How to predictably scale and grow your solar installation business

ladders and rocks

Even as the residential solar installation market continues to grow, most solar businesses are looking for ways to lower the cost of acquiring new customers. How can your residential solar contracting business manage customer acquisition so that you have the right amount of business through each season without over-spending on sales and marketing? The answer is to get better at acquiring new customers using the newest trends in marketing.

The holy grail of marketing is knowing whether you’re wasting your time or money, and whether your efforts are generating a positive return on investment for your solar business. When companies generate a consistent ROI for each dollar spent on marketing, they have created a predictable model. That predictability is what makes your business scalable because once you know that if you spend $1, you’ll get $10 back, you can increase your marketing spend and revenue with confidence. Once you’re confident in achieving a consistent return on investment, you can scale the channel to achieve the volume required for optimizing your ROI. In addition, once you have the ability to get customers when you need them, you can grow comfortably, increasing your spend to evenly distribute your jobs over the year to suit your needs.

When a solar contractor manages to generate new customers and contain customer acquisition costs, this creates a sustainable, predictable model. Then, it’s just a matter of defining how many customers your business has the infrastructure to serve in a given period of time and investing in getting them on board. Sales growth is predictable and customers can be acquired at an optimal rate.

The predictability problem

Since 85 percent of all solar installation inquiries now start online, the most measurable lowest cost results will come from digital marketing. However, the home improvement industry remains behind the curve in digital marketing. According to a study by G/O Digital, 77 percent of all contractors have no marketing plan. With so many homeowners turning to the internet for information about solar panel installation, digital marketing has become crucial to maintaining market share.

The path to getting more customers is typically measured by the following:

  • Cost per click. How much does it cost to get a prospective customer to click on your ad or your content to learn more?
  • Cost per response. After a prospect clicks, how many will respond by getting in touch with you? And what is the cost for each of these?
  • Cost per appointment set. How many potential customers for your solar installation business are qualified for your services and will agree to a sales visit? And what is the cost for each of these?
  • Cost per sale. How many potential buyers convert to a sale? And what is the cost for each of these?

Most solar businesses don’t have the resources to invest in developing capabilities to expertly manage this within their business, nor do they have the interest in managing it on a day-to-day basis. So, they take the new customer calls as they come, without any ability to control when they come, or whether the calls they get are from the types of customers they even want to serve. Worse, most solar companies have no tracking of lead sources, so they’re unable to determine which channels and campaigns are worth investing in and which they should discontinue.

Five paths to predictability

There are five ways solar businesses are improving the predictability of their marketing so they can grow at a controlled rate.

  1. Reduce risk by outsourcing part of the process. By eliminating the need to execute each step, you will save time and improve results. By outsourcing lead generation, for example, the cost per raw lead is defined and doesn’t vary from month to month. All you’ll focus on are the last two variables in the process: appointment setting and sales.
    “Utilizing purchased leads, as part of a comprehensive marketing strategy, is a valuable tool in growing a solar business,” says Amy Olsen at Wells Solar and Electrical Services. “Outsourcing lead generation leaves the responsibility to the experts. Paired with an efficient model of processing leads, it can ultimately expand a referral network.”
  2. Respond to leads quickly. The best results go to the contractors that respond to solar leads in five minutes or less.
    “To stay ahead of the competition, you need to have a marketing and technology infrastructure that can react to new solar leads instantaneously, coupled with capable and knowledgeable solar sales staff, or you have lost,” says Justin Jordan, VP of marketing at Sungevity. “There are many ways to measure marketing success, but it all starts with the ability to react quickly and effectively to new leads coming down the pipeline.”
  3. Be persistent. Success rates are shown to be optimal for those who place up to six follow-up calls for their residential solar leads.
  4. Capture permission to stay in touch. Even if a lead isn’t ready to set an appointment or buy, gain permission to add them to your database as a contact. If you nurture them over the period of a year, a certain number will convert to customers when they are ready to buy.
  5. Deliver a quote promptly. Your ability to respond to residential solar leads with a quote will be interpreted as an expression of your overall quality of service. A quick response portends quick service, which will take a winning position against a competitor that takes longer.

Measure the results

The rigor of tracking and measuring will pay off. This allows you to see where your processes are weakest, so you can then focus on the appropriate efforts to make improvements.

“The key to success is understanding the process and the metrics,” says Bob Brunson, SVP at Zoi Solar. “Once you understand those, you can work to improve the inefficiencies.”

Olsen agrees. “It is very important to track leads, meetings and contracts. Each of the steps in the sales process defines the efficacy of the lead source.”

Ultimately, if you get your cost per raw lead to a predictable number, all you’ll have to work on is the cost per appointment and the cost per sale.

