Solar photovoltaic installer SolarCity Corp. (SCTY) is now teaming up with Groupon Inc. (GRPN) to form one of the first online offers of its kind for solar systems, a new way to sign up more customers in the increasingly competitive rooftop solar market.
SolarCity – the country’s leading residential solar installer – announced a deal that calls for customers to pay $1 to Groupon for getting a $400 discount on a solar installation. This offer will be available for a limited period in the 15 states in which SolarCity operates.
The $1 bait offered in the Groupon marketplace will fetch more customer interest for SolarCity’s residential panels. Once the customer purchases the discount, SolarCity will then contact the homeowner for a consultation. The discount will be effective when the customer decides to proceed with solar installation and lease.
SolarCity is known for its innovative marketing strategies. The solar panel maker has in the past partnered with big-box retailers like Best Buy Company, Inc. (BBY) and The Home Depot, Inc. (HD) to boost its customer base and popularize residential solar.
Going Online for Solar
The latest partnership with Groupon will not only expand SolarCity’s customer base but also have an extra incentive. This offer is likely to bring down the cost of acquiring customers. While adding a customer through a direct sales force might cost anywhere between $6000 and $8000, winning one at a $400 discount looks cheap.
Last year, SolarCity paid $120 million for the acquisition of Paramount Solar, a subsidiary of Paramount Equity LLC. And during the first quarter 2014, operating costs increased even faster than revenues, at a 138.8% clip. That said, its retained value increased $239 million to $1.29 billion during the first quarter 2014. The retained value is an estimate of total cash flows from leases over more than 20 years.
SolarCity’s eye-catching deal with Groupon is a broad push for the industry into online customer acquisition. The company has already been building up its customer database internally through Home Depot stores since 2010 and select Best Buy stores from March this year.
The company is well supported in its endeavors by a booming U.S. solar market. SolarCity sees installations climbing to as much as 900 MW to 1 GW by 2015. It also expects a million rooftop solar customers by 2018. So, these marketing allies, ranging from brick-and-store retailers to online portals will help the company to grow its sales.
Backed by Tesla Motors Inc. (TSLA) founder Elon Musk, SolarCity presently carries a Zacks Rank #4 (Sell).