Endicott NY 13760
www.etmsolar.com / Phone: 607-785-6499
FAX: 607-786-3388
2/15/2005
How to approach customers about solar electricity
This is what I have learned from talking to many customers. Much of this is no different from what any salesperson will tell you. Our industry is not so special that we can’t apply standard sales techniques. This information is NOT theoretical. We have doubled our sales almost every year.
Listen to the customer
This is what any salesperson will tell you. Find out what the customer wants, needs, is interested in. You ask them questions. You listen to the answers. Some questions to ask:
· Are you interested in solar electricity?
· Why are you interested in solar electricity?
· What is your electric usage for the year?
· Does your roof face south?
· Do you have a budget?
This sort of questioning allows you to collect information you need to make an intelligent suggestion. It also helps in sorting the more serious buyers from the curious. Another thing successful sales people will tell you is that phone discussions need to be kept as short as possible. There is a good reason for this: The primary reason a customer will buy from you is TRUST. Not price, not technical wizardry, not payback. Trust is best gained in person.
Some questions have no simple answer. Some questions are better posed another way, and I’ll come right out and explain that.
Emit an Attitude
People can detect a wide variety of things via empathy. Empathy is the ability to detect each others feelings. The best empaths can feel what the other person is feeling just by being in the same room. This can be really distracting if you are trying to think your own thoughts, but it is extremely useful in sales. It works both ways. The customer can detect your attitude about something, even if nothing you say out loud reveals it.
When talking to the customer, your foremost attitude should be that you are selling the BEST electricity. It’s not always the cheapest. But then, neither is a luxury car. Can you imagine the salesman at the Cadillac dealer walking around feeling guilty because his cars are more expensive than Chevys?
But if you do feel guilty about selling something wonderful, but gosh, expensive, the customer will often detect that. You can tell that they have detected it the minute they start asking about “payback”. Now try to imagine the customer walking into the Cadillac dealer and asking the salesman why he should buy a Cadillac, when, gosh, it does the same thing as a Chevy? If he ever did ask such a question, I imagine the salesman would exclaim that it’s because his Cadillacs are the BEST!
I know this all sounds a bit fuzzy and non-technical, but it is a well known phenomenon. It has to do with the psychology of why we buy things. Of course, everyone wants a deal. But not many people really want the cheapest of anything. A lot of people on Long Island want the BEST that they can afford. They want nice cars, fancy houses, nice clothes, and solar electricity!
Why people buy solar electricity
Like many items for homes, solar electric systems are a pleasing feature that can be built in to a new house or added on to an existing house. Some of the reasons customers have said that solar electricity is desirable include:
Joy of generating their own electricity
Making and using environmentally friendly electricity
Elegance of a high-tech, quiet power generator on their house
Fixing some or all of their electricity cost against future fuel price (utility rate) increases
Like most things we buy, the main motivation is that we want it for its own sake. I thought that the last reason on this list would be the main reason, but it’s not! The main reason is the first item, the joy of generating your own electricity.
Why will someone buy a $40,000 SUV that lasts 8 years at best, but will be nervous about getting a $40,000 solar electric system that will last at least 35 years? Simple! They do not understand the PV system very well. Help them understand what it is, what it does and its value, and presto, they will buy it. Since people love solar power to start with, our life in sales should be Easy.
What to do with economics questions
Unfortunately, the renewable energy industry itself has tried long and hard to train customers to ask about payback, even when there is nothing else they buy for their house based on the answer. My favorite example to demonstrate this is compact fluorescent bulbs (CFLs). They pay for them selves in energy savings in about a year. So how come everyone did not rush out and buy them? Because that is not why people buy things. They want good color quality, no flicker, CFLs that fit in fancy fixtures. Payback has nothing to do with it! If you are emitting the proper attitude about solar electricity, this question won’t even come up.
But what do you do if it does? It is imperative to be honest. Some solar people out and out lie, saying it is 5 years. This is definitely not true and will lose the sale from lack of trust.