Don’t let marketing people tell you this isn’t possible. It is, and it’s done every day by savvy solar contractors who want to grow strategically. There’s no reason to let your business fall behind because you’re not able to take advantage of the new technologies and services that provide the ability to market in a way that takes the mystery out of the process. You deserve to know what your marketing dollars are generating for you in terms of new customers and to enjoy the benefits of growing your business in an intentional, deliberate way.

Jason Polka is the CEO of Modernize.

roof top reportDownload the new Residential Rooftop Report to heat up your solar sales

The Residential Rooftop Report for the first quarter of 2019 is now available for download. The theme is “Heating Up Sales,” and we’ve teamed up with report sponsor Aurora Solar to examine ways for residential solar installation companies to lower customer acquisition costs, close more leads and overall run a more streamlined, efficient local solar business. Just fill out the form below to access your free report.

— Solar Builder magazine

PV Pointer: Maintain edge distance for compliant roof attachment

mounting solar panels

The quality of a solar installation has many parameters. One frequently underevaluated aspect is a compliant roof attachment. Load calculations that determine the number and spacing of attachment points prescribe not only the length of lag screws that must enter structural members but also their edge distance or the effective centering of the lag screw in the rafter or truss.

The National Design Standards of the American Wood Council defines edge distance as the distance between the center of the lag screw and the edge of the structural member. For most solar applications, the minimum edge distance is 1.5 times the lag screw diameter. Placed in a common residential PV setting, the center line of a 5/16-in. lag screw entering a 1-1/2-in.-wide rafter must not exit the middle 9/16 in. (37.5 percent) of that rafter. In other words, 9/32 in. (just over 1/4 in.) is the maximum allowed deviation from center. Engineered trusses, or TJIs, have their own attachment specifications available from the manufacturers.

Edge distance compliance factors

First is the accuracy of the installer’s determination of center from the rooftop. The most common locating method, drilling enough probing holes to estimate one or both edges — and from that inferring center — is used where rafters are hidden. Rafters that are exposed (in a vaulted ceiling or porch roof, for example) increase inaccuracies because more complicated methods are often used to avoid cosmetic damage. Second, if a pilot hole is used, an error in placement or angle can set the lag off center. The tip of a 3-in. lag screw angled 2.5 degrees off of perpendicular will end up 1/8 in. off target.

Factors outside the installer’s control and often awareness include warped or skewed rafters that may be 5 degrees or more out of perpendicular, sending the point another 1/4 in. or more off target. In a typical installation with 30 to 50 standoffs, each subject to a combination of these factors, “spinners” are common, and they can be challenging to remedy. Other noncompliant lags go undetected, and some of these will fail under loads they are required to meet.

Noncompliant roof attachments can be minimized by attention to their primary causes. Installers should be equipped with the necessary tools and trained in a variety of methods for rafter center location as well as missed-target remediation. Site-specific parameters will point to preferred approaches. Where possible, visual inspection of rafters before lagging can inform a compliant trajectory in a skewed rafter. Post-attachment inspection may help identify noncompliant lags.

Duane Ediger is an installer with Technicians for Sustainability in Tucson, Ariz., and the founder of RafterEye LLC.

— Solar Builder magazine

Solar Marketplace Report shows the power of one ITC and the weakness of another

The semiannual Solar Marketplace Intel Report from EnergySage shows that solar system costs continue to fall, despite the Trump tariffs, which so far, have not even produced more domestic module procurement. Here are four takeaways from this latest report, which is based on millions of transaction-level data points generated within the EnergySage Solar Marketplace during 2018.

Tariffs have no impact on domestic panel purchasing (yet)

energysage market intel solar report

In January 2018, the Trump administration acted on the U.S. International Trade Commission’s finding of “serious injury” to U.S. solar panel manufacturers by levying tariffs on imported solar panels. The tariffs were intended to help American-made solar panels better compete with their foreign-made counterparts.

However, a full year after the tariffs were announced, the number of quotes offering domestically produced panels reached near-record lows on the Solar Marketplace. Ultimately, just 4% of EnergySage shoppers purchased a system with American-made solar panels in 2018 – an all-time low in the history of the EnergySage Marketplace.

But many of the top panel providers are opening / have opened U.S.-based manufacturing facilities, so this mix could actually shift pretty dramatically in a future report.

In the meantime, Panasonic remains the most quoted / selected solar panel brand with LG coming in second. Among the U.S. manufactured brands, Solaria is on top, followed by Mission Solar.

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Cost of solar falls to $3.05 per Watt, with several markets trending under $3 per watt

In H2 2018, the average quoted cost of solar on the EnergySage Marketplace dropped 2.2% to $3.05 per Watt. This is the largest price drop seen on the Marketplace in two years. At the same time, the average size of quoted solar energy systems increased by 7%, up to 9.6 kilowatts.

