In a marketplace filled with me-too solar companies where every residential installer offers the same thing as every other residential installer, the only way that most companies try to appeal to homeowners is by offering the lowest price.
That may be a mistake, according to industry analysts at this year’s Solar Power International conference this September in Los Vegas.
“I don’t believe that all renewables are created equal,” Pegasus Capital Advisers’ David Crane said during the event’s opening session according to Renewable Energy World.
Solar has many positives that the others just don’t have — economic, philosophical, locational. The solar industry has to stop acting like it’s the renewable energy industry; it puts them at the children’s table. Instead of selling on price, price, price, solar needs to present itself as more of a lifestyle choice. That’s not the way the industry is presenting itself right now.
For years, marketing experts have advised companies across industries to eschew selling on price alone.
The message should be obvious for the solar industry.
Solar installers trying to beat competitors in a price war begins a race to the bottom where solar will become dirt cheap. That’s clearly bad for solar installers. And while low prices might seem like a good thing for consumers, if solar prices get too low, it will hurt homeowners too.
Prices too low lead to shoddy work, angry homeowners and, ultimately, bankrupt solar installers, which will reduce consumer choice. The few installers left standing can then raise prices again. It’s a cycle where nobody wins.
Who Sells More Solar, the Cheapest or the Best?
Many solar installers seem to think that they have no choice but to sell on price. Solar panels are a commodity and as long as they don’t break, homeowners just want the cheapest ones.
But marketing experts say that you always have a choice. Just listen to Seth Godin:
A commodity is a product or a service that no one cared enough about to market.
Marketing creates value, by combining stories, design and care. The product or service is produced in a way that makes engaging with the item better.
Commodities are in the eye of the producer. If you don’t want to sell something that’s judged merely on price, then don’t.
There’s only so low that solar prices can go before quality begins to suffer and profits decline to unsustainable levels.
Fortunately, homeowners don’t always select the cheapest option for solar.
On the solar marketplace EnergySage, where installers compete against each other for customers’ business, the average bid came down to a crazy $3.57 per watt in the first half of 2016, about 50 cents lower than the national average of around $4 per watt.
But according to EnergySage CEO Vikram Aggarwal, customers on the marketplace typically do not select the lowest bid. That’s a hopeful sign for installers ready to sell on value rather than low price.
Options to Sell Solar on Value and Not Price
Residential solar installers can thrive while charging more if they find other value propositions for solar besides money savings. For example:
- Sell “Solar Plus” — As Crane explains, this is an integrated system with energy storage, EV charging and complementary sustainable living solutions. Today, the market for solar with storage is small and it sits at the high end, which might now be an appealing lifestyle choice for rich people. But as batteries get better and cheaper, this market will expand into the middle class.
- Sell Quality — While the experts at SPI acknowledged that “there’s no emotional attachment to a solar panel,” and I’ve written that solar panel brands carry little weight with consumers, you can try to change that. With good customer education, you can make a case that your USA-made panels and components offer higher quality that translates into customer value. And perhaps even prestige?
- Sell Yourself as A Trusted Advisor — Convince customers to like and value your company for its knowledge, expertise and helpfulness. Studies show that customers will pay a higher price not only for quality, but to do business with companies they like and respect. Educate your customer and empower him to make the best decision on solar. Chances are, when he’s ready to buy, he’ll come to you, even if your prices are a bit higher.
Stand Out from Me-Too Solar Installers
Trying to sell solar in any of the ways listed above is better than just entering the residential solar market as another installer that puts PV up on the roof, offers a decent warranty on parts and labor and helps homeowners qualify for all the types of financing available in your state.
None of that makes you special. Everybody does that.
If you’re not offering anything more than your competitors are, then as the home solar market gets more crowded, your chances of success will get slimmer and slimmer.
The only way to thrive in today’s solar market is to stand out from the competition. That doesn’t mean knocking on more doors. It means offering a different kind of value than just putting PV up on the roof at the lowest price.
First, you need to decide what will make you different and better than your competitors. Then, you need to communicate that.
And the best place to get the word out is online — through your website, your ebooks, your email list, and your social media.
— Erik Curren, Curren Media Group