energy, Entrepreneurship, startups

How SunRun Applies Financial and Software Muscle to Home Solar Installation

Wade Roush 12/21/10

Sometimes we tech reporters get so wrapped up in writing about cool new technologies that we overlook other, equally important forms of innovation. Recently I visited SunRun, a San Francisco startup that installs photovoltaic panels on residential buildings and charges homeowners for the electricity they generate. I was expecting to hear a lot about the latest ways to engineer solar panels to produce more power—but I came away with a notebook full of thoughts about power purchase agreements, tax equity financing, and pricing engines. So while there are certainly people at SunRun who spend their time figuring out how to optimize the power output of the company’s 3,500 installed systems, this is largely a story about how three-year-old SunRun is spreading solar to more homes through clever financial engineering.

Despite the rapid growth of the Bay Area’s three leading residential solar companies—SunRun, Solar City, and Sungevity—there’s still a big puzzle about solar homes. It’s why there aren’t a lot more of them. California Governor Arnold Schwarzenegger signed the California Solar Initiative into law in 2006, making more than $2 billion in cash rebates and tax credits available to utility customers who put solar panels on their roofs. The goal was to get a million residential rooftop systems installed in the state, but all that free money hasn’t translated into the envisioned acres of solar panels. “We’ve soared past a million Priuses shipped, but in terms of solar homes in California, we are only at 100,000 since the beginning of the solar initiative,” notes Steve Vassallo, a Foundation Capital general partner who oversees several of the firm’s energy investments.

It’s partly an awareness issue: the state’s Public Utility Commission has issued dozens of news releases since 2006, and has designated August as “Solar Energy Awareness Month,” but it hasn’t done much else to publicize the rebates or explain how consumers can get them. But it’s also an economic issue: homeowners hammered by the recession don’t have a lot of extra money to shell out for home improvements these days, and they aren’t sure how much money they can save on their utility bills by installing solar.

And that’s the first thing that’s so ingenious about SunRun’s business model. It’s designed to take most of the risk out of solar installation, by asking homeowners for a tiny down payment (averaging $500), lining up equipment and installers, handling all maintenance and repairs for 20 years, and finally guaranteeing that homeowners’ post-installation electricity payments to SunRun will be lower than their existing utility bills.

That simple pitch has won SunRun 7,000 customers in seven states—Arizona, California, Colorado, Hawaii, Massachusetts, New Jersey, and Pennsylvania—and made it the fastest growing residential solar company in the country. But it has taken a lot of careful planning, and quite a bit of creativity on the financial and administrative sides, to make it all work.

“It’s a simple concept to take away the hassle and up-front costs of solar,” says Vassallo, who’s been working with SunRun since Foundation made its first investment in the company in mid-2008. “But to make it happen behind the scenes, a lot of fascinating challenges had to be overcome.”

The story starts back in 2007, when Edward Fenster and Lynn Jurich, who would eventually become SunRun’s CEO and president, respectively, were students at Stanford’s Graduate School of Business. Fenster had M&A experience from …Next Page »

Wade Roush is Xconomy's chief correspondent and editor of Xconomy San Francisco. You can e-mail him at wroush@xconomy.com, call him at 415-796-3024, or follow him on Twitter at twitter.com/wroush. You can subscribe to his Google Group and you can follow all Xconomy San Francisco stories at twitter.com/xconomysf.

This post was written by the Web Marketing Ninja — a professional online marketer for a major web brand, who’s sharing his tips undercover here at ProBlogger. Curious? So are we!

As online marketers, we often devote a large amount of time to finding ways to attract eyeballs to our online assets. We put such effort into simply get the readers there that we allow the rest to take care of itself. Money will flow, Ferraris will be purchased, and we can all retire nice and young…

Then we discover the concept of sales funnels.

You may already know what a sales funnel is, but if you don’t, let me quickly describe it for you.

A sales funnel is a simple map of your lead-to-sale process.

Let’s imagine you start with 1,000 leads (visitors to your web site).

100 might click on a sales page link for of one of your products.

50 might click your Order Now button and enter your shopping cart.

Ten complete the checkout process and buy the product.

So your sales funnel starts and 1,000 and ends in ten sales—that’s a 1% conversion.

That’s a bare-bones view of a sales funnel, but as you can see it takes four steps, not one, to increase the amount of sales your site delivers. If we put all our attention on attracting new visitors, we’re essentially forgetting 75% of the puzzle—and we’ve all done that.

But that’s not where online marketers go wrong!

It’s not hard to sell people the idea of the sales funnel—it’s simple to understand and easy to quantify. It’s also been around for a long time. Offline sales professionals have been using it for decades.

The problem with the sales funnel is that in the offline world it’s a simple and straightforward methodology, but in the online world, it’s not.

The image below is a quick process map I prepared for a Managing Director of a large retail operation, who’s focusing heavily on online strategy.

As you can see, that organization’s sales funnel is a lot more complicated than the simple four-step process I mentioned above. There are some key points I want to highlight in this map:

Seven different types of traffic that visit the site.

There are multiple behaviors that we need to analyse: what pages visitors view, how long they stay, the navigational path, and their user profiles (locations, browsers, etc.).

There’s a connection outcome, as well as a buy outcome.

A visitor can become a customer in a range of ways.

Now my idea of a funnel resembles something I use to fill my car with oil, and this looks nothing like it. This depiction reminds me more of the tubes game I play on my iPhone. In even more bad news, I made this process map in five minutes. The reality is that this business’s online sales funnel is probably twice as complicated!

The key to sales funnel success

The key to creating a more successful sales funnel is: step away from the keyboard. While I work in an office, I actually have a whiteboard in my house. I actually use it, and it’s better than any online tool I’ve seen for laying out the bare bones of a real, live sales funnel.

I start by detailing every single way people can enter the funnel, identifying where they have come from, what their persona is, and where they’re at in the purchase cycle.

Then, I identify every activity that someone can undertake on the site: read some content, read some more content, subscribe to a newsletter, view a social media profile, buy something, or exit the site.

Finally I detail the measures I can put on each activity: time on page, entry path, exit path, and so on.

Then I start connecting the dots and putting together all the different pathways a visitor can take thought my funnel. The key here is not to change anything about your site yet.

Putting theory into practice

Once the funnel is mapped, and the measures are in place, I start collating reports at every step. What I’m trying to do here is understand how my funnel works in practice, not in theory.

Try this on your blog. Once you’ve collated enough information to start making decisions, I guarantee there will be obvious points of failure in your process, and they’re likely to arise in two main areas:

a page that does a great job at encouraging a secondary behaviour (that is, rather than keeping someone in the sales funnel)

a page that fundamentally fails to move a customer to the next step in the funnel.

Initially, you’ll probably feel like there is a lot to do, so you’ll need to prioritize the changes you want to make. Focus on the areas that are costing you the most sales (which might actually be at the bottom end of your funnel).

With time, effort, and focus, you could see huge improvements in the performance of your site, without your having to attract one new visitor to your site. Sounds good to me!

Have you tweaked your sales funnel recently? What changes have worked best for you?

Stay tuned from most posts by the secretive Web Marketing Ninja—a professional online marketer for a major web brand, who’s sharing his tips undercover here at ProBlogger. Questions? Suggestions? Email him.

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Wednesday, December 22, 2010

Who's Making Money

energy, Entrepreneurship, startups

How SunRun Applies Financial and Software Muscle to Home Solar Installation

Wade Roush 12/21/10

The key to sales funnel success

Putting theory into practice

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