Across the U.S., the cost of solar energy systems continues to fall at an accelerating rate. Our latest data report saw prices drop by over 6% between the first and second half of 2016 – the greatest rate of decline since we started tracking prices in 2014.
Yet despite consumer-friendly prices, solar installers are still having a difficult time acquiring customers. Nearly 70% of the 360 respondents that completed our 2016 Installer Survey stated that customer acquisition either got harder or remained the same compared to the year prior. We expect this trend to continue in coming years as more solar installers enter the industry and successful installers expand their geographic footprint. Half of all solar installers surveyed said they directly compete with 20 or more competitors in their sales territories.
To compete in this changing market, solar installation professionals would benefit from better addressing two emerging trends among today’s solar shoppers – they’re shopping around more than ever, and they’re increasingly value-conscious.
Recently, SolarCity announced it would no longer sell solar door-to-door – a sales tactic that has fallen out of favor among consumers. Today’s modern consumers are much more sophisticated about how they want to shop for solar. They’re seeking an online-first experience that allows them to research solar equipment, prices, and companies from the peace and anonymity of their laptops. They’re comparison-shopping multiple offers before making a decision. Not surprisingly, only 2.7% of our shoppers indicate that they would prefer to speak with or invite an installer for a site visit before receiving quotes online.
The number of quotes consumers want when shopping for solar is going up, as well. According to the installers surveyed, the average number of quotes seen per customer increased from two to three, with many seeking five or more. What’s behind this shopping trend? As more solar companies enter the market, and as it becomes easier to find these companies online, solar shoppers are having an easier and faster time getting multiple quotes.
Customers don’t necessarily want the lowest price, but they do want peace of mind in knowing that they’re paying a fair price for the right quality product. Qualitative benefits such as an installer’s experience, aesthetically pleasing designs and responsive sales process may appeal to some. However, other savvy consumers will seek more measurable benefits, such as length of labor warranties, production guarantees and financing that maximizes savings. This is the type of information that today’s solar installers must focus on if they want to stand out. They’ll need to quantify their value proposition, especially if they’re hoping to charge a premium.
A recent report by the National Renewable Energy Laboratory (NREL) found that the country’s largest solar installers are charging, on average, 10% higher prices than smaller installers. NREL studied our solar quote data versus quotes received by the same consumer from large installers to study the effects of company size on solar pricing.
Value-conscious consumers see through this overpricing when they comparison-shop across multiple options. These shoppers are looking for the rationale behind why they’re getting charged 10% more, and the “bigger is better” answer isn’t as believable as it was before a wave of large solar installers exited the industry.
To grow business and close more sales, installers must present prospects with quantitative information to make calculated decisions based on the long-term return on investment. The installers that come to the table with tangible and measurable benefits, such as payback period and 30-year savings, will be much better positioned to win over today’s value-conscious solar shopper.
Vikram Aggarwal is the CEO and founder of EnergySage, an online comparison-shopping marketplace for rooftop solar, community solar and solar financing. For more on the reports mentioned in this op-ed, visit energysage.com/data and nrel.gov.