As the pace of growth of solar and related energy services continues to accelerate, and more players enter the market, the pressures distributors face to compete becomes more prominent. Those distributors that adapt, evolve and optimize their businesses have significant opportunities to capture more market share and increase their revenue while lowering operational costs. Those that stick to the status quo will face significant and increasing risks. Here are 5 trends impacting revenue opportunities for solar distributors that I have observed over the past several years:
Trend 1: As solar equipment prices continue to fall, distributors face increasing pressure on margin and competitive differentiation
Opportunity: Distributors need to find creative new ways to add value beyond selling equipment.
Contractors typically have relationships with numerous distributors with little allegiance to one in particular – often switching distributors based on price, availability and other factors. To add value beyond selling equipment, distributors might consider empowering contractors to easily sell more of their equipment and finance those projects directly with an integrated and turnkey solution that bundles sales, operations and finance into one platform. By empowering their contractor base to sell more, distributors can lower their customer acquisition costs and increase their revenue, while strengthening relationships with their contractor base.
Trend 2: Solar contractors and developers increasingly recognize, and are acting to, find solutions to lower operational costs.
Opportunity: Distributors can facilitate marketing programs, standardized procurement packages and other innovations to help contractors reach their goals.
Distributors who empower contractors to sell and finance projects in a one stop shop approach can gain immediate insight into their contractor base’s pipeline, and thereby track and plan their equipment sales volume more accurately. This visibility enables distributors to more effectively manage their inventory, reducing costs, and decreasing inventory hold times. Further, with insight into exactly the equipment that will be financed, distributors gain greater revenue predictability and de-risk cash flow management.
Trend 3: Many non-traditional contractors are entering the solar market.
Opportunity: Distributors can leverage relationships with electrical, roofing and other non-traditional contractors to help them enter the solar market successfully.
Turnkey solar sales, operations and financing offerings enable non-traditional contractors, such as electrical and roofing contractors, to enter the market and start selling solar faster. Distributors who take advantage of this trend and begin building relationships by providing ready-built solutions to these contractors have the opportunity to drive additional revenue, leaping ahead of their competition with new market participants.
Trend 4: Access to competitive, easy to use financing has become a must for successful contractors and developers.
Opportunity: Distributors can create and provide such programs on a contractor’s behalf.
Traditionally, the entire financing process can take quite a bit of time – with contractors having to file each project in a manual and time-consuming process from application to funding. With an integrated solution that bundles sales, operations and financing into one, the entire process can take minutes, rather than days or weeks. With greater access to predictable financing, distributors have greater confidence in procurement pipelines and can manage inventories more effectively.
Trend 5: Multi-technology solutions are emerging, but many risks arise.
Opportunity: Distributors have an opportunity to provide tools to help contractors educate themselves, learn about new technology, and sell more of it successfully.
As new technology emerges in the marketplace, contractors require a great deal of specific sales and technical training for each new solution. Distributors that are able to provide easily accessible on-demand training (for example, how to install lighting or battery storage in combination with solar), can ensure projects are successful and revenue from new technologies continues to grow.
In summary, to capitalize on these trends and determine which actions may yield the greatest returns distributors should;
- Speak with their contractor base to validate and prioritize areas to drive greater efficiency and value creation
- Explore deeper partnerships with contractors for select sales, operations and finance related innovation
- Test and iterate such innovation in order to ensure long term fit, positive contractor feedback and enhancement to distributor brand & reputation
To learn more about how ENACT systems can help distributors empower their contractor base to sell more, contact us today.