Public Confusion About Solar

There are many things that confuse the public when it comes to solar.  Included on the lengthy list of confusing factors are items such as: incentives, regulations, restrictions, warranties, technology differences and financing options.

But in my mind, the bigger issue comes from the fact that "confusion" translates into "high risk" in the minds of consumers.

Whenever something appears to be more complex or confusing than the status quo (a.k.a. power from the electric utility) most consumers label that item as a source of risk. This perception of risk comes from the potential consequences of making the wrong decision, based on confusing or complex information.

With most consumer products there is little penalty for making a wrong choice. If you buy a pair of blue jeans and they don't look good, the most you've lost is a couple of hours of time and somewhere around $100.

But if a solar installation goes bad, the consumer is looking at losing thousands of dollars, the potential of roof damage/repair, time without electric power, inconvenience, etc., etc.  In other words a massive and costly disruption in their lives.

The perceived risk of solar in the mind of the consumer presents the biggest barrier to mainstream adoption of solar power.


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Solar Market Leadership

There seems to be wide spread agreement that solar power is well on its way to becoming a commodity. And when it does, there will be a consolidation of the industry with only a handful of solar suppliers left standing.

So how does a company survive an industry shakeout? And what does it take to build a lasting position of leadership in an industry that makes and sells a commodity?

The answer is: those companies that effectively market their solar offering (using a mix of tangible and intangible product attributes) and are always in step with the changing preferences of the market.

The relationship between product tangibles and intangibles shifts dramatically as different stages of the adoption process are achieved. This shift in customer emphasis from tangibles to intangibles can be demonstrated as:

As products move through the adoption process, intangibles assume more importance. Often, pioneering new products or "first movers" lose their initial prominence because a new entrant is more successful in product positioning based on a more effective mix of intangibles. This can be the case even if the second product is not technically superior.

Apple was not the first microcomputer company, nor was the Apple II the first microcomputer. It was the first product to be called a personal computer, but much of the success of Apple, at a cost to MITS, Tandy and others, was the result of emphasis on intangibles.

Similarly, International Business Machines was not the first mainframe computer company. A number of others were ahead of IBM (generally, Univac is credited as being the first moderately successful mainframe company). But IBM was ultimately successful in dominating the mainframe market. The main reason was an appropriate emphasis on intangibles in the early stages of market development. Univac and the others continued to compete mainly on the tangible aspects of the product, even though the situation had changed.

The power of the tangible / intangible mix of the perceived product is so strong that it can be used to identify markets and segments where pioneers can be superseded.

This seems to be a persistent weakness in the marketing practices of solar suppliers today. Most solar companies are not working to build intangible attributes into their offering, and instead seem to be focused on just the tangibles (module efficiency, price, technical specs, etc.)

A number of solar/pv market segments exist, for example, where the major focus of suppliers should be intangibles. The solar installation business is also ripe for the effective marketing of intangibles.

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Solar Marketing Transformation

To many business owners, a goal of building a $25 million company appears to be too small. Venture capitalists look for a company that can grow to at least $100 million, and go public. Yet the facts argue that achieving just a $25 million level of business is a major achievement. For perspective, the average sales per business firm in the United States in 2006 was $338,000.

Only six in every 1,000 businesses achieve revenues of $25 million. The other 994 either fail, or peak at less than $25 million. Lack of focus on marketing transformation is at the root of much of the failure.

Marketing transformation is not rocket science but it's difficult for most CEOs to step away from daily operations to understand what it really means. Marketing transformation requires the continual redirection and renewal of your company that occurs from strategic adaptation to the environment. Since the solar marketplace is in constant flux, adaptation must continue without end.

The changing environment is a constant source of clues. Interpreting environmental clues requires judgment, analytical skill and creativity. For many solar suppliers, seeing the clues requires a perspective that is inconsistent with the need to focus on daily operations. Developing perspective is difficult for those whose consuming (and necessary) daily activities are concentrating on the latest order. So perspective is one of the most important qualities an observer can contribute to a company serving the solar/pv marketplace.

There remains the matter of will. For many managers, acting on fuzzy clues requires a leap of faith that is difficult to make, or that is resisted until change becomes inevitable. A continual, gradual transformation is less traumatic to the organization, provides higher returns and lower costs, and is preferable to the organizational disruption that affect some companies. The will to make continuing change occur is a prerequisite to breaking the $25 million barrier.

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