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Pitching Energy Efficiency Projects Beyond the Bare Minimum
Energy efficiency is not a tangible product you can see or feel, which can make it tough to sell. In a time when business owners may be wary of spending money, convincing them to make energy efficiency upgrades can be a difficult proposition.
However, many people don’t realize that energy efficiency upgrades provide benefits far beyond the traditional touchstones of environmental safety and long-term investment returns. Highlighting those benefits is how) contractors can sell business owners on doing more than the bare energy efficiency minimum.
Build a foundation
Effective marketing is all about finding a way to get a conversation going with business owners, and understanding their needs. Introducing a large, expensive overhaul right out of the gate will probably bring a conversation to a halt before it begins.
Start by recommending small upgrades that have low upfront costs and easily demonstrable returns. Offer a free on-site inspection, then point out small measures they can take, such as switching to LED replacement bulbs in a couple of fixtures.
Show business owners how small upgrades can save them money. Follow up with them and document their savings so they have evidence that energy efficiency upgrades work. Eventually, your customers are more likely to invest in a larger project.
Highlight all benefits, not just some
Almost every business owner is familiar with the standard benefits attributed to energy efficient products. They know they’re good for the environment and that they can save money in the long-term. But after a while, those messages begin to fall on deaf ears. Try a more inventive approach to trade professional marketing. Business owners are often dreamers at heart. Here are some examples of big ideas – benefits that go beyond simple energy saving – that you can suggest to customers:
- Improved operational efficiency: Efficiency breeds efficiency. Improve in one area and others are sure to follow.
- More space: Pieces of older lighting and HVAC equipment are not only inefficient, difficult to control and often loud, they also take up a lot of space. The business can grow in physical size and ambition without leaving its current space.
- Becoming a destination spot: Energy efficient lighting and HVAC is essential for business owners who want to create a comfortable, welcoming atmosphere for customers and employees.
- Customer loyalty: Appreciation for energy efficiency is growing rapidly among the general public. Customers are more likely to patronize businesses that are environmentally friendly and keep coming back to those businesses.
- Improve employee productivity: The right lighting and temperature in a space can help employees remain focused on tasks on hand by improving comfort.
Propose a sound investment
It’s important to understand profit margins. Simply put, the profit margin is the amount by which revenue from sales exceeds costs. Profit margins vary by industry. Grocery stores typically operate on a thin profit margin, typically 1% - 3%. An accounting office on the other hand can operate on much higher profit margins around 19%. This matters because businesses are profit enterprises and need to reinvest in the company to stay competitive. A grocery store operating on a 1% profit margin only gets to keep 1 cent for every dollar that comes across the register. Think about that! They have to sell $100 in groceries to make 1 dollar in profit.
When selling an energy efficiency project, a calculator can be your best sales tool. Prior to meeting with your customer, do a quick web search on “company name profit margin.” If they are a public company, this information should be pretty easy to find. If they are a small business, typically a search on the business type will prove successful. Example: “Average profit margin for Hair Salon.” Once you have this figure, you can easily find out how much revenue the company must generate in order to make $1. Here’s a look at the math. Simply divide 1 by profit margin and then multiply by 100. To use the hair salon example operating on a 6% profit margin:
(1/6)*100 = 16.6 or roughly $17 dollars in revenue to produce $1 in profit.
This information is key to your conversation with the customer. It might sound something like this:
SALES PERSON: I read that the profit margin for your industry hovers around 6%. Would you say that’s accurate in your case?
PROSPECT: Actually, ours is closer to 5%.
SALES PERSON: Got it, so at a 5% profit margin, you have to sell $20 in goods and services to make $1 profit.
PROSPECT: Yes, that sounds about right.
SALES PERSON: So would it be logical to say that by the same account, saving a dollar would be the same as selling an additional $20 in goods and services?
PROSPECT: Well, I hadn’t really thought about it that way but yes, that doesn’t sound too far-fetched.
SALES PERSON: I see that you charge $20 for a haircut. This lighting upgrade will save you $1,500 a year. By my math, $1,500 a year at a 5% profit margin equates to $30,000 in new revenue or in terms you can really relate to, an additional 1500 haircuts a year.
SALES PERSON: So the question is. Would you rather figure out a way to sell 1500 additional haircuts or simply upgrade your lights?
PROSPECT: You make a very compelling case, although my budget for capital improvements is virtually nonexistent at the moment.
SALES PERSON: There are rebates to help with that. And did you know that PG&E offers 0% energy efficiency financing for projects like this which can completely offset any large upfront costs.
PROSPECT: Really? I had no idea, that’s a game changer. Can you do an evaluation and put together a proposal for me?
Clearly this customer speaks the language of revenue and profit from the number of additional haircuts, and when you tell him/her that can be gained via an energy savings alternative there is instant value there because it’s bolstering the customer’s bottom line.
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