Smart Solar Marketing Strategies - Clean Energy Group

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Smart Solar Marketing StrategiesClean energy state program guidePrepared byClean Energy Group and SmartPowerAUGUST 2009

AcknowledgmentsMany people have been helpful in the development of this report, including Lew Milfordand Maria Blais of Clean Energy Group; Warren Leon, formerly of the Massachusetts Renewable Energy Trust; Roger Clark from Pennsylvania’s TRF Sustainable Development Fund;Adele Ferranti, Dave Friello and Judy Jarnefeld of NYSERDA; Lizzie Guiles Rubado and BetsyKauffman of Energy Trust of Oregon; Eran Mahrer and Rex Stepp of Arizona Public Service;Molly Sterkel of California CPUC; Sandy Miller and Amy Morgan of the California New SolarHomes Partnership; Ryan Helton and Jane Tabor of New Mexico Energy, Minerals and Natural Resources Department; Tom Plant and Jeff Lyng from Colorado’s Governor’s Energy Office; Ann Marie McShea and Scott Hunter from the New Jersey Board of Public Utilities; SamNutter of Massachusetts’ Commonwealth Solar Initiative; and Lise Dondy and Dale Hedmanof the Connecticut Clean Energy Fund.The opinions presented in this report are those of Clean Energy Group and SmartPowerand are not intended to represent the position of Clean Energy States Alliance or any ofits individual members, or the U.S. Department of Energy.Financial SupportSupport for this report was generously provided by Clean Energy States Alliance and theDepartment of Energy’s Solar Energy Technologies Program.DisclaimerClean Energy Group and SmartPower do not assume any legal liability or responsibility for theaccuracy, completeness, or usefulness of any information, apparatus, product or processthat is referred to in this report. References in this report to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, does notconstitute or imply endorsement, recommendation or favoring neither by the United StatesGovernment or any agency thereof nor of the individual members of the Clean Energy StatesAlliance. The views and opinions expressed in this web site do not necessarily state or reflect those of the United States Government or any agency thereof, or the individual members of the Clean Energy States Alliance.

Smart Solar Marketing StrategiesPrepared byClean Energy Group and SmartPowerAUGUST 2009Table of ContentsExecutive Summary1Introduction and Background4Marketing and the 4 P’s5Building a Marketing Plan7Marketing Strategy #1: Improving the Value Equation for Solar8Marketing Strategy #2: Reinforcing the Reliability of Solar Technology12Marketing Strategy #3: Reducing the Complexity of Solar17Marketing Strategy #4: Overcoming Customer Inertia20Marketing Strategy #5: Finding the Right Message22Marketing Strategy #6: Reaching New Customer Markets25Developing a Marketing Plan: How to Begin26Conclusion27

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Executive SummaryThis report showcases smart marketing strategies from clean energy programs and solarmarketers from across the country that address how to overcome the barriers faced bysolar technology markets and serves as a guide for states in pursuing their own marketplanning process.While there has been a major increase in solar photovoltaic (PV) installations in recentyears, the total amount of solar power installed nonetheless represents less than 0.1% ofU.S. energy production. In order for solar energy to make a sizeable contribution to jobs, agreen economy, and greenhouse gas reductions, more solar technology deployment will berequired. However, installing solar technologies is no simple task. The reality is that in orderto drive more solar power installations, solar programs must address the key barriers to itsmarket growth.Although state solar programs report limited marketing initiatives of their own, this perspective reflects a narrow definition of marketing – one that primarily focuses on communications-centered initiatives, such as website strategies, public relations activities, and education of stakeholders. These marketing resources are important. However, marketing in thebroader sense should play an important role to expand the growth of solar, and state solarprograms play a critical role in creating and supporting effective marketing initiatives thatcan address the major market barriers. The American Marketing Association defines marketing as “the process of planning and executing the conception, pricing, promotion, anddistribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.” Effective marketing guides how, when, and where product information is presented to consumers, with the ultimate goal of persuading consumers to purchase a particular brand or product. Therefore, state solar program managers must seethemselves as a critical part of the solar sales process.For marketing to be successful, it must create a desire for a product. A marketer, therefore,needs to understand: a) current consumer perceptions of the product and what must beovercome to improve those perceptions, b) what price/value equation will have the mostappeal, c) who do consumers believe to be credible sources of product information, and d)where to place this key information in the form of promotion, advertising, etc., so that itwill reach the right consumer target. When all of these elements are successfully integrated, marketing connects with the consumer and builds desire for the product, resulting ina sale.Clean Energy Groupl l SmartSolar Marketing Strategies

Consumers consistently report a preference for energy produced from renewable energysources but invariably fail to purchase renewable energy in sizeable numbers. Research conducted by SmartPower and detailed in this report was designed to identify the barriers tosolar purchases, address consumer concerns, and provide state solar programs with guidelines that should be integrated into their overall marketing approach. SmartPower’s findingsconcluded that there are four primary barriers to solar market growth, and ALL four mustbe addressed to expand the market. Those barriers include:1. Cost. Consumers report high up-front and out-of-pocket costs and long payback periodsdeter them from installing solar energy technology.2.Reliability. The absence of solar technologies in the public’s eye and confusion aboutits performance and capabilities create concerns about the reliability of solar technology;it is not perceived as up to the task of powering our energy needs.3.Complexity. The time consuming and complex nature of purchasing and installing solarenergy systems discourages potential customers.4.Inertia. The lengthy decision-making process and financial complexity of the solar saleoften result in consumer inertia.SmartPower also learned from over seven years of message research in the area of renewable energy and energy efficiency that the “environmental” message is not the answer tomotivate consumers to purchase renewable energy technologies. Consumers already understand the environmental benefits of solar power, but those benefits have not been persuasive enough to broaden market adoption. Therefore, in addition to addressing these barriers,solar programs also must create a connection with customers through marketing messagesthat are likely to enhance interest and lead to further inquiry. Messages that connect on afinancial or value level are most likely to succeed.The need to understand consumer attitudes and develop programs and communicationapproaches that address those barriers ultimately means that state solar programs mustTHINK and ACT LIKE RETAILERS. A retailer knows how essential it is to: let the public know what it offers create pricing that appeals to the public demonstrate and stand by the quality of the product make it as easy as possible to make the purchase create a buzz about the product that generates interest and actionClean Energy Groupl l CleanEnergy State Program Guide

For retailers, success is easy to measure: it’s the ringing of the cash register. A state solarprogram’s marketing activities, to be effective, also must lead to an action: an applicationfor a solar program’s financial incentive to purchase and install a solar energy system. Whilestate solar programs are not directly “selling solar installations” to customers, nevertheless,they measure success in the form of megawatts of solar installed. Therefore, the state marketing approaches and activities must lead the customer to the solar sale. By starting withthat end in mind, state programs can focus their limited marketing resources to address themajor marketing barriers, overcome consumer resistance and broaden the market.To achieve state solar megawatt goals, a solar marketing plan must address the technology’svalue proposition, its perception of unreliability, the complexity of purchasing solar andconsumer inertia.This guide cites many marketing initiatives that are contributing to the growth and interestin solar across the country. However, the guide is not meant to be a clearinghouse of all solarmarketing programs, nor an endorsement of any one particular approach. Instead, it is offered to provide solar programs and stakeholders with examples of innovative strategiesthat can make a difference in solar marketing.Clean Energy Groupl l SmartMark Sinclair, Clean Energy GroupLyn Rosoff, SmartPowerAugust 2009Solar Marketing Strategies

