecting, quick follow-up on leads and the skills to close contracts. Don't assume licensees learned any of this in mortuary school. They didn't.
• Don't be embarrassed about your prices. Your competitor already has them, but it's the families in your area who want them. They generally can't get those prices unless they come into your building and ask. It shouldn't be that way.

Most of all click your heals 3 times and say, 'I want a PP', but not in a public area. I will cover more in upcoming FuneralWire features.

Dan Isard is the president of the Foresight Companies, Phoenix, which has helped more than 1,000 funeral homes and cemeteries improve their operations, increase profitability and grow their business. Dan is the deathcare industry's top buy/sell expert and has handled more than 650 sales and transfers of family-owned firms. He is the author of the bestselling guidebooks, 'the Dealmaker's Guide to Funeral Home Transactions' and 'How to Stay Independent and Very Profitable.' He also published the Preneed Perspectives monthly newsmagazine. He can be reached at 800-426-0165 or DanIsard@f4sight.com