“My business is the acquisition of non-regulated customers. It is not necessarily the business of putting solar on rooftops,” said OneRoof Energy CEO David Field.
That’s why San Diego-based OneRoof is pursuing three initiatives to lower its cost of customer acquisition. The first initiative is a “trusted advisory platform” through which OneRoof trains local CPAs, insurance agents, real estate agents, and mortgage brokers to sell residential solar. OneRoof’s second initiative is a partnership with a major online marketing company, while the third is to bring on a utility as an investor.
OneRoof isn’t the only residential solar company investing in customer acquisition. SolarCity recently purchased Paramount Solar and Solar Universe acquired Gen110. A new report from Greentech Media forecasts additional consolidation, software innovation, and strategy differentiation in customer acquisition that will reduce solar’s “soft costs.”
“We’ve found that the best sales representatives are those that have a financial relationship with the homeowner. We began to aggregate and support these guys. We gave them the right tools, built 26 online training modules, and [created] a certification program,” said Field. “I hate using this analogy, but it is like Amway. If you sell Amway, you’re not going to sell for somebody else like Amway, because Amway gives you so much support. Why would you leave? They make life really easy.”
The “trusted advisory platform” has already improved OneRoof’s margins. Last year, 80 percent of OneRoof’s deals came from dealers and distributors. Today, those channels contribute only 40 percent of the company’s business. The remaining 60 percent comes from inside sales and “trusted advisors.” Because the latter channels are significantly cheaper than the former -- Field gave ballpark figures of $8,000 for a sale acquired through a dealer versus $2,400 for a sale made through a CPA or insurance agent -- they enable OneRoof to significantly reduce costs and improve margins.
“I started OneRoof Energy because I realized that in order to drive down the cost of solar, you had to drive down the cost of customer acquisition, and the only way you could do that is by selling outside of solar dealers. You have to find channels that have a relationship with the homeowner,” said Field. “We started [by] working with roofing contractors, because they have a relationship with homeowners when they repair or replace a rooftop.”
After starting with roofers, OneRoof has expanded into other sales channels including insurance agents. Field believes that for the residential solar industry to continue its rapid growth, it will need to expand beyond Vivint's and Verengo’s door-to-door canvassing and SolarCity and Sunrun’s partnerships with Home Depot.
“A lot of [insurance salesmen] have ancillary businesses,” continued Field. “If one of those guys sells three or four systems each month through our platform, he’ll make another $100,000 a year, which is a ton of money for basically working through and providing additional value to his client list. We found that financial planners could say [to homeowners], ‘I am going to save you $100 a month on your electric bill, and oh, by the way, I really think you should open up a 529 savings account for your kids.’”
Field acknowledged that online lead generation is extremely difficult. To make it work, OneRoof has partnered with an “extremely well-known” company “whose business is online retailing.” This fall, OneRoof and its partner will begin beta-testing a new online platform, with a rollout planned for early next year.
“Sungevity was always the one model that intrigued me, so much so that I hired their VP of Sales when we launched because I wanted to learn how to sell solar virtually,” said Field. “It was really hard. You can’t spend enough money to drive eyeballs to your website. [...] You just can’t buy enough ads. Ask a whole bunch of companies.”
“What do we do?" he continued. "Partner with one of the largest brands in the world and let them do it,” said Field. “I’ll never be able to figure it out, nor will anybody at [ACORE’s Renewable Energy Finance Forum-West], yet once you get people to your website, that drives down your [acquisition] costs.”
According to Field, a sale enabled through online appeals can cost as little as $1,200, far less than the $8,000 ballpark cost he provided for sales made through solar dealers.
“The next turn of strategic distribution is when you see utilities sniffing around the space. That is the next level of distribution,” said Field. “Ultimately, it is about owning customers, which is why so many utilities came into the sector. Over the past 90 to 120 days, you’ve had four utilities invest in the sector. That is a trendline, and you’re going to see a whole lot more.”
In recent months, Duke Energy and Edison International invested in Clean Power Finance, while NextEra Energy acquired Smart Energy Capital. OneRoof is next, likely early next year.
“We will [also] be doing a utility partnership. […] We have terms from a utility for sponsor equity. They are a mid-tier utility, not like the ones that have already invested,” Field hinted. “They can get a higher IRR off non-regulated solar leases in order to augment their regular IRR. It produces a higher blended IRR with a utility end-use customer.”
“A customer with Sunrun can set his clock based upon when he knows his next payment is coming. That is really important to an industry that has really [low] margins and lives day to day on cash flow,” said Field. “They do what they do extremely well, better than anybody in the industry, when it comes to servicing a solar deal and processing payments.”
But OneRoof believes that it is better positioned than its competitors to pursue new sales channels and reduce the cost of customer acquisition. When asked if his competitors could replicate OneRoof’s pursuit of insurance agents and CPAs, Field spoke candidly about the challenges Sunrun faces when pursuing new sales channels.
“The biggest problem in sales management for any company is channel conflict. If 90 percent of your bread and butter comes from 30 [solar] dealers, you are very careful about how much you piss them off and how much you are seen as competing with them,” argued Field. “Sunrun could do it; they’ve got the depth, breadth and capital to do it. But if you’re thinking about a liquidity event in the next twelve months and you’ve got 30 customers, you are not trying to piss those guys off. [...] You are very aware and sensitive to losing volume, and rightfully so.”
Watch an interview with OneRoof Energy CEO David Field: