By Kyle Cherrick of Pick My Solar*
Recently, the Securities and Exchange Commission opened investigations into the selling practices of some of the largest solar installers in the country. The oversight commission’s concerns are primarily centered on the high cancellation rates of residential solar lease and power purchase agreements (PPA) and how the publicly-traded installers were not always forthright with their shareholders about just how high those cancellations were. In fact, we’ve heard cancellation rates for normal sales channels of 40–50% and even higher for the “direct sales” door to door teams, as much as 70–80% or higher.
What’s the Problem with Today’s Solar Industry?
High cancellation rates of large purchase items are a warning that consumers may not have been fully educated about all of their options before their purchase, and which choices were to their greatest benefit. Similar to products like timeshares, that period following the masterfully crafted, deceptively high-pressure sales consultation results in a high level of buyer’s remorse and additional time to do independent research. The solar industry itself has taken note of this with local and national Solar Energy Industries Association (SEIA) organizations calling attention and alerting consumers to “Buyer Beware.”
Some of the issues we saw as the “dark side” of the solar sales industry include:
- Compensation structures which rewarded significantly overcharging unwitting customers.
- Strong-arm sales techniques including “selling the inspection” in which salespeople were purporting that their company would start evaluating the project for the customer with a simple signature on what was, in fact, a 20-year financial obligation without the benefits of ownership or any discussion of financing options and finding the right fit for that consumer.
- Financing mechanisms built on the best interest of the company, not the owner, that that were not in the best interests of the consumer, but were presented as the only option by the salespeople.
How the Solar Industry is Changing
In a somewhat timely move, Elon Musk recently announced that Tesla (and the still-in-transition SolarCity brand) was shutting down its direct (door-to-door) sales team and attempting to transition these people to new roles, part of the company restructuring its sales organization and strategies.
To his credit, Elon has a general disdain for all commissioned salespeople, which partially motivated him to take the “no franchise dealers” strategy for Tesla all the way to the highest courts. It appears that for Tesla-developed products, including PowerWall and Solar Roof, Tesla designed the sales channels from the start to be open, transparent, and without the need for commissioned salespeople.
We’re incredibly pleased to see this transition – really, a maturation – of the solar sector. It strikes to the heart of our original vision for Pick My Solar, founded to place the consumer’s interest as the #1 priority.
How Pick My Solar is Changing the Model
Pick My Solar chose to blaze a new trail, to be fully transparent in the sales process and place consumer interest first. We ensure our sales guidance is devoid of the bias of variable compensation based on the profitability of the individual deal. What we created is the Pick My Solar managed marketplace, providing a platform where consumers can compare high-quality, regionally respected installers who provide comprehensive, apples-to-apples quotes for solar installations featuring top-tier components, high-quality installation procedures, and good customer service.
The team at Google Project Sunroof shared our vision, and they selected us as one of their original 7 national launch partners back in December 2015. They focused on lead generation, and we focused on providing high-touch unbiased customer guidance all the way through contract execution between the installer and the consumer.
This full-service approach ultimately became the difference between us and our most similar competitor, EnergySage. Like us, EnergySage focuses on competition and transparency, but leaves the actual selling to the installers, which carries the unfortunate effect of often overwhelming consumers with multiple solar salespeople aggressively pursuing hot leads. When we consider the long-term goals of lowering customer acquisition costs with maximum consumer satisfaction, we simply believe that it only takes one salesperson to sell solar, so long as they are unbiased and providing consumer first guidance.
We invested in our post-sale support team, which remains as a constant customer advocate before, during, and after the construction phase, but carrying the unique ability to restrict access to the marketplace if a contractor is deemed to be not acting in the interest of the customer.
Together, as Google’s Project Sunroof service expanded to more states throughout 2016, we curated a robust pipeline of what we call the “medium tail” of installers. While the long tail of over 4,000 solar installers nationwide includes quite a few “two guys, a truck, and a credit card” companies, our installer-vetting team maintains a high bar for access to the marketplace, supported by significant consumer surveys of installer satisfaction. The installers most likely to appear in our marketplace are also likely to appear in a report such as Solar Power World’s annual Top 500 Solar Installers.
So far, over 175 of these regional installers have caught our vision and signed onto the platform across 44 different regions in 25 states across the country.
For most of them, it’s an easy decision. They truly believe in the quality of their installation practices, financial stability, and ability to run a lean, efficient solar operation. So, the prospect of growing their business by 20–30% without any upfront investment in sales or marketing is a no-brainer. We qualify them; they gain access to the marketplace and place their bids with minimal time invested, and, when we close a contract on their behalf, we just send them a signed contract.
Some of our earliest consumers included industry executives who took note of the new model. Those of you who have been in the industry a while still remember the annual conference general sessions in which one of the organizers inevitably polled the audience to see how many of our own had gone solar. Back in 2009, even for insiders, that number was as low as 10–20%. Which makes sense, because it’s a major investment, it’s a complicated process, and many work in the industry but not directly for an installer, so it can be hard to determine what path to take.
The Future of Pick My Solar
With Pick My Solar, municipalities like the City of Thousand Oaks, nonprofits like Sustainable Claremont and SustainOC, employers like Sierra Nevada, and others can all refer their community to Pick My Solar with confidence, knowing that we don’t make any more or any less based on the price of your system or financing type, and our only interest is in getting the best deal for each consumer.
And this summer, in partnership with the Massachusetts Clean Energy Center (MassCEC), we’re launching our first statewide-focused micro-marketplace, part of the Mass Solar Connect program. Together with MassCEC and local nonprofits Self Reliance and The Marion Institute, we’re letting residents know that Massachusetts has some of the best economics available in the country, with payback periods typically under 6 years, and low-cost loans providing cash flow positive, high IRR projects saving consumers over $50,000 during the life of the system.
We believe the future is bright for both consumers and the solar industry, despite a somewhat awkward industry maturation period which has taken several large companies under.
Together with our partners, we’re building what we believe will ultimately be the largest single source of consumer solar adoption akin to the boom of online sales of consumer products during the Amazon rise.
So, if you’re out there thinking, “how can I help build a better world in the future?” we invite you to join us as an installer, a channel marketing partner, or just refer your friends who are, or should be, considering solar for their homes and businesses. We look forward to putting their needs first and building a solar-powered future. To see how much time and money you could save on the Pick My Solar platform, please visit our website.
About the Author:
Kyle Cherrick is a 10-year solar industry veteran with experience in both start-ups and industry leaders including First Solar, SunEdison, and Chint Power Systems. He co-founded Solar Merchant, an online marketplace for commercial projects which won a US Dept of Energy Sunshot Catalyst grant. In April 2016, Solar Merchant was 100% acquired by online residential solar marketplace Pick My Solar where Kyle now leads business development including industry partnerships, growth strategies, and strategic marketing. He holds a BSBA in Entrepreneurship & Marketing from the University of Arizona and an MBA in Entrepreneurship from Babson College and inconsistently enjoys CrossFit, hiking, and international missions.
*This post has been supported by Pick My Solar, images from Pick My Solar