There is a lot of complexity that comes with selling commercial and industrial (C&I) scale solar, including many factors that differentiate it from residential solar sales. Your commercial client’s motivations for considering solar differ from residential customers, as do the ways they evaluate your proposal and the processes by which they make their decisions.To understand some of the important factors in a successful C&I sales process, we spoke with professionals with extensive C&I solar sales experience, including Conrad Chase, VP Sales and Business Development at PV Booster, a manufacturer of rooftop solar trackers for commercial and industrial rooftops. We also spoke with Nico Johnson, host of SunCast, a podcast that shares the experiences of clean energy entrepreneurs, with over a decade of experience in the solar industry.
In our conversations with Chase and Johnson, some essential elements of a successful commercial solar sales process emerged: asking the right questions during the sales process, understanding the landscape of other energy and building upgrades your commercial client may be considering, and selecting the right tools and technologies (including the right proposal and design tools to close the sale).
In this article, Part 3 in our Unlocking Commercial Solar series, we’ll delve into each of these topics and how to tackle them intelligently to improve your chances of closing the commercial sale.
1. Ask the Right Questions to Tailor Your Commercial Solar Sales Pitch
One of the fundamental errors of commercial solar sales that came up in our conversations with both Chase and Johnson was the failure to ask the right questions. “Asking the right questions is so important in this category. And what we found over talking to hundreds of installers is that they’re flat out missing the mark,” said Chase.
As Chase explained, asking the right questions is important because it lets you make the right proposal for your customer's needs. This can allow you to deliver a more compelling deal and increase your chances of winning the sale. Johnson also emphasized the importance of asking the right questions in allowing you to connect with the right decision-maker in the organization who can actually get the project approved.
Let’s take a look at a few of the key questions you should be asking.
Understand the Lease Structure and Owner-Occupant Relationship
A fundamental category of questions that Chase highlighted relates to understanding the relationship between the building owner and tenants (if any).
As discussed in our earlier articles in this series (Key Players in a Commercial Solar Project and Making Sense of Commercial Solar), one of the factors that makes commercial solar projects more complicated is that the owner of the building with the authority to approve a solar purchase is often not the occupant of the building who will benefit from lower utility bills.
Questions about the lease structure and the relationship between the building owner and tenant (if any) allow you to understand these complexities at the outset. This can help you determine whether the prospect is worth pursuing and, if so, how to tailor your solar design and proposal appropriately.
While there are many types of commercial projects and lease structures, Chase highlighted three common lease / building-tenant arrangements that PV Booster often sees. From least to most complex, these are:
- owner-occupied buildings,
- buildings with a single tenant in a triple net lease (a type of lease in which the building owner provides the building as-is and the tenant is responsible for any building repairs, upgrades, utility costs, property taxes, etc.),
- and multi-tenant buildings (which may have different lease types including triple net or gross leases).
Owner-occupied buildings make for the most straightforward commercial solar projects because the building occupant who benefits from energy savings and the owner who can make solar purchasing decisions are one and the same. Particularly if you’re just getting started it may make sense to focus your energy on projects that are less complex in terms of the lease and tenant situation.
If the building has lease, some of the lease-related questions to ask include:
- What type of lease is in place and what is the tenant-owner relationship?
- Who's the tenant?
- Who is the owner?
- How long is the lease?
- How long is left in the lease?
- Who has responsibility for the roof?
Understand the Financial Objectives and Considerations of the Parties Involved
It is also essential to understand the financial objectives of the parties involved— particularly the building owner and the entity that will own the solar installation (in many cases these will be the same, though not if a third-party-owned financing option is selected). You’ll also want to understand the motivations of the tenant(s) if there are any.
Chase highlighted the importance of understanding the objective of the building owner related to the ownership of the building. “For example, is this property going to be flipped and sold to some bigger company? Is the property owned by some individual that has a long term buy and hold strategy?”
With regard to single-tenant buildings with a triple net lease, he noted that a significant financial consideration for building owners is how likely their tenant is to renew their lease and at what cost. “The building owner wants longer-term leases, with higher lease rents. And they want that to be as secure as possible, because the more secure that their income is for the building, the easier it is that they get bank financing.”
Reduced utility bills through a commercial solar installation can be a significant motivator for the tenant to renew their lease and can be a means for the building owner to obtain higher rents. Additionally, the revenue from a solar installation may enable the building owner to offer incentives that increase the appeal of a lease for a new or renewing tenant.
This scenario is exemplified in a large commercial project that PV Booster developed for building owner Harry Ross Industries, whose prospective tenant, Chiquita Brands International, was enticed by utility bill savings solar would provide on their refrigerated warehouse.
