How much is a happy customer worth to your business? Conversely, how much can an unhappy customer cost you? Increasingly, customer acquisition is the dimension that separates profitable, sustainable solar companies from flashes in the pan. The gold standard in terms of customer acquisition is word-of-mouth referrals. Successful companies focus on finding the right customers and ensuring those customers have a “Wow!” experience that inspires referrals for years to come.
Your finance partners play a key role in delivering that best-in-class customer experience. They are really an extension of your brand in the market. Finance partners have the ability to spoil a sale, expose your business to significant liabilities and disrupt your all-important flow of referrals.
If you aspire to be a profitable, sustainable residential solar company or have a successful career in solar sales, we’ve put together this guide to help you select the finance partner that will live up to your standards.
1. AVOID: Inexperienced and unproven lenders
The residential solar installer landscape has seen more than its share of ups and downs. The players that pursued rapid growth have since retrenched, gone bankrupt or been forced to radically alter their business model. The impact on the industry has only started to fully emerge, with recent press on poor-quality installations that lead to unsafe conditions and lawsuits.
Unfortunately, solar loan providers are not immune to this boom-and-bust phenomenon. The rapid emergence of the solar loan segment has attracted significant private equity investment. These private equity-backed competitors have no track record of surviving a downturn in the credit cycle and have no long-term track record of lending responsibly. With experts expecting a tightening of the credit markets after 10 years of market expansion, lenders that have not secured reliable access to funds or do not have a proven track record of lending responsibly are among the most precarious players in the industry.
To protect your business and your customers, look for a financing partner who has forged long-term partnerships with banks, with a track record of consistent and responsible lending practices throughout the credit cycle ups and downs. Otherwise, you might find you’ve put all of your hard-earned customers in the hands of an unstable lender and you’ll need to scramble to find yourself a new finance partner.
Here are some important questions to ask to keep your business (and your customers) off the solar-coaster:
1. Who is the lender of record for my customers? 2. How many years of experience does that lender have? 3. What is the nature of your relationship with the lender? 4. What is the lender’s commitment when it comes to their solar lending practice? 5. How did the lender fare during the 2009 financial crisis? Did the lender continue to lend throughout the 2009 financial crisis? 6. What sources of funding do you have that do not rely on securitization? How much funding is available to you currently from those sources? 7. Have you ever imposed caps on your solar sales or installation partners? 8. Have you ever had to delay funding of completed jobs due to a lack of available funds on your platform?
2. AVOID: Lenders who take shortcuts on consumer protection
Not all homes are good candidates for solar. And as much as we would like to help as many people go solar as possible, we trust our experts – our solar designers – when they tell us that the site is not a good fit. Undoubtedly, those homeowners will be able to find an unscrupulous solar company willing to install panels all the same.
The story is no different with solar lending.
Not all homeowners are good candidates for financing. Responsible and experienced lenders have the tools and the know-how to discern who is a good candidate and who is not. That said, there will always be an irresponsible lender willing to approve those customers. Short-termism and shortcuts exist in every segment.
As an owner, sales manager or salesperson, why should you care if your finance company is taking a responsible approach to underwriting? Isn’t that the lender’s problem if they make a bad loan? It is certainly a problem for the lender, but it is also a problem for you. Customers who can’t pay back their solar loan are very unlikely to provide your business the referrals on which you depend. Moreover, they are likely to hold you responsible (fairly or not) for not delivering on a core value proposition of solar – saving money. These upset customers may damage your online reputation or file formal complaints.
Lastly, if you are like most members of the solar industry, you enjoy helping families achieve their goals and building meaningful relationships in your community. Signing homeowners up for financial obligations they don’t understand or can’t responsibly manage is working against what you enjoy about working in the solar industry. Make sure your finance company is aligned with your company and personal mission.
Ask these questions of your financing partners to make sure their offering is safe for your customers and your business:
1. Do you assess all homeowners’ ability to pay using debt-to-income? 2. Can you offer all of my customers a “welcome call”, the industry’s established best practice for ensuring customers understand their solar financing? 3. Do you record welcome calls in order to protect my business against contrived homeowner claims? 4. Do you keep fraud and consumer abuse at bay by spot-checking proof of income? 5. Has your company or have any member of your management been barred from consumer lending in any state? 6. How does your company balance growth and responsible lending practices?
3. AVOID: Finance companies who emphasize sales over customer care
Satisfied customers are your most precious asset, providing referrals for years to come. Ensuring that your customers are having a positive experience throughout the process from initial site visit through to loan repayment is critical to protecting your future referrals. As an installer, it is easy to lose sight of the customer experience after energization, and yet, that is precisely when you have an opportunity to collect referrals and reinforce your brand.
Lenders with aggressive sales tactics may be quick to approve customers to meet their own aggressive growth goals but then fail to provide the kind of customer care throughout the process that will protect your brand and win you referrals. Lenders who do not focus on customer care risk frustrating and confusing your homeowners. Unhappy or confused homeowners may cancel their solar project, damage your reputation or file formal complaints.
Make sure you get strong answers to these questions to ensure that your finance partner is equipped to deliver a customer experience that exceeds expectations:
1. Do you measure customer satisfaction? If so, how do you measure up? (Net Promoter Score is a common measure) 2. What is your online reputation? (Check finance company reviews on Google, Facebook or EnergySage.) 3. Who will be servicing the solar loans held by my customers? What is the track record of that servicer in terms of customer satisfaction? 4. Do you have a customer care team? If so, what is their level of solar expertise? 5. Do you have human underwriters available to speak with my customer? 6. How do you track and manage customer complaints?
4. AVOID: Outdated, clunky or inconsistent user experience
The banking industry is notorious for being slow to adopt the kind of new technologies that support a seamless user experience. Leveraging automation to provide instant credit decisions is becoming the standard in consumer lending. Online portals that provide homeowners with the convenience of uploading and signing documents at any time of day are table stakes these days. Financing partners who cannot offer instant decisions and well-designed online portals are not only slowing you and your customer down and risking your sale – they are also signaling to your customer that their experience with you is not best-in-class. Homeowners don’t provide referrals for middle-of-the-road user experiences. They refer when they have an experience that moves them to stake their personal brand.
Some solar finance companies attempt to leverage funding from a variety of sources, translating into different user experiences. Because setting and then meeting expectations with your homeowner is a big part of success in solar sales, inconsistent or variable user experiences can torpedo your ability to set proper expectations with your homeowner. When homeowners receive mixed messages, they will often become confused and feel less confident about going solar. Ensure that your finance partner can deliver a consistent user experience so that you can confidently set expectations with your prospective customers.
Ask these questions to make sure your finance partner is leveraging the technology that will keep you setting the pace rather than scrambling to keep up:
1. Do you deliver instant decisions on the vast majority (80%+) of loan applications submitted to your platform? 2. Do you have an online loan application that leverages a mobile-first design? 3. Do you have a homeowner portal that allows my customers to upload any necessary documentation and track the status of their solar financing? 4. Will the homeowner have access to a portal for online bill payment? 5. Does your platform juggle multiple different user experiences based on different funding partners?
5. AVOID: Lenders who aren’t all in on solar
It seems like everyone is getting into solar lending these days, even the local bank. On the surface, it might seem any bank with a pile of deposits might be able to offer you and your customers a viable solar loan option.
You will quickly find that lenders who lack focus on and experience in the solar industry just don’t get it. The financial products they offer for solar won’t be quite right, and they won’t evolve those products to meet changing needs. The customer service teams of these institutions will be unprepared to field the common questions that homeowners have regarding solar incentives.
Some lenders launch “solar loan” programs as a marketing gimmick or in response to short-term state incentives but have no long-term strategic plan to build their solar lending business. As a leading solar company, you will quickly outgrow this kind of partner, and then you’ll be back to where you started – selecting the right long-term partner for your business – instead of focused on taking your business to the next level.
You deserve a partner that is all in on solar just like you are. Make sure you’ve got the right fit with these questions:
1. Why did you start a solar lending practice? 2. How many years of solar experience does your team have? 3. In what other lines of business are you engaged? 4. What is your roadmap for improving your solar program? 5. Where do you expect your solar finance business to be in 5 years?
In today’s solar industry, you can’t build a profitable, sustainable residential solar company without a strong solar financing partner. The right financing partner is one that deeply understands your needs, as well as the needs of your homeowners. This partner knows that happy homeowners are the difference between your success and failure and acts accordingly. This partner arms you and your team with cutting-edge technology to help you deliver a best-in-class experience. The right partner will be a source of strength and stability for your business, rather than offer you a ticket on the solar-coaster.
Sara Ross is chief revenue officer of Sungage Financial, a Boston-based provider of solar financing solutions.