IntroductionIn April 2008, Clean Energy Group (CEG) releasedBackgrounda report on state strategies for building a strongThe marketplace for solar is exploding as moresolar marketplace entitled Clean Energy Statestates increase investment in solar incentive pro-Program Guide: Mainstreaming Solar Electricity:grams. The 2008 solar market was five times theStrategies for States to Build Local Markets. Thesize of the 2007 market, which grew 57% overreport identified critical state policies and pro-2006 levels. However, solar installations totaledgrams necessary to build a successful solar pro-only 80,000 in the United States in 2007 and mostgram. The report highlighted best practices fromwere concentrated in a few states, with 69% ofstates with robust solar programs, addressingall installations in California alone.such issues as state renewable portfolio standards,equipment ratings, long-term financing, buildingNow is an important time for states to use focusedcodes, installation standards, training, and mar-solar marketing efforts to attract new customersketing and education. (See http://www.cleane-to solar and bring this renewable energy technol-group.org/Reports/CEG Mainstreaming-Solar-ogy into the mainstream. As natural gas and oilElectricity Apr2008.pdf)prices remain volatile, commercial and residentialconsumers are beginning to appreciate the priceThis report is designed to complement the find-stability that solar power offers.ings from CEG’s Mainstreaming Solar ElectricityProgram Guide and to provide a similarly helpfulMany customers with a financial focus are nowtool that focuses on how marketing initiativesmotivated beyond environmental attributes tocan help achieve state solar program goals. Bylook at solar power for the first time. However,identifying and addressing consumer barriers,with an uncertain economy and financial resourcesstate incentive programs can increase the de-stretched for both commercial and residentialmand for solar power and achieve megawattcustomers, the need to market solar effectivelygoals. This report showcases examples from cleanis more critical than ever.energy programs and solar marketers from acrossthe country that have addressed these barriers,and serves as a guide for states in pursuing theirown market planning process.Clean Energy Groupl l CleanEnergy State Program Guide

Marketing and the 4 P’sWe live in a society that bombards consumerspower in their region. Each plays an important partwith messages, from pop-ups on computers, toin marketing solar. However, state incentive pro-on-line chat room links, to e-newsletters and e-grams define the 4 P’s in a slightly different wayblasts, to advertising in traditional media, all de-than do solar suppliers.signed to build a “share of mind” for a product,service or social cause. Marketing is at the heartFor marketing purposes, state programs can evalu-of every successful brand, business, organization,ate the Product from the perspective of consum-and cause. Marketing is not merely communica-ers’ rational and emotional attitudes towards solartions. It is the sum presentation to the customertechnology. These attitudes affect the desire toof a value equation that results in a sale or action.purchase. Consumer reaction to solar technologyMarketing is the process of identifying what the(e.g., price, reliability, quality issues) informs mar-consumer needs, how the product or service canketing and communications approaches by identi-address that need, how to communicate that valuefying both the opportunities – the strengths andin a compelling way, and how to deliver that mes-positive attributes that should be marshaled – andsage in the most efficient and effective manner.the barriers – the concerns and “issues” that pre-When state solar incentive program managersvent sales.think like marketers, they will sharpen the focusof outreach efforts and improve the effectivenessPrice is one of the single biggest barriers to grow-of their solar program offerings.ing the solar marketplace; many states are addressing the financing of solar to help overcomeThe classic elements of marketing – the 4 P’s:consumer price concerns. Today, financing mecha-Product, Price, Place, Promotion – offer a usefulnisms are broadening access to solar power andmatrix to assess state solar programs. Solar pro-making it available to new customer groups. How-gram initiatives should address each of the 4 P’s.ever, states must ensure that prospective custom-For example, a consumer will not buy a poorlyers are aware of these new financing strategiesmanufactured product or one with a questionableand aggressively promote the financial “value” ofreputation merely because the price is good. Simi-solar products to consumer targets.larly, the best quality product must be affordableto ensure market share. While state solar pro-The Place, or channels through which solar is sold,grams do not produce solar panels, price them, oralso is an area where solar programs have an im-control the quality of technology or installation,portant role through their work with installers,their program success is integrally linked to thedevelopers, and suppliers. Building a strong sup-success of solar suppliers. Both share the sameplier network is critical in keeping up with risinggoal: building a strong customer base for solardemand; ensuring that customers can easily findClean Energy Groupl l SmartSolar Marketing Strategies

