I like football. I like the game, I like the intensity, I like the competition and I like the strategy behind the coaching. In football, the coaches and team have aligned goals; to score points. Each and every action during the game is based on the goal of scoring points. In the funeral industry, the game is replaced by service and the intensity is revealed in compassion. Those are easy analogies, but the competition and strategic coaching is sometimes harder to relate. For the most part, every funeral home has competition to some extent and while they are measured differently, the goal of every firm is to serve more families. The goal of every funeral director and funeral home owner is also one and the same — to serve more families. But to do that, one must realize that funeral service isn’t retail and “20%-off-sales” do not apply in this industry. For a funeral home to obtain its goal of serving more families, it is easier to break the process into four components: The Task, The Team, The Tension and Preneed Success.
The Task
The task of serving more families is a two-fold operation: At-need and Preneed. Many seminars, articles, consultants and blogs exist to help firms serve more at-need families. This article focuses on aligning the goals of serving more preneed families with a profitable outcome. My grandfather was one of the best men I ever knew and was in the funeral business for over 60 years. He was a great funeral director that served many families over the years. He often reminded me that in addition to helping families, he was in business to be in business. My question to the industry is, “Why sell preneed if it’s not a profitable venture?” If you are discounting any of your preneed contracts when they become at-need, you are discounting your profit. The logical second question is, “How many profit-less funerals can you afford to have?”
I believe that preneed is the most important strategy to growing your business. The goal of a good preneed program is to serve more families AND for it to be a profitable venture. Too many times, funeral homes do business with a preneed company or third-party marketer whose goals aren’t aligned with theirs.
In the insurance world we use the phrase “There are only 100 pennies in a dollar.” It’s a simple statement and the math makes sense. Now, imagine this principle applied to a scale balancing preneed profitability. Goal alignment becomes very clear. On one side of the scale is growth of the preneed: the goal of every funeral home. On the other side are commissions: the goal of any sales organization. If we raise the growth side to support funeral home goals, the commissions lower. Therefore, if your goal is a profitable preneed program, you’ll want to make sure your preneed company or marketing group is providing you with the highest growth possible, aligning their goal with yours.
The Team
There are traditionally two types of preneed company teams a funeral home can choose from: those that focus on 1) products or 2) products and services. The product teams offer prepaid funeral products and traditionally outsource marketing. More often than not, they work through agencies and third-party marketing organizations for product distribution. This third-party marketer is a company or agency sandwiched between the preneed company and the funeral home. The product company’s operating model is simple. They pay “X %” for “Y product,” and if there are marketing efforts involved the cost comes out of the gross commissions paid. Users of this system are at the mercy of how well the agency or third-party marketer can manage their own business. If they can control costs, they pay a higher commission to the producer (funeral director, preneed producer, etc.). If they struggle to control marketing costs, then that inefficiency comes out of commission dollars. Basically, the funeral director and/or preneed producer pay for agency inefficiencies by receiving lower commission for each preneed sold.
The products and services teams – like the products-only teams – have an operating model of paying “X %” for “Y product.” But, unlike the products team, they bring the experience and expertise of preneed marketing and lead generation with them. They tend to offer marketing-in-a-box services or diverse, endorsed lead generation programs to funeral home clients thus serving as a resource for both product and marketing services. Typically very efficient, they have the ability to offer a more competitive commission to compliment their marketing offerings to funeral home owners, directors and preneed producers alike. I always say this type of team offers turnkey products and solutions to “see the people and tell the story” about prepaid funerals.
The Tension
Any time people begin a new relationship, two forms of tension are created: task tension and relationship tension. Task tension is the desire to accomplish a specific task. The task needs to be achieved and until it is complete, there is tension. Task tension is the motivator behind action, and the higher the task tension, the greater the potential for productivity.
At the same time, relationship tension is always present in a new relationship and any interaction. Relationship tension is the lack of trust people feel in a new relationship. High relationship tension causes people to not be as open or hold back information and opinions. The higher the relationship tension, the lower the productivity.
Task and relationship tension both require energy and it can be said that if more energy is expended in dealing with relationship tension, then less energy will be available to deal with task tension. Typically the products-only preneed team described previously unintentionally creates high relationship tension because they outsource the experience and expertise needed to complete the task of selling prepaid funerals (aside from families who walk through the front door of the funeral home). The benefit of a products and services team is that given this lower initial relationship tension, additional energy is free to focus on task tension: the actual goal of selling prepaid funerals, even at the beginning of partnership.
Preneed Success
To create Preneed Success, a funeral home has to align their goals with the goals of their preneed team. Like I said earlier, in football the coach and the team have aligned goals; score points. In this business, serving more families comes from having a plan, executing it and evaluating the results. Too many times a funeral home will give the play to the preneed team but not evaluate those results. In this situation, it’s not only ROI but the ROP (Return of Performance) that is most important. As a firm owner or decision maker, you must ask the question “Was the plan executed and did it advance the goal?” This business is focused on new heritage to build inventory. That implementation requires experience and expertise. Align your preneed team to your goals to increase profitability, then “see the people and tell the story” to create long-term and profitable preneed success.
Guy Winstead – Vice President of Sales and Services Preneed Division