As a residential solar professional, sitting across the kitchen table can be a hallowed arena where you battle with homeowners over the benefits of rooftop solar for their homes. Of course, the battle is likely not with the actual homeowners but rather with their resistance to change or their doubts about the incredible upsides of solar.
Making matters worse, leads need to meet certain factors to even be considered viable. Common situations, including if a person is renting or is unable to qualify for credit and if a house has too much shading or an old roof, will eliminate nearly half of all prospects. What this means is that your qualified leads become even more valuable, as maximizing sales from viable prospects can make the difference between just getting by or achieving high levels of business success.
This brief guide aims to help business owners and sales professionals identify some of the most common reasons homeowners say no to solar and describes effective ways to overcome objections and win more deals. For clarity’s sake, please note that these tips focus on homeowners who might outright buy a rooftop solar system or finance to own an installation; this guide does not necessarily cover leasing objections.
That said, five of the most common reasons homeowners might not buy rooftop solar include the following:
1. They think solar is too expensive.
This concern is the elephant in the room. Don’t shy away from it. Sure, solar can be expensive up front, but the ultimate savings make the investment worthwhile for homeowners. That’s why calculating a return on investment (ROI) for a prospect is so important.
Don’t assume homeowners consider solar a good deal. If you are not already presenting prospects with an ROI projection, which shows them the amount of money they will likely save over the life of the solar panels, you are making a huge mistake. An ROI helps justify a solar purchase, and there are a few ways to calculate one.
Rather than on payback terms, try focusing on immediate cash gains that are available on most home solar deals. The ROI method that could give you the biggest advantage is using the 25-year guarantee, under which you figure out the amount of money a homeowner will pay the electric company over that period then subtract that from the amount the homeowner will pay by going solar. That will show your prospect he or she can save an impressive amount of money.
Furthermore, calculating the ROI results at 10 years and then 25 years will allow homeowners to see how their savings will compound over time. The table below is an example of an ROI based on a 10 kW system. This example is based on a 20-year, 5.95% financing option with a net system price of $22,750. To figure out how this amount is calculated, take the current monthly 10 kW power bill equivalent of, say, $165 and multiply that by 12; take that amount and multiply that by 1.035; take that total and multiply that by 1.035; and repeat 23 more times. This calculation might sound daunting, but if you are familiar with Microsoft Excel, you can create a compounding formula that will simplify the process. The 1.035 represents the electric utility’s 3.5% annual rate increase. According to the U.S. Department of Energy, the average annual rate increase over the last 20 years has been about 3.7%. Using conservative numbers will help you create ROIs that you – and your prospect – can be confident in.
Perception is reality, and changing the narrative using an ROI will give you the leverage you need to close a deal. Don’t insult your clients’ intelligence by trying to convince them that solar isn’t expensive. Instead, use the ROI to show homeowners that it’s worth the expense and that they can use the money they currently pay their electric utilities to finance their very own solar power systems. The key to a perception shift relies on the homeowners’ understanding that they are already spending this money and that simply reallocating it can have a tremendous financial benefit.
2. They want to wait for the next best technology.
In this day and age, everyone wants the newest and hottest technology. Potential solar clients are no different. Homeowners might have read that a brand-new panel will soon change the face of solar and want to wait for that technology to come out. It’s a common enough situation, but it’s also an easy one for you to overcome.
Ask homeowners about a technology they already own, such as a cell phone, computer or car. Yes, there will always be a newer and flashier version of that technology slated to come out, but homeowners nonetheless need a cell phone now to make calls, a computer now to conduct business and a car now to get to work. So, too, do they need solar now to save money.
Using this approach will help you explain to homeowners that there will invariably be technological advances in the future, but there is no reason to wait because a core product function already exists. Current solar panels already produce electricity, and they also do it very well and are capable of handling a homeowner’s power needs. Make it clear that the only thing a prospective solar client will gain by waiting is an ever-rising power bill.
3. They aren’t sure how incentives work.
What better way to entice a prospect than with a government-backed incentive? The federal tax credit, which is available in all 50 states, has long served as one of the most important solar incentives in the U.S.
Homeowners are currently able to receive a 30% federal tax credit from the total cost of their rooftop solar systems. In our previous ROI example, the system cost would be $32,500 and the amount of the tax credit the homeowner would receive back is $9,750, making the net system price $22,750. That is no small difference.
However, homeowners are sometimes uncertain about how the tax credit process works. Don’t be lazy! Your prospects should know that you are there for them and will help them throughout the entire solar conversion process. Providing form submission assistance, during which you show homeowners how to fill out the necessary paperwork they’ll need to redeem their available incentives, can prove to be invaluable.