an installer is part of this task. States also shouldproduct, purchase an existing product, visit a web-look at how complex the solar sales process cansite, make a donation to a nonprofit organization,be for consumers and how solar programs canor inquire about a solar incentive program, theminimize and ease the transaction process.process is the same. In essence, marketing matchesthe right customer to the right product, resultingLastly, Promotion of solar should be a primaryin a sale. As states apply marketing approaches tofocus as state programs seek to increase the visibil-their solar initiatives, they will become more cus-ity of solar installations and broaden the appeal oftomer-focused, rather than program-focused, and,their solar incentive programs. Using communica-as a result, become more effective in achievingtions and promotional strategies to favorablysolar goals.present solar in the marketplace and ensuring thatthe right messages are presented to the public willIf one “starts with the end in mind,” a solar mar-help build a stronger market for solar technologies.keting plan identifies how a state program willachieve installed megawatt goals through acquisi-As solar incentive programs examine their pro-tion of residential, commercial and institutionalgram offerings through the lens of Product, Price,customers. The 4P’s ensure that all aspects of thePlace and Promotion, they may conclude that they“sale” are covered. Improving the process of pur-need to better understand their customer throughchasing solar will not alone make a difference inmarket research, focus their efforts on specific tar-overall sales if the price/value equation has notget customer bases (customer segmentation), andbeen addressed. If consumers are not confidentaddress key messages to reach those audiencesabout the reliability of solar, improved pricingeffectively and efficiently (communications). Thisalone will not matter. All elements must work to-evaluation process informs the elements of a solargether to motivate the target customer to take ac-marketing plan. Whether a marketer’s goal is totion. Therefore, the development of a solar mar-persuade a customer to visit a store, sample a newketing plan must start with the consumer in mind.Clean Energy Groupl l CleanEnergy State Program Guide

Building a Marketing PlanThe low market penetration of green energy pric-how best to overcome market barriers, addressing products and solar technology suggests thatconsumer needs and increase solar customers.customers, whether they are residential or commercial, have concerns about solar power that areThe Oregon and Arizona studies looked at bothbarriers to market growth. Understanding whatresidential solar customers and solar prospectsconsumers believe both rationally and emotionally(SmartPower refers to prospective customers asabout solar technology will help shape the direc-“Inerts” – those who express interest in solar bytion of a solar marketing plan.attending a seminar or requesting information,but have not yet become buyers). ConductingIn 2007, SmartPower embarked on consumer re-both quantitative and qualitative studies of thesesearch studies in two very diverse states: Arizonacustomer segments provided valuable insights toand Oregon. Arizona Public Service (APS), thehelp shape the development of smart marketingstate’s largest utility, was interested in improvinginitiatives. While there is much to learn from theseits existing solar incentive program. The Energystudies, the key findings point to several essentialTrust of Oregon (ETO) (manager of the State ofelements for an effective solar marketing plan.Oregon’s solar incentive program) could not explain why a growing interest in solar, as seenBased on these studies, the remainder of thisthrough rising attendance at monthly educationalreport will 1) identify major market barriers, 2)seminars, was not translating into increased ap-detail smart marketing strategies to address eachplication for its program’s solar incentives. Inbarrier, and 3) recommend action steps to imple-both cases the goal was to better understandment a successful marketing plan.Clean Energy Groupl l SmartSolar Marketing Strategies

M ark etin g st rateg y #1Improvin g the value E q uat i o n o f so la rSmartPower’s studies showed that cost is theshock. Similarly, when solar incentive programssingle biggest barrier to purchasing solar amongprovide a website calculator that informs the pro-those customers who attended solar seminars.spective customer of the total cost of installingThe value equation (the relationship betweensolar, the message often serves as a deal stopper.the consumer’s expectations of the product’sBy “calculating” the cost of solar installation atbenefits to the costs) for solar is not strong and 20,000 or more, the homeowner may hit a mentalhigh up-front costs are limiting market growth.“delete” signal. Full cost information may be hin-The Oregon study found that less than 5% ofdering the advancement of a solar sale.Energy Trust of Oregon’s solar customers usedhome equity loans or other financing to pay fortheir solar installation. This indicates that the smallnumber of consumers who are able to afford solaris a major factor in what has kept the marketgrowth for solar technologies so low; most Inertswere clear that the high out-of-pocket costs madesolar energy system purchases prohibitive.Therefore, while many states are putting financing programs in place to overcome the high costof solar, they also must ensure that consumers areaware of those financial offerings. Often theseprograms are available in small pilot programs,or promoted through press releases and on theprogram website only. This approach may attract the well-informed, already-interested solarThere are important lessons for solar marketingprospect waiting to take advantage of these of-from the automobile industry. Car dealers haveferings. However, the car dealer does not pro-long understood the value of promoting theirmote its low monthly pricing options only to itsproduct by highlighting affordable monthly in-existing customers. It can only succeed if it isstallments (whether through leasing arrangementsable to attract new customers. Likewise, changingor purchase) rather than through full price stickerthe public’s perception about the affordabilityOregon, 160 RespondentsClean Energy Groupl l CleanEnergy State Program Guide

