"Customer acquisition costs" represent an increasingly important metric in the downstream solar market -- and it's why Pure Energies Group just scored $6 million in venture funding from NEA and NGEN.
With the solar-as-a-service concept experiencing a meteoric rise, the trick is to win more customers and to do it cheaply. Canadian solar project developer Pure Energies Group acquired 1BOG, a solar comparison shopping service, in July 2012 (1BOG had raised $5 million from NEA in 2010). Pure Energies also acquired Seattle’s Cooler Planet a few months ago.
But now the company is focused on customer origination and customer acquisition.
Pure Energies acts as an advisor to the homeowner, steering them through the increasingly intricate and varied array of third-party solar contracts. The startup looks to deliver a credit-qualified, all-in, signed-up customer to one of its solar installer and financier partners. CEO Zbigniew Barwicz told GTM that his partners include five of the top ten installer/financiers -- a list which includes companies such as Sunrun, Sungevity and SolarCity.
Barwicz said, “Residential solar is a new retail category, with complicated 20-year-plus power purchase and lease agreements, and multiple-thousand-dollar prepay options and escalation tables. We believe a homeowner should have a trusted independent advisor who will demystify the process and provide a one-stop shop to help select the best offering for their specific situation."
Pure Energies used to sell solar systems in Ontario but has since shifted to a software and sales model. The idea, said the CEO, is "to become the Expedia of the solar market," giving homeowners tools to find the best price for their needs. Another startup, EnergySage, also aspires to be the Expedia.com of solar.
In the residential solar space, there's little support for the homeowner who's trying to comparison-shop, noted Andrew Krulewitz, GTM Research solar analyst. "In a cash sale, this could yield huge price savings for the end-customer," he said. "Most homeowners simply do not know what a solar system costs."
GTM Research sums up the situation like this: "Each of the financier installers has its own unique business model. Some have an in-house solar renewable energy credit (SREC) trading business (Clean Power Finance), while others offer energy management services such as energy audits in addition to solar installations (SolarCity). Some (Vivint) are differentiated by customer acquisition strategy and back-end experience. Others (OneRoof) gain leads through unique channels. Centrosolar uses its lease option as a value-add in its distribution business, like SunPower does with its dealer network."
CEO Zbigniew Barwicz said, "what we think is happening is [the emergence of] a new retail category," with homeowners being able to choose. He sees it as being akin to the telecom industry after deregulation. He also describes running up against a pervasive lack of trust and education that his firm could remedy in a capacity similar to an insurance broker.
Danny Kennedy of Sungevity said his goal is to lower customer acquisition costs (CAC) and keep the firm's referral momentum going. "At the end of the day, solar is not about the technology; it's about the customer," said the Sungevity founder at Greentech Media's Solar Summit 2013. Investor Rob Day looked at SolarCity's customer acquisition costs here.
In the words of GTM Research's Shayle Kann, “Customer acquisition costs and strategies are about to get sexy.”