They might never admit it outright, but anyone who works in solar sales would privately agree: Solar customers are irrational. But it’s not their fault! Humans are irrational, so it only makes sense that when they buy solar, they’re still irrational.
Of course, when you’re on the sales side, buyers’ idiosyncrasies and logical fallacies are not just frustrating; they also have meaningful impacts on solar companies’ bottom lines and abilities to operate. One installer we know based out of Arizona made the decision to expand into Texas this past year due to shrinking demand in their state. Unfortunately, the Texas market proved just as soft, and they’ve had to shutter.
While macroeconomic trends may be out of your control, irrational homeowners are not. The secret to wrangling these indecisive prospects and turning them into brand champions? Behavioral science.
Behavioral science explains why most people still think solar is only for rich people. It also explains why 70% of customers don’t select the lowest priced solar quote they received.
Perhaps the best thing about behavioral science (at least for all the solar sales teams reading this) is that it can also give us hacks that we can use to get more leads, increase close rates, and sell at higher prices.
Tip 1: Change when and how you price anchor
Do you know the old sales joke: How do you sell a $2,000 watch? First show them a $10,000 watch.
That’s price anchoring, and it works because our perceptions of what is “expensive” and what is “cheap” are relative.
While some solar customers enter the sales cycle having done their research, many prospects still have only vague ideas of how much a system might cost them. A price anchor in your proposals communicates to customers “what solar should cost.” And when you position your company's offering at a discount to the anchor price, it will be interpreted by the customer as providing a superior value.
Here are some good potential price anchors you can use in your proposals:
- The cost of doing nothing versus solar savings
- The price of a fully off-grid battery backup system
- A proposal from years back
Finally, if you install below the national average of ~$3.5/W, that can also serve as a great anchor.
And here’s our 201 tip: Anchor early, so you give the customer a reference point as you build trust. Then deliver their personalized proposal at a discount to the anchor price.
Tip 2: Present good, better, and best solar options in your proposals
Do you know what GBB stands for? No, it’s not the Great British Bake-off.
GBB, or good, better, best pricing, is the practice of offering your customer three proposal options.
You may be familiar with this tactic from your own insurance plan. In 2005, Allstate famously and very successfully rolled this out. They found that by giving their customers more options, 10% choose their Value plan, and 23% opted to upgrade and go for either their Gold or Platinum coverage.
Since then, GBB has become a pretty standard sales practice across industries. And yet, we don’t always see it in solar. Instead, many solar sales reps present a proposal with only one option for “going solar.”
While sales teams may think they’re simplifying the decision making for their prospects — and therefore boosting their close rates — the opposite is actually true. By giving your customers only one solar option, you’re basically asking them to choose between “Going solar,” and “Not going solar.” Half of those outcomes are “don’t go solar,” and you’ll see that reflected in the close rate.
You can also pair this proposal strategy with tip number three: Give a decoy option. We get into it more below, but a “decoy” option is one option that is clearly worse, and which the customer can easily rule out, making them feel empowered and informed in their decision.
Tip 3: Include a decoy offering in your solar proposals
If you’re a parent, you probably already know this sales strategies. Let’s say you want your kid to clean their room. The wise parent will give their child three options:
- Scrub toilet
- Weed the garden
- Clean your bedroom
Then they watch with satisfaction as their child CHOOSES to clean their room.
So what behavioral science witchcraft is happening here? This strategy is known as the decoy effect. A “decoy” is one or more options that are clearly worse and in which the customer can easily rule out, leaving them the options that you really want them to buy.
When paired with good, better, best pricing, this makes for particularly compelling solar proposals. From the example below, can you tell which is the decoy?
- Value: A 5kw system for $15,000
- Standard: A 7.6 kw system for $23,900
- Premium: A 7.6 kw with an EV Charger for $24,900
It’s the Standard! It’s essentially the same price as the premium, but it offers significantly less value than the Premium. By positioning the two against each other, you increase the likelihood of your prospect choosing to spring for the EV charger, so make sure to build a “premium decoy system” into your next proposal.
Tip 4: Leverage loss aversion in your proposals
Any Moneyball fans out there? If you’ve watched it, you may remember this quote by Billy Beane, the general manager played by Brad Pitt:
“I hate losing more than I even want to win. There’s a difference.”
This quote can actually teach us a lot about the behavioral science phenomenon known as loss aversion. Loss aversion basically states that we prefer to avoid losses over acquiring equivalent gains.
How do you use this in your solar proposals? Position the loss of something if the customer chooses not to move forward. It could be the end of the year tax credit or utility incentive, or a limited time promo.
For example, your proposal could include the standard good, better, best offerings, but tell the customer they can get the premium package at the lower price if they buy within 7 days.
Tip 5: Increase your solar referrals with the Fogg Behavior Model
If you’ve been struggling to grow your referrals, it’s time to leverage the power of the Fogg Behavior Model.
Fogg is a behavioral science framework that describes how and why people take action.
In the Fogg Behavior Model, any particular behavior is due to the convergence of 3 elements: how motivated are they, how easy is it for them to take that action, and what triggers them to take action.
There’s an interesting interplay between motivation and ability. The easier it is to take action, the less motivated the person has to be. If it’s really hard to do, it likely won’t happen even if the person is highly motivated.
So how do you get high referral rates? Make sure they’re highly motivated to provide a referral and make sure it’s real easy for them to submit a referral!
Tip 6: Change how you incentivize referrals
If your solar referrals program is struggling, even after you’ve made it incredibly easy to submit a referral, then you might just be using the wrong strategy to motivate customers.
There are two types of motivation: Intrinsic and extrinsic.
Intrinsically motivated behavior is something a customer inherently wants to do — it just makes them feel good. Extrinsically motivated behavior is something a customer does because of the promise of an external reward, like 500 bucks.
If you want your solar referral program to succeed, tap into intrinsic motivation.
When we asked one of our installers, whose business is 30% referrals, how he does it, he summed it up like this, “Well, our customers love solar, and they love our company.”
The key to intrinsic motivation is to deliver such a great customer experience that your customers WANT to talk about your solar company, irrespective of how much the referral incentive is.
Tips to bring down your cost of customer acquisition
In this tough market, your sales team may be feeling the stress of skeptical customers and financial calculations that no longer make solar feel like a “no brainer.”
But have you been able to put a number to this sales slump? Do you know how much it costs on average to acquire a solar customer? $3,000. And we’ve had installers in more challenging regions tell us their average is actually $5000. To put this in perspective, in retail it costs on average $10 to acquire a customer. Software is close to $400. Solar is clearly in a different ballpark.
That’s why we wanted to create a comprehensive guide to solar sales strategies in 2024 that leverages the power of behavioral science.
One installer we know is fully bought into these strategies, and they have the results to prove it. In addition to using the tips we listed above, Lighthouse Solar out of Austin adopted the following additional strategies:
- They used a white-labeled customer portal to make submitting referrals easy.
- They used a communications platform to automate messages to the customer and ensure they never went longer than a week without an update.
As a result, they were able to grow their referrals by 30%.
If you’re looking for a partner who can help you bring these strategies into your business, as well as give your team a white-labeled digital experience throughout their installation, Bodhi can help. Schedule a time with us or get started for free now.
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