Getting jobs is the hardest part of the renewable energy industry. My goal is to provide you with the appropriate resources and advice needed to sell jobs and grow your business.
These objections will come up equally when selling geothermal, solar thermal, or solar photovoltaic systems. Here are the top five objections when selling renewables and a couple tips on how to overcome them.
- Price
- Payback/ROI
- Is the technology proven?
- How does the technology compare to other alternatives?
- Dealer support and service
PRICE
To combat the argument that the price is too high, remember to use added costs, not whole cost. What does this mean? When speaking about geothermal, if the customer already needs to replace a boiler, don’t just mention the cost of the complete geothermal installation. Rather, compare the added cost of geothermal. For example, if they need a new boiler that costs them $15k and the geothermal system costs $25k, use the added cost $10k and show how that added investment will save them money in terms of operations versus the traditional system For example, for an added $10k investment, they might save more then a $1k dollars per year. Most people can see this makes sense. In general, using small numbers will make the customer less likely to object about the price.
Also try to frame the discussion as an investment rather than an expense. Remind your customers that using electricity from the grid or burning oil is simply an expense, and an increasing one at that. Investing in renewables not only provides them cash in the short term, but making a house more efficient increases the value and makes it sell faster. This is a critical issue to highlight if they plan on moving out of the house in less then 10 years and are worried about getting their investment back.
Payback/ROI
The first rule of thumb is….do not use the term “payback”, ever. In calculating the benefit of renewables, use return on investment (ROI) or internal rate of return (IRR) instead of payback. This will come in a percentage rather than the number of years it will take to collect the payback, and it better communicates the value of the investment so they can compare it with other investments where they may be looking to put their money. Most geothermal and solar systems sited at appropriate sites have an internal rate of return of at least 10%, this means that for every dollar that is invested they will save 10% every year that they own a system. Again, for most people its pretty easy to see that this makes sense.
If the project is being financed with either new construction or a retrofit mortgage, the return on investment will easily communicate if the project makes sense. This is because they will compare the ROI to the interest rate on the loan. If they are borrowing $50k at 6% interest, and the ROI on the system is 11%, they are going to be saving money from day one.
Is the technology proven?
The easiest objection to overcome is something you’ll want to get out of the way on the site visit. You can either show them projects you’ve done in the past or create a booklet of other projects that have been completed nearby.
Also provide information about how fast the industry is growing in the US. This can be done with some simple research on google. Would the industry be growing so fast if the technology didn’t work? I think not. With the decreasing reliability of other energy sources, renewables have a clear advantage.
How does the technology compare with others?
This objection is closely tied to the financial questions. You’ll either have to compare the technologies to each other–should they go with solar hot water, solar pv, or geothermal–or you’ll need to compare the renewable technology with traditional fuel sources.
Overcoming this obstacle will all come down to site-specific conditions and behavior. If their house is a good candidate for all technologies, which ones to use will be based on the returns of each technology and their budget.
In comparing renewables with each other, the conditions are also the key. Does their house have a good site for solar? If not, geothermal will be the way to go, but only if they have enough room for the loop field.
Dealer Support and Service
A renewable energy business needs to be able to convince clients that they’re going to be around for the life of the system.
If you’re an existing company, for example an electrician, entering renewable energy, just remind the customer that regardless of how the solar market goes, electricians will always be needed. In that case, you’re always going to be around.
If you’re starting up as a new renewable energy company, it gets a little more tricky. Remind them that you’re in it for the long haul and that your family is depending on you being successful. With rising fuel costs and the fact that the industry has seen rapid growth and public support for these technologies, it is only going to increase in size in the future.
I hope that this will help you to close more sales and grow your business. Are there any major objections you have noticed that I did not cover? Please let me know so I can figure out how to help.
Chris:
I enjoy reading your articles and the writings of the Heatspring staff. You put a great deal of effort into them and they are quite informative. Thank you and I look forward to many more. Excellent work!!
Greg
Gregory,
Glad you found the Magazine and enjoy the articles. Let me know if you have any questions/feedback.
