This article was originally published on SocialTimes.
Marketers have heard the gospel and slurped the Kool-Aid when it comes to the virtues of word-of-mouth marketing. It's become a well-established fact that consumers believe and trust recommendations from their friends and family over other forms of advertising, and that people are more likely to buy when referred by a friend.
But while many businesses struggle to turn recommendations into sales, the solar industry seems to have mastered the art of word-of-mouth marketing.
Demand for residential solar systems is skyrocketing, with 2014 marking the first year that more capacity was installed by homeowners than by non-residential customers.
And even as phone-based sales teams continue to be the primary vehicle to help guide prospects through the complexities of solar adoption, the vast majority of leads come through word-of-mouth marketing. According to GTM Research Solar Analyst, Nicole Litvak, 50 percent of all residential solar sales are derived from referrals. That's almost four times the Word of Mouth Marketing Association's estimated market average of 13 percent. It's also higher than the next two lead sources (Direct Response at 15 percent and Channel Partners/Events also at 15 percent) combined.
Solar is a movement
When a business can turn product marketing into something that's not just about selling features and benefits, but rather into a cause that their target audience feels passionately about, they can ignite a powerful word-of-mouth movement.
For solar marketers there is a large segment of the population that believes fervently in alternative sources of clean, renewable energy, hoping they will free the country from dependence on dirty coal that pollutes the skies and contributes to climate change. That passion and conviction drives volunteers to carry the solar message, turning them into some of the industry's strongest sales reps.
And even for those who aren't diehard environmentalists, there can be feeling of peer-pressure as they see their neighbors converting to solar and a sense of pride as they make the switch.
Solar is also new and confusing
While many homeowners may believe in the high-level benefits of clean, renewable energy, they also need to learn about the intricacies of cost and payback periods and decide if purchasing, leasing, or signing a power purchase agreement makes sense for them. They need to make equipment choices and understand how net metering, utility rate plans, and tax policies affect them. They then have to allow strangers to poke holes in their roofs and rewire their electrical systems.
There are just so many new things to consider and such fear of making the wrong decision that they often turn to their friends and neighbors to find out if their experience was positive and whether the return in energy savings is worth all of the effort.
Making it easy (and profitable) for customers to spread the word
As Sungevity CMO Patrick Crane explained in an interview, homeowners often begin by evaluating a solar purchase in a very rational fashion. But by the time they make the decision to purchase they become increasingly emotional, something he calls "rational in, emotional out." He also explains that consumers are most likely to share their experience at three points in time:
Solar providers also enlist customers to help them sell by offering them referral fees of up to $1000. (Fees are often paid to the buyer as well)
For example, SolarCity has created an elaborate solar ambassador program where both customers and non-customers can create sales teams -- the person at the head of the team gets paid when they make a referral and when first and second order members make referrals. SolarCity gives their ambassadors access to dedicated web portal and mobile application (mysolarcity.com) that is filled with resources to help them spread the word including sales collateral, action plans, email templates, referral tracking, leader boards and maps showing where systems have been installed along with their CO2 reduction.
Partnering with non-profit organizations
To harness the passion and enthusiasm of community organizations, solar providers are building partnership programs to integrate their products and services into the activities of non-profits. Sungevity has created a separate entity called Sungevity.org that it uses to partner with groups like the Sierra Club. Partner organizations are then able to raise funds through referral fees as they evangelize the benefits of renewable energy.
Developing online communities
Solar lead generation companies also use social communities to encourage word-of-mouth marketing to find promising leads, which they then sell to installers and manufacturers. One example is Generaytor, a company that enables homeowners to join a social community and compare their real or estimated savings with those of their neighbors. Generaytor then makes it easy for community members to share their results and invite new members to explore potential energy savings.
Customer acquisition will be the next big area for innovation in residential solar and a primary determinant of whether any given installer will remain successful.
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