As solar PV prices continue to be chased down to the lowest $/watt solar commodity, solar PV installers, big and small, must also consider whether their solar services are also headed in the same direction.
I strongly believe that experience, certifications, and skill have value, but as solar installation becomes increasingly "plug and play" with easier and faster racking, micro-inverters/AC panels, satellite insolation assessments, and performance monitors, customers will increasingly devalue experience with the perception that installing solar requires little skill or experience, so lowest price becomes the only important factor.
This trend will not be limited to the residential market, and in fact, I believe the large scale/PPA and utility integrators are already somewhat commoditized. In my conversations with solar developers in the past year, I have never met more cost-conscious, bottom-liners. Their army of MBAs and CFOs look for the lowest possible, bank-approved installed price, while squeezing out as much scalable profit as technically possible.
Especially when you’re talking about large scale projects, every installer under serious RFP consideration has been around the solar block enough times to execute a great installation with quality equipment procurement.
So, when all things are relatively equal, then apples to apples, competing installers are forced to procure and bid the lowest possible price to win contracts.
Of course, residential customers often demand multiple bids, but I think their lack of solar knowledge makes installation commoditization somewhat less of a threat…for now. As solar becomes more common, residential solar, including leasing/PPA companies, will also become threatened with commoditization.
If installer commoditization has already begun, how can installers successfully compete to win that 5-kW or multi-MW contract? What makes the difference beyond the lowest price?
The solution is actually very simple: It’s all about having a trusted brand relationship with past, present, and future customers. The difficult part is actually creating that brand relationship so that the lowest price becomes — slightly — less important.
Specifically — regardless of market sector — you can fight installer commoditization in the following ways:
- You can stand behind your work and product longer than anyone else (and why shouldn’t you?).
- You can not only fulfill your contractually stated promises, such as completion dates, but exceed them.
- With every detail and every customer contact, your customers, prospects, and past clients can receive beyond-the-call care and service.
- Your brand can build such a high regard, that new customers are not only aware of your brand, but relate your brand to quality, rather than lowest price…even when you are the lowest price.
- Most importantly, you can give some unique added value to your solar installation service. That is, you can give some extra customer care that no one else does. It may even be something that customers never realized that they needed or cared about.
If you’re a purchase decision maker, and have a choice between Installer A that achieves the above bullet points at x dollars/watt, and Installer B that does less than the above for the same x dollars/watt, not only would you choose Installer A, but you’d probably even recommend A to others, growing A’s business even further.
Even more tantalizing, those who act against installer commoditization become one of a handful of solar industry leaders… rather than a get-it-sold-for-less commodity service. Food for thought and one more way...to UnThink Solar.
Tor Valenza a.k.a. “Solar Fred” advises solar companies on marketing, communications, and branding. Contact him through UnThink Solar or follow him on Twitter @SolarFred.
http://www.renewableenergyworld.com/rea/blog/post/2012/04/will-solar-installers-become-commodities-too-perhaps-they-are-already
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