A case study from Iles Funeral Homes
By Mike Iles
Use of a preneed program to gain competitive advantage is measured by market share. Iles Funeral Homes have been actively marketing preneed since 1988 in the six central Iowa funeral homes we own. Our experience can provide insight into whether preneed marketing can be used to gain competitive advantage and, presuming this is possible, how to accomplish it.
Admittedly, it is a hard question to answer, because to measure the effect of preneed on market share assumes everything else stays the same. Since preneed contracts take many years to mature, it is unlikely that everything else “stays the same.” Therefore, isolating the effect of preneed can be difficult. However, I can share our experience to see what insight we can gain.
My brother Mark and I purchased our funeral homes from our father in 1997. In Des Moines, Iowa, we have two locations serving the west side and one location serving the east side. Our west side locations enjoy a strong market share, derived from a long-developed reputation of delivering best-in-class service.
In contrast, we had only owned and operated our east side location since 1988, having purchased it out of bankruptcy and inheriting a past that included missing preneed funds and a strategy to provide cheap funerals. While not an enviable position to start from, we nevertheless saw this location as our area of greatest opportunity. Our primary strategy for capturing this opportunity was our preneed sales program.
From the early 1990s through the millennium, preneed sales for our east side location accelerated from less than 25% preneed to at-need ratio (passive) to more than 75% (very active). During this time, we accumulated over 6 months’ worth of business backlog relative to what we were then serving at-need. Doing this repeatedly builds a sizable backlog for your business.
Eventually, these preneed contracts started to mature, but even before they started to mature, all the sales and marketing during those across-the-kitchen-table visits helped us communicate the changes needed to gradually replace the prior reputation.
Did it work? Relative to the first year we have data for (1997), our net revenue at this location increased by a modest but not insignificant 21% by 2000. Ten years later (2010), our net revenue was up 113%. In 2016, our revenue was up a whopping 151% compared to our first year of ownership. And the best part is that there is plenty of room for continued growth because our preneed backlog continues to grow.
Based on these results, we believe preneed can be used for competitive advantage—and it can make an impact at your funeral home, too.
Don’t miss out on serving more families.
Work with PreNeed Systems to grow your preneed arrangements for years to come.