The entry of a new large solar competitor into your market will force your small business to up its game. What has been working will probably no longer suffice: you will really need to study your business, market, and customer to fully understand your position in the market and be clear on what you do best, how you can better serve your target customer, and how you can differentiate your small solar business from the competition.
This is often easier said than done. It can be a challenging process to step back and assess your own business and recognize what you do well and what you need to improve. In many cases, small solar businesses were started by people with a passion for solar and the technical skills to design and install solar systems. These skills got you started and have served you well, allowing you to grow your business and serve your customer, but now they may not be enough.
Understanding Your Competitors' Strengths
The first step is to understand the competition that these large national brands represent. The local office of a large company has two major advantages that you must address, and which form the backbone of their ability to attract customers and increase their market share.
The first is that they generally have a substantial pricing advantage. Utilizing the economies of scale, they are able to source and install a system for less money than smaller competitors. With the price of solar power dropping significantly over the past 5 years, it has become harder and harder to compete directly with larger competitors.
Their second advantage is the power of their brand marketing and customer acquisition abilities. Larger companies usually enjoy stronger brand recognition versus smaller ones, meaning more people are aware of a company's brand name and products. They build their brand recognition through personal selling, advertising, and public relations. An advantage of having stronger brand recognition is that customers will usually think of those companies first when making purchase decisions. Hence, companies with greater brand awareness generally sell more products in the marketplace. They also have more resources to devote to the sales and marketing process—continually increasing their brand awareness and selling more product.
Differentiating Your Business
Knowing that you cannot compete directly against these factors, it is important to focus on what your business offers that these large companies can’t—namely, focus on the specific needs of the customer and offer them a custom solution to differentiate your small solar business from the competition. This means spending some time really understanding what your customers want. What is the problem your product or service is solving for them? How is your solution better than the competitors in solving this problem?
Ultimately, it all comes down to offering a specialized product and service. By the very nature of their business models, these large businesses have a generic product that will meet the general needs of a large portion of the market. In other words, it will work well enough in most situations, but it will not be the best or optimized solution. This means that there is a significant population that has strong interest in a solar system, but will find the generic solution to not be the best option for them. These are your customers.
You have the knowledge, flexibility and desire to provide them the right product. This may be a different racking system to fit their space, a ground-mount system as an alternative to roof-mount, or a tracker system that optimizes the power production. As Greentech Media notes, “variance is the rule in solar, and variance is anathema to scale. For customers that don’t fit in a box, local installers are the answer." If you can become the only installer in your area offering a specific product, demand for your services will automatically go up.
As part of this process, you should provide value-added services that will appeal to your customers. One of the biggest concerns that customers have is the customer service and technical support that is available for their solar system. They are making a substantial investment into a technical product and they want to be sure that there is someone they can contact should there be any problems with the system. These services, whether it be an annual on-site inspection, ongoing tech support, or a remote monitoring system, will separate you from the big national dealer, who generally don’t have the flexibility to develop close, ongoing relationships with their customers.
Thriving in a Competitive Solar Market
Now comes the hard part—once you have identified and defined what differentiates your small solar business, you have to market this advantage to your customers. It does no good to have a great product if you cannot get this information in front of potential customers. This is a big change from what most likely has been your competency and the focus of your business. Knowing all about solar and the technical aspects of designing and installing systems may have been what got you started, but it is not where you need to put your energy. If you want your business to continue to grow and thrive you must embrace the need to get in front of potential customers as much as possible.
Marketing and promoting your business needs to be your focus and be given the time and investment that you used to devote strictly to the product. It may require you to hire an outside marketing/advertising company to guide the process, or to increase your staff to have a dedicated sales and marketing team. It may be uncomfortable and challenging, or even feel unnecessary, especially if you’ve relied mostly on word-of-mouth referrals up until this point, but it is essential for the long-term health of your business.
To put it succinctly, it’s time to get comfortable with sales and marketing strategy—because they’ll ultimately be the keys to your solar success.