Here are some of my favorite answers. Which one I give depends on how well I have judged the customer can understand the answer. (That’s a sort of “prejudice” or quick judgment, which you must be careful in wielding, but often has to be done.) Both of these answers are honest.
Answer 1: To answer that requires assumptions about the utility rates. Since I cannot predict the future, here’s an easier way to assess the cost. Take the system cost after incentives (rebate and tax credits) and divide by the amount of electricity it will generate in the next 30 years. This is easy to calculate because we know the system cost after incentive and the amount kWh it will generate. Here’s an example:
A customer has a PV system which cost $42,900 – 24,000 rebate – 3750 tax credit = $15,150. It’s 4800 W. It will generate about 1649 sunhours x 4.8 kW x 0.8 = 6332 kWh per year.
In 30 years, this amounts to: 6332 x 30 =189960 kWh. So: $15,150 ¸ 189960 = $0.079 per kWh (say 8 cents).
How pleasing it will be to be paying 8 cents per kWh in the year 2015 when all your foolish neighbors are paying 25 cents per kWh to LIPA!
This sort of answer leaves all predictions of the future to the customer.
Answer number 2: There is no simple answer to this question, because utility rates are constantly going up.
This usually is satisfactory because I have just reminded the customer that without solar electricity, they are beholden to the utility! I could continue if necessary with:
Answer 2a: But the range is 10 to 15 years with the incentive.
Cost of electricity
With a 3% increase in utility, you save $15,382 by 2018. With a 5% increase, you save $15000 by 2016. With an 8% increase you save $14400 by 2015. This does not consider the “fuel surcharge” or inflation. It does not include the cost of nuclear plant clean up (paid for by your taxes) or the cost of war with Iraq (paid for with your taxes) or the health care cost of disease associated with pollution (paid for by your insurance premiums and tax dollars) or the cost of subsidies to fossil fuel industry (paid for by your tax dollars). If we actually rolled these costs into our electric rate, LIPA would be charging you 40 cents per kWh (study by PACE university).
About the time value of money
Simple payback is completely meaningless when you get out past 5 years. Money value has historically gone down about 8% per year. Utility rates have historically gone up 3% per year. Home values in Long Island have gone up 30 % per year in recent times. The rise in home value can pay for a solar electric system in one year under these conditions. (And this is the value without even considering what value the PV system might add to the house, if any!).
Selling commercial jobs is totally different!
Commercial interests buy only based on economics. But they do buy based on payback. Payback is a fuzzy, mostly useless money concept unless the time frame is very short. Most businesses look at Return on Investment, Lifecycle costs and the Value of enhancing their public image by being “Green”. This last item is often very valuable, justifying the PV system cost right away. For example, if having a $1 Million PV system on your building increases company sales by $2 Million per year, the PV system paid for itself in 6 months. Distinguishing your business in a competitive market to get customers to buy from you rather than the other guy is one of the pillars in the foundation of good marketing!
There’s no such thing as average electric use.
But examples are fine to use.
We’ve sold mostly 5 to 10 kW systems in Long Island. Example costs:
5 kW system costs about $9.50 per W
10 kW system costs about $9 per W
A 5 kW system makes 5068 kWh serves 86% of Mrs. Pendzich’s load
A 10 kW system makes 13000 kWh per year and serves 15% of Mr. Staller’s load
But you can see that a 5 kW system only serves about ¼ of a 20,000 kWh load and a 2.5 kWh system only serves 1/8 of it. The most-likely-to-be-satisfied customers are ones for whom we can install a system that serves over 50% of their load. Chances are, some inexpensive energy efficiency measures can reduce the other half.
People are building bigger and bigger houses, which are more electricity-hungry than ever. Another proof-positive that economics does not figure into the residential markets very much. So maybe now solar electricity is also a status symbol? Why not? It’s very snazzy and makes up for all those CO2 emissions from your Cadillac.