Creedy Commentary

6
Jan

Signs Your Preneed Program is Underperforming

With almost 30 year’s experience I think I can safely say I know something about Preneed selling and marketing.  Sadly, it has been my experience that most independent funeral homes practice a form of benign mediocrity in which everyone fails to reach their potential but they all love working together.  “Happy Failures” is what we used to call them. Being an employee  who isn’t working out or your brother-in-law who can’t find a job isn’t an appropriate criteria for success in selling. Here are some of my favorite parameters:

1. How many contracts would a salesman sell if a salesman would sell contracts?

Assuming the firm serves more than 200 families per year, the average salesperson is capable of producing between 125 and 150 contracts. Of these, 20% is the minimum expectation for self generated business (non – walk – in / call- in). At Trust 100 our counselors were trained to achieve this minimum through direct mail, family followup and other lead generating devices. We had a few counselors who routinely produced 200 + contracts a year.  These people did not work long hours.  Rather, they followed the training to the letter and worked smart.  If your firm serves less than 200 families see below.

2. Ratio of contracts to At – Need Call Volume

Flags are frequently waved about a selling a ratio of  one contract for each family served. It has been my experience that few independent funeral homes are emotionally prepared for this level of activity. It requires a very high level of marketing activity, call backs and assertive (as opposed to aggressive) salespeople. A 1:1 program inevitably leads to customer complaints and At – Need staff dissatisfaction. Few owners are comfortable with this although it is easily addressed. One of our clients kept a complaint file on his desk and told us if we weren’t getting complaints we weren’t working hard enough. (we grew his business 20%). In my experience 50 – 60% of at – need volume is about the tolerance level for most owners. Complaints are rare and staff are happier. A ratio of 40% or less is unacceptable because it means you are not capturing your walk – in / call – in. I learned this personally while President of a large SouthEastern funeral home. Typically funeral homes generate an actual contract level of about 20% out of the spontaneous walk – in. What they miss is that there is an equal amount of walk – in that gets turned away because staff is busy or simply doesn’t see it as “their job”. So I have always maintained that spontaneous preneed is about 40% of At – Need Call Volume.

Caveats:

If you are serving between 100 and 150 families you SHOULD be getting 1:1 since counselors are capable of producing that many contracts annually. In these instances counselors may work a little harder but there are usually few complaints.

If you have a counselor producing 200 contracts a year and is the only counselor in an 800 call funeral home DO NOT BE IMPRESSED. It simply means that the preneed program is understaffed. Remember an 800 call funeral home should be producing 320 contracts in walk – in alone. These folks often win awards with their impressive dollar volume but, in reality, they just wait for the phone to ring. (bet I get some venomous emails on that one)

3. What Are They Selling?

First, I do not compare contracts with at need revenue without first removing cash advances and sales tax. Leaving these in will obscure what is really happening. I compare only the actual at need funeral home revenue without cash advances to the same factors in preneed. We found that there are only two reasons that preneed sales are LESS than at need sales: 1. The counselor needs more training in the field (not classroom). This can be fixed. 2. The counselor does not believe in funerals. This cannot be fixed. They must be released.

 4. Counselor Turnover:

Often times in larger funeral homes it is difficult to size a sales force because the early hires find it easy going as one fish in a big pond. They frequently make life miserable for later hires forcing them to leave. If you have lots of counselor turnover look into this phenomenon first. Always do exit interviews. If this is not your problem then take a close look at training, compensation, lead generating and recognition.

5. Sales Mix

Most programs I analyze for my consulting clients put me in a dicey situation. It’s pretty easy to identify an underperforming sales program just by its sales mix. A healthy program should have an average age below 72 and preferably below 70. I think many of our programs were in the high 60’s. Single pay policies should be no more than 50% of the mix and preferably less. As said before the average sale dollar for dollar should be AT LEAST your at need average. It is not unusual for me to see programs with an average age of 78 or higher and single pay 85% or higher. Can you say: “Waiting for the phone to ring?” This sales mix tells me you are doing nothing to impact your future…but you feel good about it.

5. Compensation:

A word is in order about compensation. I have found the most successful compensation plans must first be simple. If they are complicated your staff will never trust you. Second, I believe that people should be paid the same way and in the same proportion that the company is paid (including chargebacks). We had a very successful plan for commissions and bonuses. We paid a proportionate amount of the commission schedule we received from the underwriter. In this way those who sold better quality business (lower ages, more multipay) were paid more. We then paid a monthly bonus based on production. Under $50,000 no bonus, $50,001 to $75,000 minimum bonus, $75,001 to $100,000 medium bonus and more than $100,000 for the month maximum bonus. Note: these are gross sales. The bonus itself was paid based on commissions net of commission chargebacks. This system paid everyone from underperformers to our top people fairly. Our lowest people averaged about 5% of net face sales and our highest performers averaged between 8% and 10%. That meant that compensation ranged from a low of $35,000 annually to well over 6 figures. The best part: everyone liked it. No complaints and no suspicion. You could figure out what you made yourself very easily and compare it with your check.

 

 

Leave a Reply

css.php