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Reducing Customer Acquisition Costs for Home Solar Systems

“Comparison Shopping” for a solar power system is a great way for a homeowner to find the cheapest/best system for their needs.


According to a recent NREL study, these customer acquisition costs (lead generation, bid preparation, contract negotiation, system design and salesforce compensation) amount to $0.67 in the U.S., compared to $0.06 in Germany. That’s almost $2,700 for a typical 4 kw system! These costs are so high because of the extent and complexity of the paperwork. It takes a very skilled salesperson to complete a residential solar transaction (solar knowledge, spreadsheets, contracts, nuances of incentive and interconnection paperwork, not to mention sales closing capabilities). And most salespeople are supported by lead generation and marketing expertise. Computerizing some of these tasks can help reduce the “shoe leather” costs — but then the IT costs have to be added back in.

Let’s look at the compensation a good solar salesperson merits. With all of the customer contact, design, bid, revision, contract and hand-holding requirements, closing one complete transaction a week is about all that can be accomplished. Salespeople of this caliber can earn about $100k/year including base, commissions, bonuses and benefits (YMMV depending on location). Salesperson compensation alone accounts for $2,000 of the $2,700 customer acquisition costs. Add in lead generation ($300/qualified lead), marketing, advertising, web design, sales management and IT costs and it’s easy to see why customer acquisition costs are so high. In Germany these costs are more like $240 — because customers call their local solar company when they want a system (just like we call a local electrician when we need electrical work), there is no need to explain why solar is a good investment (because systems are already popular), and the manager of the local solar company fills out the one page solar application. In Germany, a salesperson doesn’t need to do complicated design work, a shading analysis, charts and tables illustrating why solar is a good investment, incentive application, interconnection agreement or financing documents.

In order to reduce these customer acquisition costs we need to ELIMINATE the paperwork and red tape necessary to install a system. Comparing multiple bids is helpful, but won’t substantially reduce the time and effort it takes to sell a system. In other words, comparing systems won’t make these costs go away!

Solar Freedom Now is striving to ELIMINATE the paperwork and red tape it takes to install a system — and that has the potential to bring customer acquisition costs down from $2,700 to $240.


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