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.
Why Are Solar Sales So Social?There are a number of reasons that solar sales are so social, but two explanations standout.
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.
What are solar providers doing to drive word-of-mouth marketing?To maximize referrals, solar providers and solar lead generation companies are using a variety of innovative strategies to build community awareness, empower influencers and boost recommendations.
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:
- When they purchase
- When their system is installed
- When their system is connected to the utility grid
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.
Where will they go from here?Competition will become even more intense as providers seek to sign new residential customers before the expiration of the federal investment tax credit at the end of 2016. Given that referrals generate such a large portion of new business, vendors will likely intensify their efforts to drive more word-of-mouth leads. To do this we're likely to see:
- Tighter integration between advocacy programs, communities and the solar company's own sales and service agents. This will enable the providers' agents to step into social discussions, answer questions and address problems that are not resolved by community members.
- Greater emphasis on addressing complaints posted to social channels. As the importance of WOM increases so does the need to monitor social conversations to resolve complaints before they get out of hand and potentially go viral.
- Enabling lead development reps to listen for sales opportunities on social media. As more conversations occur about the benefits of solar on social networks, solar providers will use technology to listen for promising opportunities and route those conversations to sales reps who can reach out over social media
- Moving social conversations to phone-based interactions. While it's great to begin a conversation with a prospect on Twitter or Facebook, providers want to move that conversation to a real-time, over-the-phone or in-person interaction where a highly skilled sales consultant can lead a homeowner through the evaluation process.
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.