Drivers of Residential Solar Adoption: Environmental Preference or Peer Pressure?

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By Pamela Cargill, Principal, Chaolysti

A version of this post was originally published on Chaolysti.

 

A study by NYU Stern School of Business Assistant Professor of Marketing Bryan Bollinger explores the drivers of residential solar adoption. The findings contain valuable insights for solar installers as they develop their strategic marketing programs.

Is solar adoption being driven by marketing on the part of solar companies? Is it affected by a “keeping up with the Joneses” predisposition to sympathy with environmental concerns like owning a Prius or electric vehicle? NYU Stern School of Business Assistant Professor of Marketing Bryan Bollinger presented preliminary findings of his solar adoption research in “Environmental Preferences & Peer Effects in Diffusion of Photovoltaic Panels,” a study he co-authored with Kenneth Gillingham of the Yale School of Forestry & Environmental Studies. The results of this preliminary study provide insights that residential solar installers can explore when developing their strategic marketing programs.  

Using California’s San Francisco Bay Area as a study radius, Bollinger’s research explored possible reasons for a very visible clustering of PV installations shown clearly in two illustrations:

SF Bay Area: Clustering of PV Installations from 2001-2003

 

SF Bay Area: Clustering of PV Installations from 2001-2006

 

Bollinger and his colleague pored over California Solar Initiative (CSI) data from 2001-2009 covering 34,110 installations. They analyzed the data for possible correlations both within complete zip codes and then on a street-level basis. Some top-level findings include:

  • The average time between adoptions in a given zip code was 64 days, with a 21-day median.

  • When crossing demographic information with a zip code, peer influence was clearly influential among populations with higher median home values.

  • Perhaps somewhat shockingly, a trait that many believe leads to solar adoption, hybrid vehicle ownership, was not susceptible to much peer influence in further solar adoption.

  • As with other studies, populations that were highly educated and over 65 were shown to be adopters.

 

The clustering behavior does seem to be influenced by both peers and environmental leanings, but with peer leanings showing far greater statistical relevance, with 1% driving a 1% decrease in time until the next adoption. Peer effects were also correlated with specific contractors, especially within a small geographic area, such as a street. This shows that companies that rely on word of mouth/social networking to drive referrals, who reward customer loyalty, and who provide excellent customer service will win business.

Strangely, strong environmental leanings were shown to decrease the peer effect. Why is this? It’s unclear, but perhaps those with high environmental leanings were more self-motivated in their purchase decisions and lifestyle choices and less likely to succumb to peer influence.

Since the publication of this study in 2012, the truth behind the findings has played out. The top-selling solar companies have tuned their customer acquisition strategies and developed “tupperware-style” neighborhood solar parties, group marketing programs, and loyalty programs that depend on social or neighborhood networks. These tactics all take advantage of the peer influence and proximity study findings. And since referral customers are your least expensive customers to acquire, why not find a way to bring more of these tactics into your company’s marketing program?

The takeaway: Start driving customer loyalty programs to increase referrals, explore neighborhood marketing programs, and ride the natural peer influence wave to help catapult your solar business to success.

 

Disclaimer: Any opinions expressed in this blog by persons not affiliated with PV Solar Report reflect the judgment of the author and not necessarily that of PV Solar Report.