The U.S. residential solar market remains white hot, with Q2 2021 installations up 2% over the previous quarter and up 46% from Q2 2020, according to the Solar Energy Industries Association (SEIA). Industry forecasts remain bright for 2022 and beyond.
With more than 10,000 solar installers vying for a larger share of this surging market, residential installers will need to find new ways to cut costs and grow their businesses to remain competitive. One area with the most potential to accomplish this involves reducing soft costs.
Despite a slight decline in recent months, soft costs remain much higher in the U.S. compared to other developed global solar markets. These costs, for design, customer acquisition, permitting, and more, can account for up to 70% of total residential solar costs, according to SEIA.
Successfully and sustainably scaling a solar business in this climate, whether it involves moving to a new market with different regulatory rules or adding a sales channel instead of relying on internal channels, comes with its own set of risks that can add up.
Let’s take a look at five smart ways residential solar installers can cut soft costs:
1. Take Customer Acquisition Online
Customer acquisition for large and mid-sized regional residential solar installers has traditionally relied upon door-to-door sales. Although many companies had to switch gears to comply with pandemic-related stay-at-home mandates, many companies have returned to door-to-door and in-person solar sales.
But as of the first half of 2021, customer acquisition costs account for 23% of the total price of a residential system at U.S. $0.75/W, according to Wood Mackenzie. This follows a cost increase of 9.2% from 2018 to 2020.
Door-to-door solar sales is one of the most expensive sales channels, since it’s such a labor-intensive and time-consuming endeavor. While older methods can still be effective, it may also be time to upgrade and incorporate an online sales strategy. Installers can trim these costs associated with customer acquisition by investing in an online customer acquisition platform. This can help sales reps reach significantly more potential customers and generate more leads in the same amount of time it takes to walk from house to house.
2. Streamline Permitting
An inefficient permitting process can add up to $1.00/watt to the cost of residential solar installations. Bureaucratic red tape and mandatory wait times all contribute to prolonging projects and raising the chances for risks.
Permitting also becomes a major hindrance when installers try growing their businesses and entering new markets. Due to the piecemeal nature of local regulatory and permitting processes, it can take significant time and efforts to get the lay of the land in new areas with different Authorities Having Jurisdiction (AHJs).
Thankfully, installers now have access to automated permitting programs and inspection checklist apps, such as SolarApp+ and SolSmart, that speed up this long drawn-out process, and save installers on the associated soft costs.
3. Partner With a Non-Solar Business
Another way to lower customer acquisition costs involves finding a non-solar business partner. Partnering with a non-solar business, such as a roofing or HVAC contractor, can help reduce customer acquisition costs while expanding the company’s customer base. By offering discounts to homeowners to install solar panels at the time of a roof replacement, or offering a discount on a new roof when installing a rooftop PV array, all parties involved benefit from the partnership. With both companies giving direct referrals, it can reduce customer acquisition costs considerably.
4. Keep Lines of Communication Open
Communication remains important, and delivering necessary information at the right cadence is crucial in ensuring projects stay on schedule. Installations involve many moving targets that need to be completed within the proper time frame for project success, including permitting, siting and more.
Without open lines of communications, installers run the risk of creating delays and other setbacks, which contribute to increased soft costs. A lack of communication can not only cause delays due to poor planning, but it can also sour the customer relationship. This extends beyond the transactional talks about products and costs, and also includes delivering information about the nature of the market and what’s at play that could potentially impact current and future projects.
5. Provide More Rooftop Solar System Value
At the end of the day when the sun goes down, the output of a rooftop PV system matters the most. Providing customers with high-powered, high-efficiency modules that are also affordable delivers more value to homeowners, which helps with customer satisfaction. And satisfied customers become brand ambassadors who can evangelize friends and family into getting their own rooftop solar systems. This helps bring in new customers without having to spend on acquisition costs.
Trina Solar’s sleek and affordable residential PV modules bring that extra power and efficiency necessary to truly optimize your homeowner customers’ rooftop PV system.
Want to learn more about how Trina Solar can help residential installers boost rooftop PV system value? Reach out to us today!
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