How to buy solar leads in 2021

Updated

Are you a solar installer looking to grow your business in 2021? With the federal tax credit stepping down from 26% to 22% in 2023, before expiring completely in 2024, this is a great year to grow your sales organization and grab some additional market share.

In this article, we’ll give you an overview on how much solar leads cost, the different types of solar leads, and what to avoid. Hopefully this helps you to allocate your sales and marketing budget more effectively in 2021!

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    What’s your true cost per close?

    Most installers who are trying to grow their sales teams need to buy high-quality solar leads at a reasonable cost. So, what’s considered reasonable? 

    Most installers in competitive solar markets, like the Northeast and California, are trying to get their cost per close (lead spend/number of closes) under $1500 per close. Installers in emerging solar markets, like Florida, Colorado, and Texas, are usually aiming for $800 - $1,300.

    Savvy sales organizations that track their solar lead processing measure not just their cost per close, but also the amount of sales rep time it takes to get to each close. There’s a big difference between needing to process through 50 leads to get a deal versus getting a close after 15 leads, both in terms of what it costs financially and in terms of your available bandwidth as an organization. 

    If you have a small team with under 20 sales reps, every minute counts. You want your reps to be spending as much time in conversations with actual prospects, whether that be via phone, text, email, or in person. That means incorporating software to help with contacting leads and measuring activities, as well as working with solar lead companies that have a good screening process in place, so you don’t have to sift through 49 leads to get to that one closed deal.

    Per lead pricing

    We’ve seen per lead prices increase across the board in the hottest U.S. solar markets, primarily due to growing competition. 

    Exclusive opt-in web leads (leads matched only to you) that have been through a screening process in a solar market dense with installers like San Diego, will sell for as much as $300 per lead, while a lead generated by a call center in India in that same market might sell for $25. As you can imagine, if you are working with ethical leadgen partners, you get what you pay for.

    There’s a lot built into the cost of a solar lead. Leads that are the cheapest usually have a few things in common:

    1. They were generated using aggressive ad copy or outbound tactics like cold calling. This can generate leads at low cost, but it usually results in a higher downstream cost per close.
    2. They have minimal screening done. If a lead company sells you 50 leads and only 1 closes, they made most of their money selling you those other 49 leads that tied up your reps' valuable time!
    3. The lead generation company may cut corners with regards to TCPA compliance (hiding or even eliminating the disclaimer that gives you confirmed written consent to call the lead).
    4. They may sell the lead to a lot of solar installers at once to cover their costs.

    One huge downside to buying cheap solar leads is that it funds some of the negative tactics listed above. It encourages bad behavior from the industry, with lead generators cutting corners to get per lead costs as low as possible, which can turn good potential customers away from even wanting to go solar.

    To get away from cheap leads, solar installers with the best digital lead processing tend to focus more on their cost per appointment, rather than their cost per lead.

    Types of home solar leads

    Solar appointments

    If you sell solar, you’ve likely heard of solar appointment setting companies. “Ready to close appointments for $150 - 250 per sit with a generous refund policy and a credit check??!” Sounds too good to be true? Well, it probably is. 

    Most of these companies are using offshore outbound call centers that do not follow the Telephone Consumer Protection Act (TCPA). What that means for us here in the U.S., is that associating ourselves with these companies as an industry can put us at serious risk.

    In 2019, Colin Walsh, COO of SolarReviews and former CEO of Wave Solar held a webinar on the current TCPA law with a top attorney in the space, in order to summarize what solar companies need to know about the regulation. Check out the recording here if you’re interested:

    The quick summary: most of these appointment-setting operations are breaking the law by calling on consumers using automated dialing technology without confirmed written consent. They pay their offshore reps based on the number of appointments they set, and then a U.S. company pays them a marked-up price per appointment and resells them to you.

    To give you an idea of how bad TCPA violations can get, SunRun just settled a $5.5 million lawsuit - that’s right, $5,500,000 - for TCPA violations. Read about it here. To avoid being named in expensive TCPA lawsuits, we recommend not associating with companies that generate appointments by cold calling. It’s not worth the risk.

    We’ve also heard of a new trend where a leadgen company will sell a lead to three solar companies, and then a call center rep at the leadgen company competes with the three companies they just sold the lead to, trying to set and sell an appointment as the “4th leg” of the lead. It’s pretty creative, but we can’t imagine the experience is great for the installers buying the leads or for the homeowner accepting the appointments.