of solar power will ultimately make the mostto expanding solar adoption, the value messagedifference in building consumer demand.about how to afford solar should be the mostprominent message delivered.A primary marketing challenge for states to address is to ensure that the marketplace hears theAn example of how to use these new financingpositive message about the value equation for solar.offerings to create a strong value message can beThe recent proliferation of creative solar financingfound on SMUD’s website. SMUD promotes itsstrategies provides the tools to address the Price/SolarSmart homes program with a value-oriented,Value barrier. While many of these initiatives areinvestment-focused message:relatively new, they reflect the need to give con-Make a SolarSmart choice today andenjoy a new home that is more affordable,comfortable, and environmentally friendly.Buy a SolarSmart HomeSM and reduce your annualelectric bill by as much as 60 percent. SolarSmartHomes combine the most cost effective energy efficient features and roof top solar electric generation in a package that makes homeowners moneyevery month.SolarSmart Homes are a wise investmentthat make doing the right thing easy.sumers more financing options and reduce theout-of-pocket cost of solar installations to a manageable monthly expense that is more comparableto their electric bill.As one example, the City of Berkeley, Californiacreated a pilot city tax program that allowed homeowners to apply solar installation costs to theirproperty taxes. It was sold out within nine minutes, demonstrating the consumer demand for affordable payment approaches. In addition, est loans, 3rd party leasing and innovativemart/Pages/index.aspxprograms like SMUD’s SolarShare are making solaravailable to new customer groups. However, whileHighlighting the specific monthly cost of a solarmany programs are providing innovative financinglease or loan has a much stronger effect thanschemes, they are not always as innovative or ag-simply promoting “low interest loans.” Recentgressive at promoting the offerings to consumers.focus groups conducted by SmartPower with homeIn fact, SmartPower research in Oregon and Arizonaenergy audit customers confirmed this. Customersfound that most solar customers today alreadyknew about the availability of 0% interest loans,held a long-standing interest in solar with the in-and yet when a 15,000 / 7 year loan was pre-centive program functioning as more of an en-sented to customers as 125/month payments, theabler than a true incentive and promotion thatprogram had substantially more appeal. As onebrings new customers to the program.customer reported, “I knew about the loan offer,but the actual dollar amount makes me take aTherefore, it is important to realize that thesesecond look.”new solar financing mechanisms are tools that cantell new customers that solar is affordable. To thatA similar effective “value” message is being deliv-end, states should prominently feature this mes-ered by SolarCity, a California-based installer that issage of affordability on their solar program web-offering solar leases to residential customers with asites. Because the affordability of solar is so centralvery strong affordability promotion on their website:Clean Energy Groupl l SmartSolar Marketing Strategies

