The lighting retrofit was one of the first services that electrical contractors (ECs) entering the energy services’ market offered their customers. In the beginning, lighting retrofits almost sold themselves because customers recognized that their lighting systems were outdated and believed upgrades would reduce recurring energy expenses and be environmentally responsible. As the energy services’ market has matured, customers moved on and began looking for new and different ways to reduce their energy use and demonstrate their commitment to the environment. As a result, many ECs today believe lighting retrofits are no longer a viable energy service. There is no doubt that the lighting retrofit market has matured over the past decade, but it certainly has not passed on. Lighting retrofits can still be a very profitable part of the EC’s energy services. Here, you’ll learn why lighting retrofits can still be profitable and how such services can help the customer improve its business results.
Marketing lighting retrofits
Successfully selling lighting retrofits in today’s energy services’ market is about educating customers whose businesses would benefit from keeping their lighting systems up-to-date and in working order. The electrical contractor must be ready to address the following three common customer objections to proposed lighting retrofits:
Customers who object to proposed lighting upgrades tend to give reasons similar to one of these three. To overcome customer objections, the EC must be able to show why the proposed lighting retrofit is in the customer’s best business interest.
Objection 1: My lights work just fine
When the customer flips the switch, the lights come on, but it does not necessarily guarantee quality lighting that is suitable for the tasks. Lighting quality is more than just the quantity of illumination that the lighting system provides. Lighting quality helps people perform visual tasks more effectively and efficiently than they otherwise could. These visual tasks are not just work tasks such as assembling a product in a manufacturing plant or performing clerical work in an office setting. In this context, the term “task” includes anything that requires seeing to perform a required function. “Tasks” in a lighting sense can refer to a wide range of activities, from a shopper picking out a new sweater in an upscale clothing boutique to a patient’s ability to read the directory in a medical building lobby.
Of course, the quantity of light the system provides is important, but it must be the right amount of light. In addition, the quality of light can affect productivity and the visual comfort, mood and safety of people occupying the space. Many factors—such as color rendering and glare, along with occupant age, required visual acuity, and time to perform the needed tasks in the space—are important for a quality lighting system. For example, improved lighting quality in a retail store can raise customer perception of the retailer and the quality of its merchandise, productivity in terms of sales per square foot, employee productivity and transaction accuracy, and the number and length of customer visits.
Objection 2: We just upgraded our lighting system
Customers are focused on their core businesses and often do not understand that efficient and quality lighting can help them achieve their goals. Customers often believe that a lighting retrofit is good for the life of the installed luminaires and controls, requiring only occasional maintenance to replace burned-out lamps and failed components. For this reason, many ECs are reluctant to propose a lighting retrofit to a customer, even when the customer’s business could benefit from it. Buying into the customer’s objection that they just upgraded the lighting system ignores the fact that both the customer’s business and space use are constantly changing and lighting technology is advancing at a frantic pace. Overcoming this objection requires that the EC first understand its customer’s business and how improved lighting quality can benefit them, and then the EC can put together a proposal that focuses on the benefits to the customer’s business.
A good way to think about marketing lighting retrofits is to consider why you regularly upgrade computer hardware and software even though it is still “working.” You make the investment because technological advances cause your existing system to become obsolete long before it breaks down and stops functioning. When you consider the potential increases in productivity that upgrading existing hardware and software will provide along with the positive effect on your bottom line, such investment makes good business sense.
The same is true for your customer’s lighting system, but the advantages of upgrades may not be as obvious. Overcoming the mindset that lighting systems are good for their operational life and don’t become obsolete requires that you do your homework and provide information and analyses that your customer needs to understand the good business sense behind upgrading.
Even though the customer may have moved into a new building or recently renovated space, there is no guarantee that the installed lighting system meets his or her specific business needs or supports the tasks performed in its spaces. Also, your customer’s business is not stagnant and, therefore, requires corresponding changes to the way the spaces it occupies are used. What is considered quality lighting for one space use may not be adequate or could even be detrimental if the use is changed and the lighting does not. It all comes back to the principle that a lighting system must be designed, installed and operated so that people can perform visual tasks efficiently and effectively in the space.
Similarly, lighting technology is advancing at dizzying pace with new technologies becoming commercially available, and existing and formerly expensive products becoming more economical due to advances in technology, increased demand and more efficient manufacturing. Like computer hardware and software, what was state-of-the-art in light sources, luminaires and lighting controls just a few years ago is now considered old hat. As a result, upgrading an existing lighting system may be economically justified based on increased efficiency or functionality even though the customer’s existing lighting system still “works.”
Drawing another analogy to the EC’s business, you seldom drive your vehicles until they are completely worn out and have to be towed to the scrap yard. Instead, you replace your vehicles regularly based on their economic life rather than useful life. This is how you should sell lighting upgrades based on advancing lighting technology. In an engineering economy, determining when it is more economical to replace a functioning asset rather than wait until the end of its useful life is referred to as replacement analysis. Being able to perform replacement analyses for customers either in-house or with the help of someone outside your firm is the key to selling lighting upgrades based on new technology.
Objection 3: I need to invest in my business, not lighting
Understandably, your customers think of a lighting upgrade as an expense rather than an investment that can provide a low-risk path to reduced energy expenses, increased productivity and improved profit. That is why, when you propose a lighting retrofit, your customer will often express the need to invest in its core business rather than in a lighting upgrade expecting to reap greater benefits. As a result, customers tend to rank a lighting retrofit below other possible business investments, such as a new marketing campaign or production equipment upgrades. To effectively sell lighting retrofits to its customer, the EC must demonstrate that a lighting retrofit is not just an expense but an investment that will pay dividends just like other business investments.
Depending on the situation, upgrading a lighting system improves revenues, reduces expenses or both. Increased revenues can result from greater sales to customers; reduced product returns; improved customer satisfaction and loyalty; increased employee productivity, meaning more product available for sale; and other factors, depending on the customer’s business. Similarly, an upgraded lighting system can directly result in reduced energy expenses and improved employee productivity and satisfaction. Increased revenues and reduced expenses—considered separately or together—result in increased profit and, ultimately, a greater return on investment for the customer.
While it can be difficult to quantify the impact of improved lighting quality on the bottom line, the effect of energy savings resulting from more efficient light sources, luminaires, and controls is not. Reduced energy expenses from a lighting upgrade are a near risk-free investment for your customer when compared to other less certain business investments such as a new advertising campaign or product launch. When selling lighting retrofits based on energy savings, the EC needs to demonstrate the potential return on investment for its customer through life-cycle financial analyses.