Digging into this number further, the news is even better for solar in larger markets like Arizona, California and Texas, which are seeing sub $3 per watt costs regularly. In fact 45 percent of the quotes in EnergySage’s network fell below $3 per watt.

Florida is one state showing intense price competition, with an average cost per watt of $2.72. On the other end of the spectrum, the Northeast is still seeing some of the higher solar system costs in the country.

ITC step-down could erase price decreases from previous year

The federal Investment Tax Credit (ITC) will decline to 26% at the end of 2019, which may effectively erase a year’s worth of solar cost decreases. The installed cost of solar could increase by over $1,000 for the average residential solar shopper come January of 2020.

Solar interest grew in all 50 states

Consumer interest in solar increased across the country, with interest doubling in 11 states between 2017 to 2018, according to an analysis of EnergySage website traffic. Virginia led the nation with the most year-over-year growth in solar interest, with Nevada a close second.

“Consumer interest in solar has proven incredibly resilient over the past year, despite tariffs and other attempts by the current administration to artificially decrease demand,” said EnergySage CEO and founder Vikram Aggarwal. “Solar prices are continuing to fall as installers improve their operations, supply chain management, and sales strategies. Additionally, we expect the growing popularity of brands like Enphase, LG, Panasonic, SolarEdge, and SunPower to lure more American consumers into the residential solar market in years to come.”

— Solar Builder magazine

Virginia’s Ipsun Solar adds energy storage offering with Tesla certification

Ipsun Power

Ipsun Solar, located in Fairfax, Va., is now a Tesla Powerwall Certified Installer. The company says sign-ups for the product are already coming in at a brisk pace, which speaks to a desire on the part of D.C. and Northern Virginia homeowners for customized solar-plus-battery solutions.

During 2019, the final year of the federal solar tax credit, electric customers have a chance to take full advantage of tax incentive dollar savings while harnessing the free, abundant power of the sun. This ensures power is available in the event of a grid outage.

With Tesla Powerwall, D.C. Metro residents can store more solar energy generated during the day for use any time. During the day, the sun shines on the solar panels, charging the battery. At night, the home draws electricity from the battery, so that the home can use clean, sustainable power 24/7. Ipsun Solar’s in-house teams handle system design, permitting, installation, financing, and basic service, and they are pleased to install these systems along with photovoltaic solar arrays and electric vehicle chargers.

The unit is typically connected to the grid in order to export excess energy, maximizing the financial benefit opportunity for a business or a family by making use of utility net energy metering.

— Solar Builder magazine

Crossing Wires: Solar installers are connecting new services to spark new sources of business

wire illustration

More solar installers are adding products and services to their core offering, both to help customers fulfill their sustainable energy goals and to drive ancillary revenue. Products like battery storage, EV charging stations, Smart Home devices and electrical upgrades are natural add-ons for many customers. At the same time, more installers are offering extended operational monitoring and warrantied maintenance, further tightening the relationship with the customer, at greater profit.

Astounding market growth

The sustainable energy market that complements solar is sizable, if difficult to accurately value, for the residential and commercial segments alike. The residential energy storage market alone is exploding, according to a September 2018 U.S. Energy Storage Monitor from the Energy Storage Association and Wood Mackenzie Power & Renewables. They say 156.5 MWh of energy storage was deployed in the second quarter of 2018, triple what was deployed in the second quarter of 2017. The residential segment led the way, growing tenfold year over year.

With such awesome growth prospects, the key hurdle to such business expansion seems to be customer acquisition. In a 2018 study, the Rocky Mountain Institute found that two-thirds of U.S. homeowners consider home energy performance a top priority, but few actually take action to improve home energy use. And those who have implemented efficiency improvements seldom invest in whole-home energy upgrades, RMI reports.

Thus, much of the sustainable energy add-on market may need to be driven by product installers and service providers. In a survey by the American Institute of Architects, 51 percent of single-family homebuilders and 36 percent of remodelers surveyed for the report anticipate that green building projects will make up more than 60 percent of their residential projects by 2020.

This feature originally appeared in the Solar Builder print magazine. Don’t miss our annual Mounting Guide edition in May — subscribe to Solar Builder magazine (print or digital) for FREE today

solar install

Photo via Baker Electric Home Energy.

Growth through partnerships

One way that solar installers expand their offerings and increase revenue is through strategic partnerships or acquisitions. Auric Solar, for example, had already begun offering expanded energy services and was in the course of launching a field service team when they were approached by a smaller competitor, Solaroo, which suddenly had developed a pipeline too large to handle. The companies merged.

“We had a good foundation in four states, but a small office in Colorado, where most of their pipeline was located. And since we also have experienced several expansion periods in the past, we knew how to scale up, so it’s a great fit,” says Danny O’Malley, the client engagement manager for Auric in Salt Lake City.

