Is your New Year’s resolution to lower your residential solar company’s customer-acquisition costs? Or is it to increase deployments and worry more about soft costs after you scale?
In 2018, solar companies of all sizes grappled with these questions and adjusted their sales channels to align with their goals. For companies that needed to drastically cut costs, some were willing to do so at the expense of installation volumes.
Tesla, for instance, laid off salespeople, stopped selling door-to-door, and announced it was ending its partnership with Home Depot at the end of 2018. Since Tesla acquired SolarCity in late 2016, the company went from installing over 200 MW of residential solar per quarter to about 50 megawatts per quarter more recently. But during this time, Wood Mackenzie estimates that the company’s customer-acquisition costs fell from nearly $1.00/watt to under $0.50/watt. If cutting soft costs was one of Tesla’s top goals, it certainly achieved it.
Vivint Solar and Sunrun, however, took a different approach over the last few years. Rather than focus purely on cutting costs, both companies invested in new sales channels in order to grow the businesses. In 2017, Sunrun introduced its partnership with Comcast to help it sell its residential solar services. Also in 2017, Vivint Solar partnered with Vivint Smart Home to increase its offerings and reach. Both companies formed additional partnerships in 2018 in order to expand their customer bases. All the while, neither of these companies has seen customer-acquisition costs come down in a meaningful way. In fact, both companies spend more on customer acquisition (through higher commissions) for more profitable system sales.
Across the board, these strategies employed by Sunrun, Vivint and Tesla highlight the primary role that customer acquisition plays in the pursuit of profitability as companies achieve scale.
Outside of the publicly traded, national installers, other residential solar installers have made changes to their customer-acquisition strategies too. Some have expanded their referral networks, while others have abandoned inside sales altogether and rely entirely on third-party lead generators. Some have abandoned door-to-door sales, while others have taken on this strategy wholeheartedly.
As Wood Mackenzie analyzes trends in residential customer acquisition, we want to hear from you. If you work at a residential solar sales or installation company, please fill out this five-minute survey to contribute to our research and for a chance to win a free copy of the report! Free reports will be given to the first survey respondent and then every 10th survey respondent when the report is completed.