Selling solar in Africa: selling a fridge to an Eskimo?
Selling solar in Africa seems to be a great equipoise to the expression ‘selling a fridge to an Eskimo’! Africa should be at the heart of the solar power revolution.
With 5 million buildings in Uganda awaiting access to electricity, all with blistering roofs in the year-round equator-lined sun and a dire need to have a decentralised power generation source to run appliances, solar power seems like an obvious solution.
Imagine a rural farmer in Uganda. Esther. Owner of more than a dozen cows. Which might make her richer than you are!
With muddy boots and early waking hours to beat the burning midday sun. She does a day of hard work herding and gardening, providing for most of her own food for the family living in the fenced compound. And every day she is looking forward to engaging friends, maybe with some chai or maybe during a kwanjula (*engagement party). Her family needs power appliances which can bring massive change to their lives.
Imagine those bright lights for enhanced education where before studying happened at candle light or not at all; or outdoor ‘security’ lights for prolonged evenings, maybe for some additional income generation hours with evening retail shops, barbers or phone charging stations; or those essential USB hubs to power communication and information tools where before that meant a trip to the nearest grid connected town; or simply entertainment through radio and TV; and specifically for a farmer, water pumps for irrigation to increase yields...
Power is at the heart of all human activity. The simplest power source are our own muscles. Then we harnessed more and more of it. Empires rose and fell because of access and lack of it. On the individual level, productivity increases due to it. For a society to grow, it is one of the necessary foundations.
But, as many practitioners know, selling solar can be dishearteningly hard, maybe even as hard as selling a fridge to an Eskimo. SolarNow has been offering decentralized, modular solar power solutions since 2011, including a wide range of electrical appliances. What can be learnt from SolarNow's 6 years of work on selling solar?
- It is all about people. So, we kept on introducing technical solutions to any problem we had. Organisational changes, new incentives, consultants (...), product improvements, pricing. Great ideas, poor results. The real change came from good leadership, starting by aligning the company vision at all levels. Giving people more responsibilities rather than less, and allowing them to make mistakes. We left the idea that our staff were soldiers, as soldiers tend to treat clients as soldiers, or...worse, as enemies. When the value proposition involves customisation and building client relationships, empowering your staff is not an option, it is a must.
- It is the client, not the product. Yes, product quality is essential. Esther won’t pay if she is in the dark. Service is even more important. Even if her system fails, a rapid service response can return Esther into a very loyal client. After sales service is still an unprecedented phenomenon in Africa… But the real trick is understanding Esther. How can Esther save or make money with her system? Can we configure her appliances and solar system such that she has the highest benefits at the lowest possible costs, avoiding monthly instalments she cannot afford? Solar companies find it hard to transition from product sellers into problem solvers. This effectively prevents them, and their clients, from climbing the energy ladder.
- Appropriate Marketing. Personal relationships form the glue among our rural, off-grid target market. It relies heavily on your people. Most importantly, good news travels by foot, bad news travels by horse. The absolute commitment to client satisfaction, rather than short term revenues, proves to be the most effective marketing tool a solar company can have. Not only to boost referral sales, but to also build a strong identity and pride in your employees. They are the quality, it is not anywhere else.
- Keep costs down. Being in a sector that thrives on social impact and with plenty of soft money available, it is easy to lose sight of core business principles: every penny spent must be earned back ten-fold, in a market that is getting more competitive. Investors start to realize that this is not an Uber or Airbnb market, where it is market share first, profit later. Companies that manage to keep costs down will, irrespective of their size, be the companies that attract the second generation of investors, who are primarily interested in RoI followed by the nice impact story. These investors have far more capital than the current pool of impact-first investors.
So, what is your conclusion? Is selling solar to Esther as hard as selling a fridge to an Eskimo? Probably not, but as you have noticed, it can get real hard if you think your product will sell by itself, ignoring what your clients need, how your staff behaves, and how important client satisfaction is. Or if your primary mission is social impact justifying you to be a lousy financial manager. It has taken us years to learn the above, and sadly, I think you can’t learn much from this blog; you need to experience it. Nevertheless, with 48 branches in Uganda and Kenya, 18,000 installed systems, 560 FTE and a revenue of USD 8m per year, close to break even, we believe the sustainable power revolution is around the corner. Thank you, Esther. Hopefully the rest and the West will follow…
To hear more from SolarNow’s experiences hear from CEO Willem Nolans and Hystra in our webinar on ‘Choosing an appropriate marketing approach’.
This blog is a part of the July 2017 series on energy access in partnership with Hystra.
Read the full series for more lessons from practitioners, trends in business models, market penetration and understanding and measuring impact in the energy sector.