Thanks again,
Chris
These are all good rules of thumb for expanding awareness and investment in geothermal energy, although more collaboration is needed among providers of all types of energy-saving strategies.
The concierge program outlined below offers significant benefits for homeowners, independent contractors and utility companies:
My model calls for a comprehensive assessment of the current condition of each client’s home, along with the preparation of a five year plan that includes estimated costs and recommended strategies for addressing both major deficiencies (boiler replacement) and routine maintenance (gutter cleaning). The initial cost for this assessment is very low ($500), with a nominal yearly fee for administration and overhead. Guidance is also provided for projects that can be accomplished by the individual homeowner. Energy conservation measures are coordinated with utility rebate programs, and tie-ins with banks provide financing for major projects like window replacement. If the model is marketed regionally, clusters of similar projects could be centrally planned and bid competitively in advance, to the advantage of both small contractors and homeowners. Due diligence and warranty provisions are managed by the provider of the original assessment, which could be an independent maintenance company or retail building supply outlet.
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The advantages of the five-year plan are:
• Homeowners are empowered to approach maintenance and energy efficiency upgrades logically and to avoid the need for expensive emergency repairs. They also benefit from spending significantly less time pursuing due diligence, improved quality, and lower costs.
• At the neighborhood/regional level, contractors benefit from aggregated project opportunities that allow them to bid multiple jobs from a central source, plan seasonal work more efficiently, and utilize bulk purchasing.
• Utilities benefit from increased access by homeowners to their rebate programs in a comprehensive format that links energy conservation with home maintenance. Energy conservation measures are coordinated and prioritized over time, from initial heat loss calculations to the replacement of inefficient doors and windows and installation of PV’s and geothermal wells.
• The company providing the assessment service develops a brand as a clearing house for all types of contract maintenance and energy services, from house painting to boiler tune-ups.
Scott,
Interesting perspective. It seems like concept is similar to 1BLOG but for energy instead of solar. Would this model be for a private company to do by themselves or for a public organization to organize everything and then bid out the work?
A couple of the roadblocks that I see of the bat that I would be interested in hearing your perspective on 1) homeowners are motivated by profits/money 2) minimizing transaction cost. EE has the highest ROI but who cares if the investment is $500? 3) I’ve heard of the comprehensive energy-plan business model for many years and tens of companies, but on one has pulled it off yet seemingly due to scale and focus issues, what do you think?
Thanks again for the comment and thoughts. I like where you’re going with this.
Chris
Scott,
I can really appreciate your approach. We too have looked to the future on what will pan out from what is being indicated will come out of DOE for the future of incentives.
Sounds like you have already forged ahead.
The “whole envelope” mentality that seems to be part of a new direction for incentives will neccessitate more cohesive partnering between various energy efficient services.
Taking on all of those roles in one business model would be unmanageable and attempting to do it on the fly is inefficient so, why not be the “driver” for the overall service/need and make it seemless.
For the customer, time and turns “in the pipe” means everything in sales.
Todd
Chris,
appreciate some of the angles and perspectives for dealing with/overcoming Geo objections.
We will definetly look to apply them.
Curious, what if any twists would you suggest when attempting to purvey Geo to the project builder or architect on a pro-active level? Seems like the concerns of the end user will trickle to the pro trade. We have found that as Geo is still yet untapped/unknown here in California, our best close rate is coming from outreach to the proffessional trade. High on their mind are new and upcoming thresholds for envelope design in which a “medley” of energy savings approaches seem necessary in varying measures to hit targets.
Thank you
Todd,
Interesting. What part of CA are you in? I may be wrong but I’ve heard from a few people that geo may not make any sense because the delta in heating or cooling is always so low due to the moderat climate.
To be honest, I think that education for contractors will just be as useful as to homeowners. The issue is that what the contractors/architect is afraid of is much different then the homeowner.
Chris
Chris,
we are in Northern California for starters and range between the coast, the mountains and the north end of the Central Valley. True, on the coast, the temps are moderate enough that Geo is slightly less dramatic in terms highs and lows.