SolarLease Example for Typical 3Bedroom HomeFor a home with a monthly electricity bill of 200, we would recommend installing a 16panel solar system.and the internet to promote these affordableoptions to the public.The affordability of solar is not just an issue forresidential and commercial customers. Institutionalcustomers, such as state, municipal and countyThis system will generate enough electricityto offset what you are currently paying tothe utility company from 200 down to 75 per month. Your monthly SolarLeasepayment would be 100, so you could actually save 25 per month from day e.aspxbuildings, are also an important source of futuresolar customers. Realizing this, the Massachusetts’Commonwealth Solar program created solar workshops specifically targeted to municipal leaders toeducate them on Power Purchase Agreements toexpand solar on public buildings. Every Board ofSelectman, Superintendent of Schools and Mayorwas invited to attend a workshop to learn aboutsolar energy’s value proposition. The workshopsFor a homeowner looking to reduce utility bills,were sold out with over 100 people attending inthis SolarCity solar leasing approach offers imme-Boston and 130 people in central Massachusetts,diate financial relief and guarantees, maintenancewell above expectations. Today, municipal leadersand other program offerings that create a greatare actively seeking strategies to reduce energyvalue for the consumer. The environmental bene-costs and environmental impact. Solar has morefits are important, but savings are of greater valueinterest for cities and towns than ever before andto the homeowner.high attendance at these workshops is proof ofthat demand.Currently, most solar customers learn about incentives from their installer, suggesting that they al-In sum, creating and promoting innovative fi-ready had an interest in solar before they knewnancing mechanisms for customers to install solarwhat incentives were available. Promoting the val-are critical to expanding the market. Just as withue story through new messages, outreach activi-financing the purchase of a home, an automobile,ties, and forums will expand the solar marketplaceor a college education, financing options for solarby reaching new customers and creating broaderpurchases are necessary to overcome high up-interest in solar power. Incentive programs mayfront costs. Paying cash for a new car is not possiblewant to consider using advertising opportunitiesfor most consumers, and neither is paying out-of-such as National Public Radio, cable television,pocket for a new solar energy system.Clean Energy Groupl 10 l C l e a nEnergy State Program Guide

Marketing Plan Action Step #1:IMPROVE THE VALUE EQUATION1.Identify the range of financial options currently available to customerswithin your market.- Are lease arrangements, PPA’s and other monthly financing strategies available?- What new approaches, if any, should you offer?Evaluate how you currently promote financial options to prospectivecustomers.- Are you reaching a broad audience with these options and bringing newcustomer groups to solar?- Can you leverage the resources of strategic partners (such as lendingorganizations) to create broader awareness?3.Develop an outreach plan.- Prominently promote the affordability message in collateral material, publicrelations and advertising that go beyond the website.4.Create a strong “affordability” message.- Use the website to show monthly payment options for solar technologypurchases or leases.5.Work with installers.- Ensure that they are promoting the financing options that are available totheir potential customers.6.Focus on “how to pay for solar.”- Ensure that workshops and other solar seminars highlight financing as a keycomponent, remembering that this is the biggest barrier to broader adoption.7.Host special solar financing events/workshops.- Identify target groups such as business associations, municipal and institutionalcustomers, and developers.8.Educate homeowners and commercial customers.- Work with local utilities to promote the value of combining solar with energyefficiency for optimum financial effectiveness.2.Clean Energy Groupl 11 l S m a r tSolar Marketing Strategies

Ma rket ing st rateg y #2Re in f orcin g the reli ab i l it y o f so la r tech n o l og yConcern about the reliability of solar is a barrier toFor most people, solar technology remains anmarket growth; consumers believe they will beabstract concept or a niche product rather than a“buying” into a simpler lifestyle with solar that theymainstream energy source. As a result, mostare not ready for. Solar energy systems are notpeople do not think of solar power as a reliableoften visible in our every day lives, in our neigh-source of energy for their home. This perceptionborhoods or on our public buildings. We rarely seeis often reinforced by misleading stories such assolar installations as we travel or on TV. Thethose appearing out of Troy, Michigan, where, ininvisibility of solar technologies contributes to athe winter of 2009, a model solar home, built atsense that solar energy is not up to the task ofthe cost of 900,000, sat empty due to stormpowering our modern world.damage. The headline “Celebrated Solar HouseLeft in the Dark” c

Building a marketing plan 7 marketing strategy #1: improving the Value equation for solar 8 marketing strategy #2: reinforcing the reliability of solar technology 12 marketing strategy #3: reducing the Complexity of solar 17 marketing strategy #4: overcoming Customer inertia 20 marketing strategy #5: Finding the right message 22

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