Unlock Preneed
How to increase case volume and create a self-sustaining revenue stream
BY TYLER ANDERSON
If you’re looking for a great conversation starter, preneed insurance probably isn’t at the top of your list. It’s pretty cut and dry. You find a provider, select a product that hopefully aligns with your investment philosophy and risk tolerance, and start prearranging families.
And yet when you look a little closer, preneed is much more powerful than most people realize. A proactive program funded through preneed insurance can be at the center of your funeral home’s strategy for growing market share and reaching new families. It can give you a competitive advantage for years to come, and it is also critical to addressing some of the biggest challenges facing the profession today.
It’s long been clear that shifts in consumer behavior are accelerating.
According to a research study done by Accenture, a global technology consulting company, 88% of executives say people are changing faster than their businesses can keep up.
And few people know this better than funeral home owners. Many funeral homes have already experienced shifting preferences when it comes to traditional funeral services versus direct dispositions.
In 2021, cremation made up 60.5% of all dispositions according to the NFDA , a percentage that is expected to rise to 81.4% by 2045. The result is slimmer margins, which – when paired with the ever-increasing costs of doing business – create a big headwind for funeral homes.
The easy assumption to make is that increasing cremation rates are the problem. But those numbers are really more of a symptom.
Long gone are the days when the majority of families have a close relationship with their local funeral home.
Part of this is because of the cultural stigma having to do with anything related to death or dying, but it's also due to fewer community and institutional ties. More than a quarter of all Americans have no religious affiliation, and their numbers are expected to keep growing. According to USA Today, even baby boomers are opting for DIY or home funerals as a way to cut costs.
Adding to that problem is the fact that nearly 60 percent of Americans have moved away from their hometown, further increasing the difficulty of building loyalty and brand equity.
This means that a growing number of consumers prefer to "shop around" for funeral homes, and they don't necessarily understand the opportunities for gathering and ceremony that your funeral home can provide. The result is declining average funeral values, increased competition and diminished market share.
Most families aren’t waking up and saying, “Today’s the day to preplan a funeral.”
Yet typical preneed programs run around 70% of their volume based on walk-ins and call-ins. These are consumers who are already nearing the end of their journeys along the preneed pipeline. Chances are they already know your funeral home and would choose your services anyway.
They are usually just checking preplanning off their to-do list because something has inspired or motivated them to take action, whether that’s the passing of someone close to them or another one of life’s big milestones.
But this is the low-hanging fruit. In order to break through the consumer trends, you need to appeal to families beyond those who have already decided to preplan with your funeral home. The longer you wait to reach new families who would not have chosen you by default, the higher the risk that they will go with your competitors and – worst of all – not receive the outstanding service you can provide.
By being proactive about educating your community on the importance of ceremony and gathering, you can solidify and expand your market share and create lifelong brand advocates for your funeral home.
Changing someone’s mind after it’s already made up is hard.
And it’s even harder when they’re sitting across from you at a time of need, saying: “I just want a simple cremation.” This is why a proactive preneed program is so important. It’s not just a sales tool to secure future business. Instead, it’s an opportunity to educate families and share why gathering and ceremony are so meaningful for the loved ones they leave behind.
In other words, you get to change the conversation about the value of funeral service years in advance. This can be a real ‘a-ha’ moment for families, a potentially transformative experience where people consider the impact their final wishes will have.
And for your funeral home, you now have the opportunity to shift consumer norms and turn the tide in your favor.
But the quality and consistency of the experience is key. What we’ve found at Precoa is that you have to monitor and manage every stage of the consumer journey. From marketing to managing leads to appointment setting to sales coaching, there are countless opportunities to increase performance and effectiveness.
The question then becomes one of sustainability. How do you support a proactive program without siphoning off your funeral home’s operating revenue or resources?
Once most funeral homes recognize how valuable a proactive program can be, the trouble they run into is how to continually support it.
The revenue you generate from serving families at a time of need should ideally go toward supporting your operations, your general marketing strategy, and investments in your facilities or new service innovations.
Instead, what happens is that some of this revenue ends up subsidizing preneed. Obviously this is not ideal. For a proactive program to work, all the necessary elements—lead generation, CRM, appointment setting, sales support—need to be fully funded and self-sufficient.
Preneed insurance is the most effective way to do this. A proactive program will bring in a high volume of preneed policies, and the revenue generated from a preneed insurance product ensures you are not drawing down at-need revenue.
The end result is a sustainable cycle. You proactively reach new families and prearrange more funerals, which in turn allows you to reinvest that revenue into prearranging even more new families and growing your market share.
Preneed insurance can unlock tremendous growth for your funeral home. As part of a proactive strategy, you’ll build new relationships with families you may not have reached otherwise and increase market share through a self-sustaining system.
Of course, getting a proactive preneed program up and running takes time. The preneed pipeline is complex, with a lot of operational pieces to align, and some funeral homes find it simpler to outsource that work to a trusted partner.
No matter what you choose, putting preneed at the center of your growth strategy is worth it. You get to share your story at scale so that more and more families learn the value of a funeral at your funeral home.