    In the short term, buying appointments can be one of the lowest cost ways to get customers. It’s pretty cheap to have a call center in India call 100k consumers per day through a predictive dialer on a list of numbers they bought or traded. But in the long term, the numbers don’t look so great when you consider the potential ding to your company's reputation on sites like Google or Yelp, along with the legal risk you run for TCPA violations. The monetary value of the TCPA risk can be quite high, given that solar appointment setting operations may be technically violating the TCPA thousands of times per day. 

    Installers typically pay between $150 - $250 per set appointment, but are the risks worth it?

    Telemarketing leads

    Cold calling homeowners is a big business, and despite increasing litigation in the space (4,392 TCPA claims against companies in 2017), many solar installers continue to sell jobs generated by the heavily-regulated outbound calling industry. 

    Cold calling generally has a bad reputation and is disliked by most consumers, and for good reason - who wants to have their family dinner interrupted by a telemarketer trying to sell them something? This means that buying solar leads generated from cold calling could potentially hurt your reputation in your local market and prompt negative reviews online, even if the cold calling is done legally

    We’ll keep this section short for that reason - we recommend not associating yourself with solar lead generation companies that use telemarketing to generate new business.

    Canvassing leads

    Some solar lead generation companies have set up door-to-door sales operations to generate new leads in a Multi-Level Marketing (MLM) model. 

    They sell salespeople “kits” to learn about selling solar door-to-door and then build teams of salespeople under them. The pay for these salespeople is low and as you may imagine, many of them are not well-educated on solar equipment, financing, or installation practices. They are also taught to not take no for an answer. 

    Door-to-door selling in some areas requires a permit, so this may also present a legal risk depending on your local laws. Associating yourself with companies that generate leads or appointments this way can be tricky in terms of risk versus reward, and while solar will likely continue to be sold door-to-door, it can turn consumers off from wanting to do business with your company.

    If you do business with a solar lead generator or solar sales group that does door- to-door sales, do the following:

    1. Be sure they have a great sales education program. NABCEP’s PV Technical Sales certification can help salespeople to raise their knowledge base to a national standard, giving accurate solar information to consumers.
    2. Be sure they are following permitting requirements for your local area.
    3. Ask how they are representing themselves to the homeowner. It can be confusing for the consumer to be sold solar under one company and then have the installation done by another company.

    Solar lead sheets (aged data)

    Many solar sales organizations buy aged data, otherwise known as a “solar lead sheet”, to run through a call center. 

    Solar installers who buy this type of data usually have low return expectations, and the data is priced accordingly (often below $1 per record). Solar installers often report that they need to process through hundreds and hundreds of records to get to one appointment! Which, again, shows that in general, you get what you pay for.

    Installers who have spent money on aged data frequently report encountering these issues:

    • Consumers who claim they never submitted their info to inquire about solar
    • Consumers who ask never to be contacted again
    • Consumers who appear on the Do Not Call list
    • Law firms that make money by suing companies for TCPA violations that “seed” the lists to try to catch you calling them
    • Non-working phone numbers and/or email addresses

    The companies that sell these lists can generate their data in a lot of ways, but it is usually from one of the following scenarios:

    • A solar lead company reselling leads that they sold to other installers at an earlier date in order to make more money. We’ve heard of some lead companies that will sell one lead 10x or more. For example, they might sell the lead to four installers on the first day, then wait a week and sell it to four more installers, and then continue selling it every so often for the next few months. If you are purchasing “aged data,” you are usually near the end of the line here and the consumer is usually pretty annoyed by the time you call them!
    • Co-reg/Co-registration data, which is when a lead generator tries to turn one type of lead into another lead type by asking the consumer a question like: “Thanks for submitting your roofing lead! Are you also interested in one of the following home improvement offers:
      • Painting
      • Windows
      • Solar
      • Siding
      • Plumbing
      • Offshore telemarketing
    • List swapping/sharing with other industries - lists may be sold hundreds of times across different industries
    • Email marketing/spam

    Some of the tactics above can be downright risky when it comes to the law, especially if you end up calling on a consumer who appears on the Do Not Call list without their permission. For this reason we recommend you only consider investing in aged data if you have the following in place:

    1. The website or websites (URLs) that the consumer submitted their information on, in addition to a record of them clearly accepting that your company will be contacting them.
    2. A way to scrub the list against a real time DNC list to avoid complaints.
    3. Software and processes that ensure your call center is 100% compliant with the TSL (Telemarketing Sales Rule) which covers DNC standards, automated dialing rules, and caller ID transmission.

