When was the last time that you did a professional business checkup?

According to industry research-organizations and various industry-publications such a GreenTech Media, the solar industry must lower soft costs of solar installations.

CAC (Customer Acquisition Cost) plays an important role in soft costs, and it relates to your profit margins and affects your customers’ solar savings.

What is CAC? It is the cost of convincing a potential homeowner to buy or lease a solar power system from you. And, in business terms, CAC 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.

How to measure your average CAC?

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

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

This means your average CAC per project in our example is $2,194.

To find out if your CAC is healthy or not, first you need to find out what is your average KWDC solar system installed.

Average KWDC (Killo-Watt-DC) solar system installed can be calculated by the following equation. 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.

To calculate your average CAC per KWDC use the following equation. CAC per project DIVIDED by the Average KWDC installed per project.  In our example, the CAC per KWDC is $399 or $0.399 per WDC (Watt-DC). Your CAC Ratio to unit-price in our example is equal to 12.9% if your average price per watt is $3.10 per WDC ($0.399/$3.10).

Once you know your CAC, then you need to answer the following questions.

  • Can my solar sales and marketing process be improved?
  • Are we making the right marketing investments?
  • Is our sales process effective enough?
  • Where are we losing business?
  • How strong is our lead generation?
  • How powerful are our sales and project management tools?
  • How connected is our process from solar lead to installation?
  • More…

Renulogix is the solar installer accelerator cloud-based Platform. We help solar companies to increase their lead-volume organically from one side, and we provide them with cloud-based tools from the other side to sell and manage solar projects.