Meanwhile, you’ll also want to understand the considerations of the tenant(s) involved. As Chase explains, “It actually depends very much on the tenant, but in general, they're already in or signing up for a lease, they certainly don't want their power bill to go up. And some may have some requirements around, you know, flexibility up on the roof, you know, if they want to put something up there, like an HVAC unit or some other piece of gear, you know, there might be some actual structural consideration that they need to they need to be aware of.”
Finally, you’ll also need to ask questions to understand the financial objectives of the entity that will own the solar installation. In particular, it can be helpful to understand the organization’s tax situation as this will influence whether they can benefit from tax credits for solar.
“Knowing these nuances will shape how the installer makes their pitch and what types of things they pitch” says Chase.
Find the Real Decision-maker
Another essential element of asking the right questions is to ask questions to identify the individual or individuals who actually have the authority to sign off on a solar purchase. Unlike a residential sale which has fewer decision-makers involved, commercial solar projects involve many stakeholders and its up to the sales person to identify who has the authority to move the project forward.
This is a common C&I sales pitfall according to Johnson. Often “[contractors] get their foot in the door, they've done a great job prospecting, they've got the tools, maybe they've got a good layout and energy analysis—but they're just plain talking to their own person.”
In many cases, he says “the only person they've been able to get open the door is the facilities manager. Well, in very rare cases is the facilities manager actually making the decision. But if you recognize that the facilities manager is your champion, and you understand large account management, and your sales team trained right, then you’ll be able to get to the decision-makers—the board of directors or whoever is going to actually stroke the check—in an efficient process. Identify the economic versus the technical buyer.”
Make sure you ask the questions necessary to understand find the real decision-maker.
2. Understand the “Ecosystem” of Other Energy and Building Upgrades Competing for the Same Budget
Another important element of a successful C&I sales process according to Chase is to understand the variety of other options that are competing for the same part of your commercial client’s budget. He says that often solar contractors assume that their main competition is other solar proposals.
In fact, there are many other energy and building upgrade options and technologies competing for the same dollars available for a solar purchase. These include things like energy-efficient windows, roof replacements, new HVAC units, and many other potential investments.
In some cases, these investments may have shorter payback periods than solar. But pairing solar with these other upgrades may yield a more compelling proposal for the client—particularly if the other technologies are eligible for rebates or other incentives.
It’s also crucial to understand that some of these investments may be things that the client needs to undertake to maintain their building. Chase gave the example of a university that PV Booster worked with. The building in question needed a new roof, as well as to upgrade very old HVAC units that were at risk of breaking, as well as several other changes.
By asking questions to understand the other building initiatives the client was undertaking, the team was able to learn that after the other improvements were done, the load profile of the building would be drastically different. Because of the improved energy efficiency of the building, its energy consumption would be drastically less.
With this knowledge, the team proposed a smaller, 400kW PV system that better matched the actual future needs of their prospect, compared to megawatt-scale projects proposed by competitors. “In summary,” Chase explains, “understanding the ecosystem of solutions is critical because it allows installers to make the right proposal.”
3. Use the Right Tools and Technologies
A final critical element of a successful commercial solar sales approach is to use the right tools and technologies. This includes both the technologies that you propose in your commercial solar project, as well as the design and proposal tools—particularly software—that you use.
Both Chase and Johnson highlighted the importance of robust solar software tools to successfully closing a C&I deal. “The right proposal and design tools are critical,” says Chase. “Software that allows an installer to look at a bunch of different scenarios, factoring the other technologies that are in play and may result in a new load profile—to run those scenarios quickly, is important.”
Johnson added, “I see a lot of folks that try to scale in the C&I not investing in the software upfront. And so they try to do the hard math, hoping that they'll do they'll close a deal that'll justify the software expense, rather than justifying the software expense because it'll help you close a hard deal.”
Choosing the right technologies to include in your solar design is also essential in delivering the proposal that will be most compelling to the client. “In the story of the university, they did not want to put carport solar, because it was really expensive,” explains Chase. And because they were already replacing the roof, they were interested in adding rooftop solar at the same time. In that case, PV Booster’s proposal of an efficient option that offered higher production with fewer modules appealed to the client’s desire to minimize the amount of equipment on their new roof.
Commercial solar sales are complex. That’s particularly true if you’re new to the sector—for instance if you’re transitioning into commercial solar from residential. Bearing these best practices in mind—asking the right questions, understanding the landscape of competing technologies and building upgrades, and using the right tools and technologies—gives you a better chance of closing the deal.
What else have you found to be critical to a successful commercial solar sales process? Let us know in the comments below!