Positioning your business around quality rather than price in a saturated market can be a hard sell to consumers, as solar company Sun Connect discovered in its start-up phase.
Mark Tuke, who founded the business in 2008, has been forced to defend his stance on solar since day one. Tuke says he started the business after recognising a flaw within the industry.
“I knew there was a problem with the model. Everyone was convincing people to go small and quick, so [charging a premium] has been a principle I’ve had to defend since day one,” he says.
“I believe the entire industry in Australia is upside down – it’s all about price. Solar retailers have flooded the market on the back of rebates.”
“A lot of our competitors don’t want to serve their customers. They just want to sell appliances. We refused to go low price and low quality; we pay for a premium for our components.”
While Sun Connect prides itself on its offering, it has faced an uphill battle to secure customers.
“The mainstay of our entire business model and performance has cost us quite a lot of market share and turnover… We probably could have turned over three times as much as what we have, in dollar turnover, but we would have sacrificed our components,” Tuke says.
“We do get a little bit of customer attrition but we explain the benefits of solar power rebates they may be eligible for. Some people still go purely based on price, so we do lose customers to cheaper competitors.”
Tuke points out that Sun Connect relied a lot less on rebates than many of its competitors, so the removal of various rebates hasn’t had a huge impact on the business.
He says while renewable energy is a highly topical issue at present, he welcomes the debate and believes it is just the beginning for the solar industry.
“It’s an interesting environment and a long overdue environment. We’re on the cusp of a massive shift in the renewable energy market,” he says.
“It’s great news for our company. We can take advantage of it in the right way and help to spread solar. In terms of the retail market, I’ve been waiting for this for a long time – consolidation of the industry with a cleaning out of the cheaper players.”
“I refer it as the rebirth of the solar industry and I’m really happy it’s happened. We’ll continue to build on that.”
Last financial year, Sun Connect had a turnover in the $20-25 million mark, according to Tuke. In the 2012 financial year, the company is predicting revenue of anywhere between $30-40 million.
Despite the company’s struggle to secure customers, it has experienced incredible growth, with staff scattered in Perth, Sydney and Melbourne.
We’ve come from two staff to nearly 80 in less than three years and, within an industry which can be at times turbulent, we have continued our growth… We’ve installed over 2,000 solar energy systems across Australia,” Tuke says.
His advice to other start-ups?
“Try to be countercyclical against everything you see as a problem. If everyone out there is cheap, don’t try to beat them on price – play a different game.”