    Opt-in web leads

    “Opt in” means just that, the consumer has opted in online to you calling them for a solar quote. This is by far the least risky way for you to win new business, if you are working with a TCPA-compliant solar lead generation company

    The website the lead is generated on must have a disclaimer that gives you what is called “confirmed written consent” to contact them. SolarReviews’ disclaimer looks like this:

    solarreviews disclaimer

    If a web form has a prominent disclaimer like the one above that names your company, you can call and text the consumer to try to win their business for up to 90 days even if they appear on the DNC list! That last point is little known, but very important. Certain software companies, like Jornaya and ActiveProspect, will record this TCPA confirmation, so you can feel safe knowing you have that 90-day window.

    Some lead generators will cut corners and hide, minify, or even remove a TCPA disclaimer to raise their conversion rates and lower their cost to generate a lead. Be wary of this, because if you call a consumer on the DNC list who didn’t give confirmed written consent, your business may be at risk. 

    It’s important that every lead you purchase from a solar lead generation company has given expressed written consent for your company to contact them.

    So if you want to buy opt-in web leads:

    1. Do your due diligence on the lead vendor - specifically ask to see their landing pages and check to be sure they have a TCPA disclaimer that is prominent, and names your company once you become a client.
    2. Ask if all the leads you buy come from websites they own. If they don’t own all of their websites, be sure they have a way to monitor TCPA disclaimers on other websites that may generate leads for them.
    3. Ask how many companies the lead will sell to and when. Some solar lead generators will try to make more money from their leads by selling “aged data”, which just means that they will resell leads they have already sold, at a later date. A good way to vet this is to ask the lead generator if you can buy aged data. If they say yes, there’s a good chance that the fresh leads you buy from them will be resold to someone else down the road.

    The rest of this article focuses on the different types of Opt-in web leads. We think this will be the fastest-growing way for installers to get new customers in 2021. It’s also the safest way in terms of protecting your company’s reputation.

    Installers can expect to pay between $10 - $300 for an opt-in web solar lead. The exact price will depend mainly on their geographic region, how much screening has been done, and how the lead was generated. Lower-priced leads will typically require sifting through a high number of leads to get to a closed deal -- as many as 100 leads for one closed deal, while leads priced at the upper end of the range might have enough screening done to close one in six.

    Buying opt-in web leads poses a much lower risk to your business’s reputation than using outbound sales tactics like cold calling or canvassing. 

    Types of opt-in web leads

    Organic solar leads

    “Organic” refers to the unpaid section of the Google search results. This is the area of Google.com that consumers trust the most, and it is where consumers will gravitate towards if they are really trying to learn about solar.

    Type some solar keywords into Google that you think consumers shopping for solar will use and you will notice a trend. Look past the ads and Google local listings and you will see that Google primarily likes websites with high-quality informational content. Sites like Wikipedia and SolarReviews have pages that are considered “the best” on the web for particular search queries.

    Consumers who self educate and learn before becoming a solar lead will set up appointments and close at a higher rate. Generating leads this way is not a cheap or a quick exercise, though. It can take years of content development before your site is seen as authoritative on a particular topic. The substantial time and financial commitment, along with leads coming in from all over the country, means that this tactic is usually only utilized at scale by the largest multi-state installers, leadgen companies, or solar marketplaces with nationwide installer networks.

    If a solar leadgen company says they are generating leads this way, ask to see their websites and some keywords that they rank for in your market. Try typing in the search phrases yourself in Google to see. It takes high search rankings across thousands of high traffic keywords to generate a consistent volume of leads this way. Partnering with a good one can pay dividends in 2021, because consumers are becoming more and more comfortable researching solar themselves on Google. 

    Google PPC leads

    If you can’t get your site to rank for a keyword in Google, you can just get out your wallet and pay for a spot in Google Ads. 

    Representing 84% of Alphabets revenue for a reason, this system works for Google and for installers, but can get expensive fast. Google Ads requires you to pay for keywords in a per-click model. If you search for a keyword on Google you will see a little “ad” next to the paid listings - those are Google PPC ads.

