In recent years, LEDs have surpassed incandescent and CFL to become the most common lighting technology installed today. The energy savings associated with LEDs and the improved aesthetic of LED over fluorescent or incandescent have been two primary factors driving this growth to date. Additionally, utility-driven rebate programs intended to promote energy efficient technology have offered incentives to offset the upfront cost of LEDs and expedite the rapid adoption of LEDs.
Policy also plays a major role in the adoption of LEDs, when governments set standards it’s a sure-fire way to increase implementation of a new technology, as it forces the hands of consumers and utilities alike. A couple of examples of how policy can shape the efficiency market have been in the news recently. Next month, the EU is taking the final step to phase out less efficient light sources by banning the production or import of halogen bulbs. And in the US, regulations that include tougher standards for bulbs are set to go into effect in 2020, essentially making LED bulbs the standard and ensuring further growth.
LEDs have come a long way but there is still plenty of room to grow. In a report by PS Market Research, the global LED market is expected to surpass $70 billion by 2023, growing at a Compound Annual Growth Rate (CAGR) of 12.6%. The main growth drivers identified were increased investment in infrastructure enhancement (mainly in China, India, and other Southeast Asian countries) and the reduced cost of LED fixtures.
Why are LED solutions getting cheaper? Two main reasons. The reduced cost of fixture components and the increased competition in the LED industry. Due to relatively low barriers to entry in the LED market, manufacturers are frequently popping up and creating more competition. With the increasing number of LED manufacturers in the market, there is growing pressure to differentiate from competitors. Some are targeting niche product categories and some are trying to develop all new applications for LEDs. Another option is to differentiate based on price. When consumers have such a difficult time telling one product from another, price is likely to be the determining factor. If an LED manufacturer can’t convince its customers that their products are worth the premium price, they’ll need to lower their price to keep competitive.
In the United States, some of the cost decreases that the LED market has experienced due to lower component costs and increased competition could be partially negated by tariffs. Many LED manufacturers import components for their fixtures from China and if a tariff needs to be paid, it will likely be the consumer that has to pay the brunt of that cost. That’s where manufacturers and their sales channels can benefit from incorporating utility rebates into their sales pitch. Utility rebates can provide some of the relief needed to keep product costs down and offset the tariff.
Another restraint noted by PS Market Research that could slow the growth of LEDs is the consumer’s lack of awareness of payback periods. The cost of LEDs can seem like a lot if the customer doesn’t recognize all the energy savings that are associated with their upgrade. It’s vital to educate consumers about all the benefits of LEDs and show them how quickly their LED investment can pay for itself.
As people are more and more interested in energy efficiency and the prices continue to decrease, the LED market will continue to grow. However, there are still some objections that consumers may have that need to be answered. Staying educated on the market trends and barriers, as well as having solutions to their problems, will help dissuade their concerns and help convince them LEDs are still the wave of the future!
Rebates…UGH. They’re like your favorite worst enemy. We all know how important rebates are to the world of LEDs, but easy access into constantly changing utility programs has never been available. No matter who you are or how you are trying to use them, rebate programs are a challenge to navigate — from an end user trying to learn about and submit for a utility rebate, to a distributor who wants to use rebates to increase his margins but is afraid to quote the wrong number, to the marketing team trying to plan their next targeted campaign or create engaging content that converts their website traffic. Using rebates can be so beneficial to these processes, but they are extremely time consuming — especially if you’re dealing in more than one utility.
When it comes to using rebates confidently to sell lighting, there are a lot of factors that come into play and it can be very confusing. There are over 3,000 individual electric utilities across North America. Each program calculates rebates their own way, with their own special set of rules and requirements. Within the LED lighting world there are custom, prescriptive, and midstream calculations. Most utility rebate programs offer some combination of the three. Some require pre-approval and post-inspection by the utility, and others just require data that proves energy savings. Additionally, a program you research one month could be closed the next if funding unexpectedly runs out. With every rebate program having its own variations, the world of rebates can be quite puzzling and require a lot of time to navigate.
In a survey of lighting distributors by www.electricaltrends.com, almost 90% of them said that they found rebates to be important or very important in closing a sale and 74% said they would sell fewer products if incentives were no longer available. However, only 13% of distributors felt that programs are easy to follow and file into. Most lighting manufacturers will say their distributors handle rebates in their territory and have a good grasp of them, but based on this survey it is clearly not the case.
Understanding how difficult these programs are to follow, we created the Encentivizer™ Platform. A suite of tools built using a comprehensive database that includes the rules and calculations for every utility program in the United States and Canada. By tracking every utility program across the US and Canada and every LED fixture listed on the DLC® and ENERGY STAR® product lists, we were able to create some tools that are simple to use no matter how much you do or don’t know about utility rebates and programs. These tools are designed specifically for lighting manufacturers to assist with sales and marketing strategies. When it comes to engaging with customers, content is key. The Encentivizer Platform equips you with valuable and relevant data that can help your sales channels close deals and engage end users.
How to use the Encentivizer Platform to maximize your sales and marketing efforts
1. Use Encentivizer Product Awareness to see where rebates for your products are highest across the country to help you to target your marketing efforts. Then, drive that traffic back to your website where they can learn more about rebates using the Encentivizer Catalog Widget.
2. Engage your website visitors with the Catalog Widget. It’s simple to use and provides real-time rebate estimates for every fixture in your qualified product catalog. You can also provide download links for cut sheets, screenshots of the DLC® listing, and a link directly to the utility program. In addition to your end users, make sure every person that sells or installs your products knows that this is available on your site. Believe me, it will make their day and you will earn their loyalty.
3. Use the Encentivizer Payback Widget to show how rebates can decrease upfront product costs, the improved ROI from rebates and energy savings, and the short payback period. It’s also hosted right on your site, so your sales channel and end users can both evaluate the value of LEDs.
With Encentiv Energy and the Encentivizer Platform, you aren’t just getting a great product, you’re also getting a customer success team to help you grow and realize the full potential of the Encentivizer Platform.
With Q3 quickly coming to a close and the slowest part of the year following closely after, now is the perfect time to start implementing these tools. We would love to show you how the Encentivizer Platform can bring value to your organization and it’s easier now than ever to book a demo. Schedule a quick meeting to see how Encentivizer can work for you!
By Reid Gustin, National Sales Manager