If you go to the IRS.gov website, you can find Form 5695 and instructions. Print out and keep a few copies of the form in your briefcase so you always have them on hand. Before a sale, you can show homeowners examples of a completed form.
After a sale, take it a step further: Schedule a follow-up appointment with homeowners a couple of months after they have had their systems installed. You can then help them actually fill out Form 5695. While you are there, it is a great time to ask for referrals. Your clients will likely open up their contact books for you because of how helpful you were throughout the entire sales and installation process, and now they are seeing the results on their power bills. Congratulations – you just created new solar advocates and earned some more leads.
Aside from the federal tax credit, there are other municipal- and state-level solar incentives available. Get to know your region’s incentives before making any sales calls or knocking on a homeowner’s door.
DSIREUSA.org is a helpful source where you can search your local area and state for all available incentives. Find all the ones that apply to your viable leads. Do the research, and be prepared. The more incentives you can present to a homeowner, the more enticing a solar purchase becomes.
4. They are concerned about their credit.
This situation is a little tricky because homeowners usually will not tell you about their credit concerns, so you need to put on your detective cap to uncover them. The use of simple verbiage about qualifying for loan financing goes a long way. Say “let’s get you qualified” instead of “let’s see if you qualify.” The former phrase implies that you are doing the work and a positive outcome is likely; the latter suggests the result relies strictly on the homeowner and the outcome is questionable. Be encouraging, and avoid raising your prospect’s stress level.
Although it is always possible that a homeowner will turn out to not have the credit needed to qualify for loan financing, surprisingly, many homeowners do have adequate credit but are just nervous about being rejected. Your goal is to submit an application and let the process decide. Don’t make the mistake of reading a homeowner’s nerves as a reason not to take an application.
There are several factors that go into financing approval. The most important are credit score, income and lender standards. Most of the main lenders in solar are looking for a 640 or 650 credit score. There are some lenders that will lend at 580, but they diversify their risk onto installers through higher transaction fees and onto the homeowners with unattractive interest rates.
Approval rates for loan financing can be as low as 40%. So, don’t give up on homeowners who don’t qualify. Many people may already have available home equity lines of credit. They may also have plenty of equity in their homes and can do a second mortgage or a refinance. If they fail the initial credit check, keep your cool because this is very common. Move forward with qualifying questions about additional credit lines and equity in their homes. Also, ask if homeowners are in the position to pay in cash or combine cash and credit cards to complete the purchase. Use the “if there’s a will, there’s a way” approach. Keep going until you and the prospect have exhausted all viable options.
5. They don’t understand solar.
Besides price, this is the most common reason homeowners don’t buy solar. They are often not educated enough about solar to make a decision on the spot, and they may be intimidated by all of the information you provide.
Make sure you cover the basics, and explain how solar works. Give them a tutorial from photons from the sun to the excess energy being sold back to the grid and all the steps in between. Don’t assume homeowners know. Spend the time to educate them about net metering and the installation process.
It is also essential that you encourage questions as you are presenting. Use trust checks like “does this make sense?”
If homeowners are unfamiliar with solar, overwhelming them with information is very likely. If you’ve come to that point, overcoming this on one phone call or home visit can be difficult. You can spend time reaffirming and gaining trust, but until homeowners feel certain about all the information you shared, they will slow down. They will want to think about it. Once that happens, your probability of gaining a sale begins to go down. If you do have to back out of a call or visit without closing a sale, make sure you isolate what a prospect needs to think about. Schedule a follow-up appointment before you hang up or leave. That way, you have established an expectation that he or she will consider the information and locked in a set time and day to reconvene regarding a decision.
However, the best time to overcome the education problem is before you even meet a prospect. By using an inbound marketing solution, you can give homeowners valuable decision-making information in advance. Sending them a guide or a tutorial prior to an in-person conversation can make all the difference. It gives you a tremendous amount of credibility. You took the time to educate them, and they will be further along in the buying cycle when you meet with them. That will increase your success rate and your perceived value as a professional.
In conclusion, the next time you find yourself in a homeowner’s kitchen, be prepared to address the most common reasons prospects say no to buying solar. Employing the simple strategies discussed here can improve your closing ratios, which in turn, will supercharge your sales results and lead to higher business success.
Good luck, and happy selling!
Anthony Fiorino is a solar marketing specialist and the founder of Solar Selling Solutions. He also is the founder of a solar consulting firm called Emerald Sun Energy.