solar groupon offer strategy

SolarCity announced a Groupon for home solar, eliciting a range of reactions from analysts and journalists. The deal offers customers $400 off home solar power when they purchase a $1 Groupon. Is it a desperate move, or a brilliant marketing ploy?

Solar provider SolarCity astonished a lot of people today by announcing a Groupon for solar power. [Note: This post was written on 5/28/14.]

The deal between Groupon (Nasdaq:GRPN) and SolarCity (Nasdaq:SCTY) offers customers $400 off home solar power when they purchase a $1 Groupon.

The companies said they were creating the “first of its kind” offer to make going solar more affordable than ever. But was that the real motivation? And is this a good idea?

The pros

By now it’s well established that solar soft costs are the next line of attack in further lowering the cost of solar. Customer acquisition is prime among these costs, easily coming in at $3,000 per customer. Some say it can go as high as $6000 - $8000, but even a few thousand is too high.

So it makes sense to find new ways to attract customers. And as a growing base of customers prefer to interact online, SolarCity is finding more ways to engage its customers there -- including with this Groupon deal.

SolarCity spokesman Jonathan Bass was quoted by Greentech Media as saying that the online group discount hearkens back to the company’s roots as a community solar provider, which it’s now outgrown. The Groupon deal, he said, “takes that model, puts it on an online platform and scales it across our footprint.”

The cons

But does it scale?

Journalist Herb Greenberg didn’t look so favorably on the announcement. He was quoted as saying, “SolarCity is couponing. Whenever you see discounting, whenever you see couponing; You don't do that when your business is strong. You do that when your business isn't strong.”

As GTM Research Solar Analyst Nicole Litvak pointed out, chances are that many homeowners who purchase the Groupon either won’t qualify for solar on their roof or will decide they’re not interested. So the deal isn’t likely to get SolarCity a lot of new customers.

It’s not much of a deal for customers, either. Solar companies routinely offer discounts of more than $400, whether they’re to buy or lease a system. And though this may be the first Groupon for solar, solar group purchasing is not new.

More pros

But that’s not the end of the story.

While Greentech Media sees the move as a form of cheap lead generation, some are viewing it as an effective marketing ploy. After all, the deal is getting its share of attention -- for both Groupon, whose shares and profits are down, and for SolarCity.

Jason Hall of the Motley Fool called the Groupon “brilliant” and said, “It's these sort of savvy, ‘out-of-the-box’ moves that set SolarCity apart from its competitors, and part of why I'm a shareholder.” He noted that by noon Eastern Time, only a few hours after the Groupon was announced, more than 60 people had bought one. As of this writing, the count is up to over 250 -- and that’s just a fraction of those who've heard about it.

What will come of this Groupon remains to be seen. But it may turn out to be a very cheap form of publicity for both companies.

As Oscar Wilde said, “There is only one thing in the world worse than being talked about, and that is not being talked about.” SolarCity is certainly being talked about.

Originally published on PV Solar Report