    Although you may need to pay a high cost per click, a lot of good solar leads are generated using Google Ads, as this is high-quality traffic. Google Ads is an open playing field - your budget and the clicks you pay for directly compete against national leadgen companies, affiliate marketers, home improvement marketplaces, and other regional installers. 

    When competition increases, bids go up, leading to a virtually perpetual cycle of bid increases. So if you’re thinking about starting Google Ads, be prepared to spend. In competitive solar states, installers employ in-house search marketing experts or hire outside agencies to manage $10k/mo+ budgets.

    In many solar states, competition in this channel has pushed costs out of reach of many installers, and as of the writing of this article, the keyword search above “solar installation san diego” costs between $19.17 to $33.12 per click!

    Facebook solar leads

    From 2010-2016, Facebook was a great channel for generating solar leads, but it started to reduce in efficacy after 2017. That being said, Facebook can still be a cost-effective way to generate leads today if you have high-quality, shareable content.

    Following the Cambridge Analytica scandal, people became less likely to share their data under Facebook privacy settings, which meant advertisers lost information on their target audiences. Advertisers also often get frustrated by the bugs on Facebook’s ad platform, as it can make it difficult to decipher why a campaign that worked well last week is performing horrible or not even delivering impressions this week. 

    Many advertisers hypothesize that this is because of Facebook’s “black box,” which is also referred to as their “edge rank.” It uses social signals in the network to prioritize content that people want to share and communicate with other users about. Facebook’s goal is to create engagement, so if your content is not sharable, it won’t be shown as often.

    What does this mean in terms of your leadgen decisions? Try to create content that is sharable to lower your cost per lead. Also keep in mind that homeowners are increasingly using Facebook reviews as a way to choose their solar installers. 

    Buying third-party leads

    Most third-party solar lead generation companies like SolarReviews use some combination of the above to generate leads. 

    The highest-quality ones will generate a high percentage of their leads through their organic search rankings by producing high-quality educational content (like SolarReviews’ blog) in combination with digital marketing. Educational content helps consumers and gives them resources to learn on their own time. More and more consumers will be shopping for solar this way in the future, so it pays to give homeowners some value in exchange for their lead information.

    Remember there is a lot built into the cost of a lead. This chart summarizes different leadgen tactics into three separate categories. The revenue-driving tactics like telemarketing, outbound email marketing, coreg data etc. are the cheapest and riskiest. These tactics can turn good consumers from even wanting to go solar! Don’t invest your hard earned dollars in tactics like this - leadgen companies can only use them if you give them money to.

    More difficult tactics like SEO and Search Marketing are more expensive per lead, but typically lead to more sustainable, long-term results. They pose no negative risk to your online reputation and are connecting you with consumers that are searching themselves. 

    These consumers have a fundamentally different level of intent than leads or appointments that were generated from outbound tactics like cold calling or canvassing, where you try to convince the consumer to buy your product.

    Solar lead processing tips

    Many solar installers struggle with making the costs of third-party lead buying work. Here are some tips on how to drive success with this channel:

    • Commit to using solar sales software/CRM
      • Monitor your key stats daily
      • Time to call (strive for under one minute)
      • Number of calls per lead (aim for a minimum of seven calls before marking a lead revisit later)
      • Appointment set rate
      • Number of calls per rep (good reps should be making 30+ calls/day)
    • Remember your front line/inside sales rep who calls a lead as soon as it comes in is one of your most important employees! Don’t underinvest in this role
    • Train to success on objections. Most of the objections consumers have regarding solar in the first call are predictable and trainable. Be sure your front line reps don’t need to brainstorm on the fly for common ones
    • Use email templates to save time with repeatable tasks

    Are you ready to start receiving high-quality solar leads? Sign up with SolarReviews today!

     - Author of Solar Reviews

    Colin Walsh

    COO at SolarReviews

    Colin Walsh is the COO of SolarReviews. His experience with solar and sales dates back to 2015 and his knowledge has helped some of the top companies in the industry spur tremendous growth. Colin served as former SVP of Marketing at Mosaic, COO of Unite Inc (acquired by Operam), CEO of VisiSeek (acquired by Audience-X), and former CEO of Wave Solar.

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