Crap Solar: Number 1 reason why solar companies fail

I recently had chats with Erik Zimmerman from the Echo Group and Andy McCarthy from Gippsland Solar on what they thought of the Solar industry. In those interviews, I was very interested to find out that over 700 solar installers across Australia have gone broke in the past 8 years.

I wanted to find a common pattern.

So I tried looking for the worst rated solar installers and found this page on Solar Quotes.

And here they are.

The 5 worst rated solar installers with at least 30 reviews.

Obviously, as a web designer, I’m curious in what their websites looked like. In my opinion, a company's website is their 24/7 storefront - a glimpse into their vision, their values and how they differentiate themselves against their competition.

Here are just some of their websites.

Clear Solar:

Unleash Solar

Green Engineering

What’s the number 1 thing these businesses have in common?

‍Trying to compete on price. 

Let’s take a look at their headings. 

“8 panel system fully installed for $2450.00”

“Low deposit and easy payments”

“Lowest price guarantee”

The messaging is focused on price, and price only.

Does being the cheapest option work?

Yes. But only if the business has access to:

• Lowest cost of labour or
• Lowest cost of materials or
• Systems of efficiencies that their competitors don't.

But if not, being the lowest cost option becomes unsustainable for the business.

Positioning as a commodity

Generally, consumers are searching for the "least risky" option, rather than the "best" option.

By positioning themselves as the cheapest option, the lower the risk of investment it is for the consumer.

I get that.

But the problem arises when talking about price is the first item that is addressed. The solar company positions themselves as a commodity. A product that is indistinguishable from all its competitors save for one factor: price.

The solar company is asking for the consumer to "shop around" and compare prices.

Problems with being the lowest price option

Solar installers who are forced to compete on price leaves very little room for profit.

For example, here’s a graph showing how much cheaper an unsustainable businesses may charge to install a similar sized solar system.

Unsustainable installers make very little profit from their engagements.

Unsustainable businesses

Unsustainable businesses force their staff to finish early in an attempt to meet their profit margins. When under stringent time constraint, we begin to see where they take shortcuts.

Panels become misaligned, cables exposed, and wiring terminations not up to standard.

Here are a few pictures taken from the Facebook group Crap Solar where you can see results of poor workmanship. 

These solar panel installations like these do not last long and it is likely that cabling will start to fail, or panels or both. 

Claiming warranty

Unfortunately, this leads to a cascading series of events that leaves a sour taste in the mouths of the general public. 

1. Customer calls installer claiming warranty issue.
2. If customer is fortunate, installer returns to fix the issue which removes their profitability from project.
3. To break even, installers will attempt to cut costs even further. 
4. Installer runs out of money due to not making any profit. 
5. They become liquidated when they cannot access low cost word of mouth referrals. 
6. Installer phoenixes into another solar company with a different name, and cycle repeats.

Liquidation 

When solar companies operates unsustainably, it is no surprise many have gone under.

In fact, there are over 700 solar installation companies that are in the process of being liquidated or already have been since 2011.

Many of these solar companies failed because they were unable to deliver high quality work to their customers and could not operate profitably.

Change messaging on front page

Solar companies can take a look at how more successful solar companies communicate their value on the home page. Let's take a look at some of the highest rated solar installers found on the same page.

Adam solar: 

Adam solar's home page does not address price. Instead, their website is designed to pull your attention towards the main quote about building a strong relationship. The second likeliest section to look at are their awards and ratings, which all builds credibility.

Soltek:

Soltek's main website also does not address price. Rather, the page attempts to educate the customer with a video and "beginner's guide to solar". Similar to Adam Solar's home page, Soltek also attempts to build trust and highlights experience.

Gippsland Solar:

Gippsland Solar's website also does not address price. Similar to Soltek, they attempt to educate and provide value to their customer.

Charging more

Every business would love to be able to charge more. It is easier said than done.

It is difficult to match the expertise, experience and awards by the larger established solar installers. But smaller companies can still be nimble and use being small to their advantage.

Educating the consumer

Consumers are as skeptical as ever. The old way of blasting advertisements over radio or television is a poor investment for any savvy business. The digital age has given everyone a free platform to create content and be as transparent as possible.

Solar panels are still confusing to many consumers, and it hurts the industry to see consumers being burnt by overqualified and inexperienced solar installers. Newer or smaller companies can really differentiate themselves by educating rather than selling.

Erik Zimmerman knows the industry well, and advises solar companies to educate their consumers about choosing the panel and inverter with the most warranty.

Create more value

Andy McCarthy from Giippsland Solar advises solar business to create high value for the consumer by delivering above and beyond the standard.

One way they add additional value is being able monitor the entire system remotely and detect faults as they come up. If they arise, they notify the customer and attempt to rectify the situation as soon as they can.

This level of proactive servicing gives customers the sense that they're being well taken care of.

‍Specialise in a certain field.

By being a specialist in one particular field, an installer reduces their competition. When there is less competition, an installer can command a higher fee.

For example, the solar company's website can be dedicated to delivering solar for homes only:

However, there are other specialisations worth considering:

• Only installs solar on double storey homes.
• Only installs 6kW systems.
• Only installs on commercial buildings.
• Only installs on new homes.

Some may argue that specialising in a niche limits the number of potential customers.

But I disagree.

Specialising in a small niche allows a company to really understand their customers pain points. Their messaging is on target and articulate their customers' frustrations better than they can.

In turn, they are able to provide a solution that they can charge higher, but is overall a better outcome.

Make a guarantee

Guarantee something that larger businesses cannot match.

For example, a small to medium sized installer can guarantee a complete installation within 48 hours of receiving payment.

Conclusion:

All solar installation companies should aim to be sustainable. We can see that being the lowest priced option does not lead to sustainability.

Rather, it is much better to charge more in order to deliver a better outcome for the end consumer.

In order to charge more, solar companies need to add value, specialise or make certain guarantees.