When was the last time that you actually did a professional business check up?

Do you run or own an EPC Solar Company? Are you a solar sales manager or a solar sales director who wants to deliver better results? If so, first you need to know what is your current COA to measure your sales and marketing success.  

We hope you find this blog informative and helpful to optimize your solar business. Your business optimization shall result in a better profitability with no need to increase your prices.

What is COA (Cost of Acquisition)? It is also known as CAC (Customer Acquisition Cost). It is the cost of convincing a potential homeowner to buy or lease a solar power system from you. And, in business terms, COA is a metric that is used to measure the success of your sales and marketing campaigns. The use of this metric has been growing in the solar industry as the market is getting more and more competitive while the whole industry is getting closer to the scheduled expiration date (2022) of the 30% ITC (Investment Tax Credit).

As you may have surmised, the COA metric is directly important to two parties: solar companies and customers. It is important to the solar companies because it determines how much they have to pay to acquire an installation that must be recouped. And, it is important to the second party because it determines how much they have to pay for their solar power system.

How to measure your COA?

Basically, the COA can be calculated by simply dividing all the sales and marketing costs (advertisements, payroll, commissions, etc.) spent on acquiring installations by the number of installations. The following explanation should give you a better understanding of the variables that control your COA:

COA = COM + COS

COM (Cost of Marketing) is all of the marketing costs spent on acquiring solar installations DIVIDED by the number of installations. For example: If in a given year you paid total of $470,000 in marketing costs (advertisements, payroll, etc.) to acquire 360 residential installation, then your COM is equal to $1,305 per installation.

COS (Cost of Sales) is all of the sales costs spent on acquiring solar installations DIVIDED by the number of installations.  For example: If in a given year you paid total of $320,000 in sales costs (commission, payroll, etc.) to acquire 360 residential installation, then your COS is equal to $889 per installation.

This means your COA per project in our example is $2,194. This is your COA across all system sizes that you installed. 

The next step is to find out if your COA is within industry standards or not. In order to find out if your COA is within the industry average, first we need to find out what is your average KWDC solar system installed per installation.

Average KWDC (Killo-Watt-DC) solar system installed = Total KWDC installed in a year DIVIDED by the total number of completed installations in the same year.

For example, if you installed 1,980 KWDC with 360 projects, then it means your average KWDC installed per project is 5.5 KWDC.

Ok. So, now we can go ahead and calculate your COA per KWDC: COA per project DIVIDED by the Average KWDC installed per project. In our example, the COA per KWDC is $399 or $0.399 per WDC (Watt-DC).

Now, we need to find out what is your COA Ratio. Here is the formula: your COA per WDC DIVIDED by your average price per WDC.

That requires you to calculate your average price per WDC by using the following formula: The total dollar amount of your EPC solar contracts in a given year DIVIDED by the total KWDC installed in that year.

Your COA Ratio in our example is equal to 12.9% if your average price per watt is $3.10 per WDC.

Once you know your COA, then you can determine what is the efficiency of your sales and marketing campaigns. 

  • Can your solar sales and marketing process be improved?
  • Are you making the right marketing investments?
  • How effective are your marketing campaigns?
  • What is your marketing efficiency?
  • Is your sales process effective enough?
  • Where might you be losing business?
  • How strong is your advisors team’s conversion ratio?
  • Do you have an effective and user friendly proposal tool?
  • How smooth is your project hand-off from sales to operations? When properly functioning, it should minimize your cancellation ratio while increasing your referral rate.

All of these directly affect your COA.  Attention to these should help you to lower your COA, resulting in an obvious competitive advantage for YOUR COMPANY over your competition.

Energy Advisor Hub (as a cloud-technology conglomerate) provides a powerful solar sales and marketing software as a service to solar companies. Our aim is to optimize the solar industry, one company at a time. Please call us at (833) 2-THE-HUB or send an email to info@EnergyAdvisorHub.com.

According to industry research organizations and various industry publications such a GreenTech Media, the solar industry must lower Soft Costs of solar installations, and COA is one the main ones.

Solar Companies turn to Energy Advisor Hub to optimize their sales and marketing process while increasing their business volume.