Preneed marketing remains a much-debated issue as competition and pricing pressures collide with media reports of illicit accounting scandals. Aurora assembled a group of preneed industry leaders for a look at the state of preneed marketing: Graham Cook, president and chief executive officer of Homesteaders Life Com­pany, Des Moines, IA; Jerry Reichert, chief operating officer, Aurora Casket, Aurora, IN; and Charles Ander­son, president and chief executive officer, The Outlook Group, Franklin, OH.

An excerpt from this discussion:

1. Some in the industry have argued against creating an active funded preneed program. Why is funded preneed a good idea for funeral service providers today?

J.R.: As awareness of preneed services continues to increase, families will naturally expect their local funeral home to offer this service. From a funeral home perspective, this is an excellent opportunity to provide a unique product/service which gives families additional convenience, support and "peace of mind." A vibrant and well-managed preneed program will increase family satisfaction and enhance the value of the funeral home.

G.C.: The real debate tends to focus on the issue of guaranteed pricing or freezing the price of the funeral regardless when it is performed. From a consumer perspective this is a great value because the consumer is protected against funeral price infla­tion in the future, thus leaving little if any financial burden on family and loved ones. Although in most instances the funds are transferable, from the funeral home's perspective, guaranteeing the price is an important marketing tool that strengthens the tie with the family by adding greater value.

Critics will question that the funeral home should not be taking on all of the inflation risk. Whether this is an accurate assessment depends on how the firm views their individual economics and their marketplace objectives; i.e. 1) Do they view it as an incremental case and thus are only concerned about covering their variable costs? 2) Are they in a competitive market where another firm is guaranteeing price? 3) Are they covering some of their risk with a casket guarantee program? etc. Critics will also point to those instances where funeral homes have absconded with the trusted funds, a scenario that is less likely using insurance funding.

C.A.: The key word in your question would be "active." I believe funeral homes should make pre-funded arrangements available to every family they serve. The level of "activity" each funeral home undertakes is what defines the success of this endeavor. In today's funeral service environment, a firm without a well organized preneed strategy, and without a designated person to implement the strategy, is at a competitive disadvantage. The future will be about market share and increasing revenue.
2. Describe the biggest challenges to "preserving the value of funeral service®" through preneed marketing.

G.C.: In my view that phrase can be viewed from at least 3 perspectives:

Capture today's buying habits. Educate the consumer about the choices available to them. If we aren't up to the task they may well get biased information that is not favorable to funeral service ...and we all know there is plenty of that in the media. Consumers don't know what they don't know.

Better merchandising, especially with regard to cremation can keep funeral home margins from eroding, allowing every service to add value to the bottom line.

Create more value in the eyes of the consumer. Whether it's memory boards, video tributes, cater­ing, and event planning ...do what it takes because today's consumer is less about expense and more about value.


J.R.: To expand on some of Graham's points, I would emphasize "positioning" and "people." There are great preneed products, services and solutions available. But at an individual community level there is a real challenge associated with appropriately positioning and communi­cating the features and benefits of these solutions to the families.

As with any business, it takes great people to be successful. The individuals presenting the preneed solutions to the families must clearly and compassionately articulate the value of pre­planning.

C.A.: We (funeral professionals) are the biggest challenge to preserving the value of funeral service.

We need to develop and grow our listening skills. We need to avoid assumptions as to what consumers want, and instead listen to what they ask for. We need to allow the consumer to define what funeral service means to them.

Graham is right. Families don't know what they don't know; it is our responsibility to educate people as to their choices. We need to begin that process by educating and training the professionals in funeral service. Focus on creating a memorable experience that consumers will never forget. Funeral directors should be creating the "WOW" in funeral service.

3. You've worked with firms who have successful preneed programs. What is the impact on their business today and in the future?

C.A.: Opportunity and growth in their business. Firms who successfully embrace preneed have their own "ambassador" out in the market­place to tell their unique story. With a consistent and supported effort they are capturing business that might have gone to another funeral home. Also, they are retaining families by providing a valuable follow up service that expresses a commitment to the family.

J.R.: Firms who have successful preneed programs have achieved a long term competitive advantage by offering unique solutions to the families they serve. They have solved a problem or alleviated a burden for their client families. This long term competitive advantage culminates in increased value for the stakeholders in that funeral service business.

G.C.: In the end it's all about execution. Many firms still back into their preneed programs as an adjunct to their at-need business. They have no dear preneed objective other than to make it available should someone request it. Preneed can be and should be an extension of funeral service ...after all it's all about making it easier for families.

4. What steps would you advise independent funeral home operators to take to start or enhance their preneed marketing program?

G.C.: It's really basic business management. No shortcuts. No fairy dust.

1) Get with a few of your key people then take a hard look at your strengths, weaknesses, oppor­tunities and threats. SWOT analysis has been around for years but it still works if you have the disci­pline and objectivity to do it. If it looks baffling get some­one to help you...it's that important.

2) Set an objective or two ...not six ...but don't bother if you don't do step one.

3) Get with your preneed and at-need staff to hammer out the competencies and action plans to get the job done. If you don't include your staff, don't bother, buy in is critical.

4) Evaluate if you have the people on board to do the job. If not, make the tough deci­sions. Without the right people you are wasting your time.

5) Figure out how you are going to manage and monitor the initiative. What are your milestones or check points? How will you know if you fail or succeed? Who is going to be accountable for results? In most instances firms skip over the first 4 steps and focus on this one ...bad mistake.

6) Have the discipline to review your results at least quarterly and review the whole plan annu­ally starting with step one.

Just 6 steps ...more work than you might think, but a proven blueprint for success.

J.R.: I wholeheartedly agree with Graham's points of view. He is right on! An additional consideration as you work through these steps for success is to evaluate the risks and rewards of an outsourcing strategy to leverage or complement your firm's capabilities. Remember, however, outsourcing is not "magic dust" either. Rather, it is an opportunity to leverage off another group's skills and expertise for your mutual benefit. The outsourced business continues to be an integral part of your existing business and needs to be managed accordingly.

C.A.: You must be committed to the effort. You can believe that increasing your preneed activity is important, but unless you and your staff share in this commitment, it won't be as effective as it should or could be. I would suggest to anyone that this is a process. It takes time to create the commitment envi­ronment necessary for long term success. With the commitment in place, follow Graham and Jerry's blueprint.

Preserving the value of funeral service® is a registered trademark of Homesteaders Life Company.