As the solar market gains fuel, the next wave of adopters is expected to be more risk-averse. (For a full primer on solar energy user groups based on Rogers’ Diffusion of Innovations Theory check out our blog here). If you’re a residential solar installer, it’s important to be prepared for the next generation of consumer.
The Department of Energy has commissioned several rounds of studies examining consumer purchasing and decision-making of solar buyers. Let’s see what the SEEDS studies can tell us about adapting your solar marketing to changing customer segments.
Innovators and Early Adopters, Their Demographics and Motivations
Across sub-markets in the US, early-stage solar adopters are older (65+), better educated and wealthier (household income +$100,000) than the average consumer. They also have correspondingly higher electricity bills.
Across surveys, motivations for purchasing solar have been a re-hash of the same top five reasons time and time again. Last year, a survey found consumers are motivated by multiple drivers. Grouping together related drivers gives us insight into their mindset – some people are drawn toward solar as a ‘collective good’, while others are motivated by a more individualistic mindset.
Spark events are events that ignite someone’s initial interest in solar PV and shape the decision-making process and information search of solar PV adopters. According to the study Evolution of consumer information preferences with market maturity in solar PV adoption, found that direct marketing by a solar company was the most popular spark event, followed by planning for retirement and a recent increase in electricity rates. However, more recent surveys have shown that climate disasters are leading to new spark events as consumers focus on resilience and disaster preparedness.
We’ll discuss direct marketing shortly, but you can clearly see the overlap between the age demographics, key driver and spark events: early adopters are well educated on current technology, and are looking for ways to save money as they tighten their belts and plan for retirement, investing in solar to hedge against forecasted energy price hikes.
But as adoption spreads (diffuses) from innovators/early adopters to the early majority, their demographics, spark events and risk tolerances are going to change, which means so does your marketing.
What the Early Majority looks like
The Diffusion of Innovations theory divides people up into user groups depending on how they react to a new idea or product – by psychographics, not demographics.
What we do know about this group is their preferred information sources, product expectations and risk tolerances.
Preferred information sources
The study Evolution of consumer information preferences with market maturity in solar PV adoption compared an emerging market to a mature market. Innovators (i.e. the first houses in their neighbourhood with solar) were sparked by mass media coverage of solar PV or their local utility.
As diffusion progressed, the next wave of consumers were early adopters, who preferred to get their solar information from local sources like neighbours, co-workers, family, friends or solar installers. This is called the peer effect. The innovators provide a model of adoption that is imitated by early adopters, who primarily trust the information they get from neighbours who have recently installed solar.
The pattern of diffusion amongst innovators was different for each new market, but as the markets matured and early adopters gained prevalence, the preferred information sources became similar and more homogeneous. Generally, adopters preferred information from local sources. Installers also had a noticeable impact on driving local market adoption through increased marketing and events.
So what does this mean for your marketing? If you’re in a regional market with few to no installs, kick your PR into overdrive because the innovators are often sparked by mass media or other global, more authoritative information sources. This means there’s no playbook for who can dominate the initial spark in the community.
But as the market matures, your marketing should take a predictable turn. Programs that promote the peer effect like referral bonuses and discounts or neighbourhood open houses will “benefit from the relative stability of local information preferences as diffusion progresses.” While your messaging should be tailored to the local market, rest assured that your sales programs can be rolled out effectively nationwide.
Capitalize on the ‘first in the neighbourhood’ and the Peer Effect
As with any other trend, there’s always the trendsetter and the copycats. But how much weight do the Jones’, -er Jenners’, actually have? Overcoming barriers and uncertainties in the adoption of residential solar PV found that the peer effect had an impact on one-third of respondents and fully determined the behaviour of more than 10% – meaning these consumers only purchased solar because someone they know did first. The peer effect shortens the duration of the consideration period, makes them more motivated to buy and gives them more confidence in this new technology.
Once you have sold and installed that first project in a neighbourhood, consider investing in a digital or direct mail campaign, both of which can target leads by postal code. Featuring images of local high-profile residences, paired alongside owner testimonials allows you to extend the peer effect in your advertising.
Overcome objections and set expectations for the risk-averse
The literature globally identified the “wait and watch” problem retailers face, but studies disagreed if this should be interpreted as consumers rejecting the innovation or delaying adoption. In one study, two-thirds of the general population said they had thought about installing solar, but decided not to move forward. Commonly cited reasons for waiting are:
- Expectations of rapid technology improvement and cost reductions
- More attractive incentives
- Needing a clearer understanding of the installation process
- More peer experience
Component prices of modules, racking and inverters have come down substantially over the last decade, but realistically, such savings for future consumers will be incremental, not in the orders of magnitude seen previously. Especially as soft costs and labour have remained constant. As solar moves along the adoption curve, consumers will become more risk-averse, so it’s important to invest time and effort into creating marketing material that addresses these concerns.
- Educate consumers so they understand that most of the expected technology improvements and cost reductions have already occurred. You want to shift the conversation so they don’t see any benefits to waiting.
- If a new incentive becomes available, seize on this conversation starter. Or more interestingly, as a conversation restarter. Residential Solar Consumer Insights found that interest remained strong for years amongst those who requested quotes. In fact, homeowners were purchasing solar up to five years after the initial quote. Setting up long-term nurture or ‘drip’ email campaigns allows you to cost-effectively educate and update wait-and-watchers on new financial incentives.
“Sold, not bought product”
Two of the SEEDS studies found that solar is a “sold, not bought” product, countering the common narrative that consumers are motivated buyers, inspired to save money and the world, and are actively searching out solar installers like they would a reputable electrician or real estate agent.
Frequently though, the initial spark is installer-initiated, through direct or in-person marketing. While some households carefully weigh the pros and cons of solar, the act of being sold something they weren’t actively looking for can lead other households to make an impressionistic decision.
The research discovered that consumers value information sources that they find early in the decision-making process, so if an installer initiates the spark event, they can become the primary source of information for customers. This is every marketer’s dream, but it also places an ethical burden on companies.
“Keeping information about solar simple and positive likely makes adoption decisions easier for many households, but it may deter or mislead others,” one author said. If customers are looking to you for their sole source of information, you have to ensure you address all risks and benefits and invest the time to educate them on complex topics like maintenance, decommissioning, and tax and real estate sale implications.
It takes time and money to create all of this marketing and educational material, but there are numerous benefits, such as:
- SEO – The more optimized content you have online, the better your chances of being found by potential customers.
- Better-performing pay-per-click ads -If you link your ads to a robust, well-written custom landing page, Google will score your ads higher, increasing the number of times your ads are shown.
- You’ll close more deals– “Overall, respondents feel strongly that interactions with their solar contractor improved the quality of their information, motivated them and gave them the confidence to install solar,” another study said.
As spark events and the demographics of solar adopters change, installers will need to work to overcome the ‘wait-and-see’ stasis that is holding back true mainstream adoption. While the industry has used the benefits of the Peer Effect in its marketing for years, it will become increasingly important for the next wave of consumers. In addition, mass-marketing will remain an important component in encouraging solar energy adoption if solar is truly a “sold, not bought” product.