With a staff of about 120, Auric is helping Solaroo, which had 80 employees, to handle the solar installation pipeline. The deal was not Auric’s first effort at strategic partnering. The company also is working with a new partner to provide EV chargers, has a partnership with a roofing company and has partnered with larger firms as an entree to larger projects. Auric is also exploring a partnership in the energy efficiency upgrade business segment, is doing some consumption monitoring and is Tesla Power Wall certified.

“We have several potential partner companies that we have vetted and can work with in the future,” O’Malley says. “If solar doesn’t get a customer to his or her energy savings goals or needs, we want to plug the hole in the bucket. Solar is the bread and butter for both companies [Auric and Solaroo], and it will continue to be.”

solar install

Photo via Baker Electric Home Energy.

The next wave

For some solar installers, deciding which add-on product to pursue first can present a quandary, given the swarm of new solutions being offered at every product level. Tinkering, testing and pilot installation programs help prove what works best.

“The concept of a single platform that can control all the energy systems in a house — or a business — is being looked at by a number of product manufacturers, from the inverter guys and smart home hub guys to the HVAC and thermostat guys. They are all looking at a solution from their own perspective,” says Mike Teresso, the president of Baker Electric Home Energy. Baker Electric Home Energy is California’s second-largest solar installer, with over 8,500 solar systems designed, engineered and installed throughout Southern California.

“At some point we will see a single platform, but it is unclear now as to which business model will be the center of the house,” Teresso continues. “We prefer it from the solar side, but we don’t really care which product perspective succeeds — any of them would be a dream solution, regardless.”

Baker now offers battery storage, heating and air systems and Smart Home solutions. Baker’s preferred central smart home platform is currently Control4, Teresso says. Control4 solutions works with over 12,000 third-party consumer devices — and that number is rapidly growing.

“You can count on your Control4 system controlling anything from the pool to thermostats, gates to garage doors, entertainment to security systems and almost anything in between. Our open platform and commitment to interoperability gives you the most in third-party choice,” Teresso says.

For Baker Electric Home Energy, this integrated set of products and services are being marketed as The Baker Connected Home.

“Today, these additional products and services are still a very small portion of our business, but in five years, we might see them as a third of our total revenue,” he says.

Baker has made its bones by staying ahead of trends. The company began evaluating and building battery storage configurations in 2016, for example, two years ahead of the residential storage boom. “Not all of the pilot projects went that smoothly, but today we have the experience of those two years of testing,” Teresso says.

Beta-testing new technology is also a good way to select the next avenue to ancillary business for a solar installer. Jason Andrade, the owner-operator of West Coast Sustainables in Igo, Calif., is a beta-tester for a variety of sustainable energy products and often performs high-visibility installations. Among his clients are the late country singer Merle Haggard, ‘80s action star Steven Seagal and ex-California Governor Jerry Brown [which won a Solar Builder Project of the Year Editor’s Choice Award], Andrade says.

“Smart home for light automation will be next wave, with hardware solutions like Lutron lighting which is easy to retrofit, and with the next round of automation from Google,” reckons Andrade. “Then the next level will be battery storage for homes.”

Lutron, based in Coopersburg, Pa., claims to lead the market in high-quality lighting controls for fluorescent, halogen incandescent, magnetic low-voltage, electronic low-voltage and LED light sources. The company has also led innovations in window shade technology for the control of daylight, as well as wired and wireless systems, to integrate the control of both daylight and electric light.

solar install

Photo via Baker Electric Home Energy.

O&M builds long-term relationships

But you don’t need to jump right into automated window shade installs to grow your business. For some solar installers, offering O&M services for existing solar customers makes the most sense as a first step (and the biggest step) for diversification. SunPeak Power, of Madison, Wisc., for example, is enhancing its O&M offerings to better serve its commercial and industrial clientele.

“SunPeak is firmly rooted in C&I installation and has not yet ventured into other areas of sustainability business with the exception of O&M services, but we are in the process of rolling out an updated O&M program,” says John Schwarzmeier, the O&M manager at the company. “We use advanced monitoring capabilities that allow us to quickly detect problems and anticipate component replacement. We provide clients with detailed reports on the status and performance of their systems, and we perform necessary maintenance with highly skilled and trained technicians.

Schwarzmeier notes they are not necessarily looking at these extra or extended services as a source of revenue, however, but rather as a way to continue to provide excellent service to their customers on an ongoing basis.

“Not only is this is the right thing to do, but it often leads to future opportunities. In short, it’s a win-win proposition for all involved,” he says.

Charles W. Thurston is a freelance writer covering solar from Northern California.

— Solar Builder magazine