By skillfully reading and reacting to sales metrics, Verengo Solar excels at diminishing its cost of customer acquisition.
The solar industry is booming. And if you think that's a trend from a previous decade, think again.
According to a survey released yesterday by The Solar Foundation, a nonprofit industry group, U.S. solar companies will add 22,240 jobs over the next 12 months, amounting to a 15.6 percent growth in employment over the 142,698 jobs that exist today. That astonishing growth prediction (if it happens) will actually be a slowdown from last year's growth rate of 19.9 percent.
Though boosting sales is a challenge any business must rise to, in a booming industry (where everyone's piece of the pie is growing) an essential stat is cost of customer acquisition. Verengo Solar, an 854-employee provider of residential solar installations based in Torrance, Calif., has mastered this metric.
That focus (and, not for nothing, the steady growth of the residential solar market) has gotten Verengo this far: $108 million in sales, up from $15.8 million in 2009, with more than 300 jobs added in that time. Not long ago I spoke to founder and CEO Randy Bishop about all of this. Here's what I learned.
Get the Right Numbers
To begin with, his top team tracks sales leads by marketing channel, hoping to spot one trend or another that will help them improve success rates (and customer-acquisition costs).
Those marketing channels include canvassing (door-to-door sales), radio ads, TV ads, direct mail, web-based SEO and SCM, and word-of-mouth referrals.
I asked Bishop to break down Verengo's success rates by channel. He politely declined, but he did share a story illustrating how Verengo analyzes its channels, and learns from the results.
Vet Your Sales Leads
For instance, the company buys some of its sales leads from third-party aggregators who specialize in homeowner leads: Places like LowerMyBills.com and LendingTree. In November, Bishop's team noticed that the success rates from this particular marketing channel were dipping. "We needed to understand why," he recalls.
When Verengo funnels these leads to its sales team, the leads either go to a group that does phone sales, or a group that does web-based sales. In this case, Bishop's team immediately isolated the problem to the phone side.
Specifically, there was what Bishop euphemistically calls "a misalignment" between the information that was in the leads, and the information that his team would discover when they made their house visits (the visits having been set up by the phone team). This was especially surprising because Verengo generally "scrubs" its leads before issuing them to the sales team.
Upon further digging, Verengo realized the problem originated with two of its lead-providing partners. The good news: After hearing from Bishop's team, those partners "were able to correct what they were doing" within "a couple of weeks." And the Verengo sales machine rolled on.
Revisit Old-School Strategies, Like Door-to-Door Sales
Verengo is also careful about which sales leads it funnels to its inside team (phone, web) and which ones go to the canvassing team. The company has found, through the years, that canvassing works best in neighborhoods where it's currently performing an installation.
That may seem commonsensical, but remember: Conversion rate is just one facet of Verengo's equation. The generation of useful leads matters too, as does the cost of customer acquisition. A numbers-based knowledge about when and where to canvass has enabled the company to smartly avoid generic canvassing tactics (say, by affluent zip codes).
Further, it allows Verengo to move marketing resources from less effective channels (say, radio ads) into a channel that generates more leads per hour and yields a higher conversion rate.
Hire for Skills, Not Flashy Resumes
Bishop has made it a habit to screen for what you might call dynamism: The ability to pivot on a dime and move in another direction in response to a surprise. "Utilities change their rules, and suddenly our salesforce has to do something different on a moment's notice," he says.
Verengo makes sure that candidates from large companies have a track record of building something. He'd rather hear, "I grew sales for my region by 200 percent," than hear about a budget size or a headcount of non-direct reports. The ultimate red flag, he says, is a candidate who "talks about their responsibilities--as opposed to what they've accomplished."
He and his team at Verengo have accomplished quite a bit in the last few years. Based on their ability to manage the sales process and the industry's projected growth, it's a safe guess that their successful run will continue.