Is Your “Bag of Tricks” Missing a Critical Tool?
It’s interesting to me how many self-employed people don’t think they are good at sales. Whether it’s true or not, though, the reality is if you’re in business, you’re in sales. It might be obvious but the bottom line is, in order to stay in business you must sell jobs.
Many of us have attended great workshops where we spent the entire day talking about sales strategies. Typically this involves discussing “pain points”, the value of controlling the conversation by asking questions, and how to identify good potential customers, all of which are important topics. There are endless webinars on the subject. In fact, our industry has a few of its own sales gurus who spend a great deal of time traveling the country enlightening contractors on how to sell jobs and improve closing rates.
The thing that many salespeople overlook is the value of attractive financial offers. When I was a contractor we did a job for an employee of SolarCity. He was in sales and was very good at it.
In conversation one day he said something that took a while to sink in. He stated, in a very matter-of-fact manner that SolarCity was really a finance company that offered solar panels to its customers.
Wait a minute! We all know that SolarCity is a leader in the solar industry and at the time they were only offering solar panels. But if you think it through a bit further you’ll recognize that he was right. SolarCity grew to dominate the residential P.V. market by selling leases. To put it another way, their unique position in that market is really due to an innovative financing model. Fast forward to now and that strength has become a weakness, as folks are realizing that leasing is an expensive option. Today SolarCity is struggling, primarily because of their financing model, solar leases, is being challenged by other options.
Energy Efficiency Financing Can Help You Sell
What does this mean to you as an Energy Efficiency contractor? Is the “missing tool” in your business affordable, easy to obtain financial products that you can offer your clients to help close the deal? If you want to provide real value to your clients you need to offer finance options as part of your proposal.
Ten years ago, when I first entered this space, there were not a whole lot of choices as far as financing was concerned. Typically you could pull some equity from your house with a line of credit, use your credit card, or apply for a signature loan at the bargain rate of 22 percent interest.
There are Now Better Financing Options
Today’s energy efficiency contractors have a wide range of financial tools to choose from. There are things like Energy Efficiency Mortgages (EEMs), special loans whose interest rate has been bought down by an incentive program, grants combined with a low-interest loan, and several other choices. If you missed the news you might not be aware that thanks to President Obama, PACE financing will now finally be available to most folks across the nation. The point is, there are multiple products available today and you need to have at least one of them as part of your offering.
A colleague of mine once said that he felt he could close more jobs if they just got rid of the rebates and offered great rates on loans for Energy Efficiency contractors. This perspective has been presented to the California Public Utility Commission (CPUC) on multiple occasions. In response, the CPUC tasked the State Treasurer’s office to create affordable finance options to support the energy efficiency industry. The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), a state clearing house for financing, is now offering a new product called the Residential Energy Efficiency Loan Assistance Program (REEL). REEL is a low interest, easy-to-qualify-for signature loan, and it has a couple of bonus features as well. One benefit is a co-op branding grant that helps you promote your business with up to $7,000 in matching funds. The other unique feature is that REEL only requires that 70 percent of the funds to go to energy efficiency improvements, which means that the remaining 30 percent can be used for whatever your customer chooses. There are similar loan products in development by a variety of entities. Energy efficiency financing is an attractive offer to many financial institutions and I am certain we will see new and even more creative options in the near future.
So the good news is you have a variety of products to choose from that are unique offerings designed to support the industry. I know a few of you a thinking “OK but my clients pay in cash, so it really doesn’t apply to me.” I know, I know. I was one of you. There is no question that cash deals are easier for the contractor. You do the work, you get paid, they get a rebate, and all is well. But the reality is if you’re not offering financing as an option, you’re leaving money on the table, I guarantee it.
It Helped Me Sell Bigger Energy Efficiency Upgrades
Here’s another anecdotal example. I met a young couple with a baby on the way. They were buying their starter home (albeit a very expensive starter home) and wanted to do some improvements before they moved in. We performed an energy audit and presented the results to them in person. The conversation turned to “we would like to do all of this but…”
I know you’ve all been there before. Lucky for me, my company was based in Sonoma and we had the only active PACE program still running at the time (due to the Fannie Mae/Freddie Mac legal debacle), SCEIP. I mentioned this new form of financing and explained how it worked. In a heartbeat, the tone at the table went from “we wish we could” to “let’s do everything and more.” The financing option turned a “wish we could” job into to one of the single largest jobs we sold.
Over and over I’ve witnessed folks open their wallets and take on $20k to $30k job scopes or even larger, mostly due to financing. In fact, I would say that your two biggest sales closing tools are financing and rebates, in that order.
Research the Financing Products Available to Your Clients
The point I am trying to drive home is you need to have some form of financing available before you meet with your clients. I suggest you build a reputation with your local PACE provider or specialty loan program person. Spend the time to learn how their offers work and what paperwork you need. Attend their trainings, be familiar with what it takes and know who to call when you have questions.
Many of your potential clients want to buy the “full meal deal” but don't think they can afford it. By offering unique and valuable financial solutions, you can sell bigger jobs, make happier clients, and make a significant impact on their energy bills and carbon footprint.
We all love tools. Just remember that not all of them fit in your hand.
Efficiency First California
Image from iStock.