Metrics to help you grow your preneed market share
By Mike Iles
A recent case study of Iles Funeral Homes’ implementation of preneed marketing highlighted how this practice can help funeral homes gain a competitive advantage. But how can you measure the success of your preneed program?
When it comes to implementing a successful preneed program, four key metrics can be used to determine what’s working and what adjustments may need to be made.
1. Preneed to at-need ratio
The first metric is the preneed to at-need ratio (PN/AN) and this statistic measures the short-term success of the program within a calendar year.
The denominator is the funeral home’s current annual call volume minus trade calls
and indigent and infant cases. The numerator is the number of new funded preneed sales sold during the same year minus partial sales for existing preneed customers.
Our objective is 50% PN/AN based upon experience that a result less than this may not lead to a competitive advantage. But, achieving a 50% PN/AN ratio or even much higher in the short term does not lead to a competitive advantage. Instead, this must be sustained over time, and to measure this, we turn to the more important preneed (PN) backlog.
2. Preneed (PN) backlog
The PN backlog is measured by total in-force PN contract volume divided by your annual sales, again net of trade work, indigent, or infant cases. The result is a multiple, in years, of the impact of your PN file on your future AN sales. Our experience is that a result below 3.0 (years) may not translate into a competitive advantage and a result exceeding 5.0 probably will. This is the key measure of the likely impact of your PN sales on your AN results.
3. 13th-month persistency
Other important measures include 13th-month persistency, which measures the percentage of the PN contract volume still in force after one year. A result below 85% can suggest various problems such as an over-reliance on call-in and walk-in clients, over-selling, or dissatisfaction with the PN sales process or salesperson.
4. PN replacement ratio
In mature programs, measure the PN replacement ratio, which is the number of new contracts sold divided by the number of contracts maturing. A ratio greater than one leads to a growing PN backlog, with the converse resulting in a declining PN backlog. In relation to the health of a PN program, measure burial and cremation contract averages to explore disposition preferences as an indicator of where our market is headed.
Implementing a robust preneed marketing strategy can help you better serve your community, without adding more work to your busy schedule. Not sure how to take the first step? Book a 15-minute call with us and we’ll help you find out how to implement your own preneed program and help more families, all while growing your business.