There are several factors though. 1. Coastal California is very “green in it’s motivations and also, there is the aspect of air source equipment exposure to salt spray. 2. In the Mountains, there is little to no acess to natural gas for heating. Electricity is cheap but, propane is not and highs and lows swing more. 3. In the Central Valley (very long and dramatic cooling season) and the coast, customers are on consumption “tiers”. That is were Geo shines. Keeping them out of tiers is where the ROI looks really good.
No doubt in any case that our target envelope is mainly 3,000 sq ft plus.
Commercial has also been our friend. Casinos love us as do community oriented buildings
So, can you elaborate more on the what you see the architect/builder being more afraid of and any suggestions for what your approach would be?
Todd
Todd,
Interesting about the market there. In the mountain is there enough room on sites to do horizontal systems? If so, that would drop the price significantly.
I can be a little more elaborate, my first thought, and what I here a lot of is simply fear. And as we know, Architects specifically, do not want to look stupid….granted they’re not really going to be doing any of the calculations. I think it’s also lack of community and/or mentor that they know they can turn to if they have a question/issue. So, not only do they not understand it but they have no clue where to go for answers. These two items will make geothermal not promising for any job regardless if the technology works or not.
From your experience, what is the architects vs builder actual role in deciding the type of heating system?
Chris
Chris,
in the mountains it tends to be mostly vertical or horizontal drilling into hillsides yes. Most of our Geo installs though are in the Northern Central Valley and the coast where rates are higher. In these areas it is a pretty 50/50 mix between horizontal and vertical but, we also have made use of radial short bore configurations which we can do at a cost comparable to horizontal.
Our approach is to be that “mentor” in regards to architects and we are working to develop that more through our website and direct outreach. With Architects, this works very well. When we are brought in as a consultant “at the drawing board” we tend to be refered to by name when the bid goes out. We get contacted by all the General Contractors and walk in through the front door so to speak. In this case the transition between architect and builder is pretty smooth and seamless.
When it comes to contact and forging relationships with general contractors it tends to be more retrofit and is generally via an owner request.
I suspect that as DOE agendas take hold, we will all become more in demand to meet envelope mandates. We are looking ahead at that today and attempting to form an alliance with a reputable solar contractor. Solar and Geo are the real “heavies” in the equation for meeting thresholds. Our intent is to form a face front business that can manage all the parameters and offer the best solution. do the solar and geo amongst us and sub out the windows and insulation.
This is going to become very potent to builder and architect alike as we move forward
Todd,
I like the approach. I can only imagine the ease of cross-selling a geo system after solar and vice-versa. The homeowner is already sold on how upgrading systems is a wise investment. Let me know how things develop and if you have any more questions/ideas
Chris
Great article Chris and a good reminder that every ‘objection’ is an opportunity to bring the homeowner one step closer to getting what they want! An objection is really just someones way of saying ‘I’m looking for a better reason to purchase this from you’. I’ll take an objection over a flat out ‘No’ anyday!
Mark Piscitelli
Specialty Heating & Cooling
Mark,
Very true! And often times objections will come up if the customer has not been completely qualified from the beginning, especially with geo because there is so much nuance.
Chris
Like your article on how to work with our customers. Personally, being very new to this market, there is a lot of helpful information to make it much easier for me to work with customers. Thinking of Mark’s message.. We havent had many no’s from our customers and prospects at Egg Geothermal. I also definetely agree with you; an objection is so much better than a No. We have been seeing a boost in customers interested in geothermal heating and cooling units down here in Florida along with the interest in geothermal pool pumps. A lot of homeowners down here have been more interested in geothermal for their homes and businesses..I’ve seen a couple of country clubs and golf courses interested in this energy efficient option, as well as some drug stores. Geothermal works, it’s just getting the consumer past the cost of changing up. I saw an article from Fox News about this-
http://www.foxbusiness.com/personal-finance/2011/04/28/lenders-appraisers-catching-green-homes/#content
It may be helpful for other businesses and consumers alike to read up on it.
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