Despite the many advantages of upselling LED applications, many contractors are hesitant to try because they think it might create an awkward situation. However, by communicating the key benefits of LED technology in a friendly and conversational manner, you will position yourself as a trusted advisor instead of a sales-focused contractor. When you provide your customers with helpful information about LED applications as they relate to their project, it helps them build a picture of what can be accomplished, and of the potential cost savings, which is a win-win.
One thing to remember is that upselling is a process, not a fast transaction. Listening to the needs of your customers, and providing them with sound advice and responsive service, will help you upsell more LED applications. All of this can help you develop long-term, profitable business relationships. In this Balboa Capital blog post, we discuss LED upselling tips for contractors.
The LED market at a glance.
Fueled by innovation, LED technology is making tremendous inroads into the United States lighting market, with commercial/industrial and residential applications leading the way. The rapid growth is being driven by improved LED performance, declining prices, and a push to move towards more energy efficient and environmental-friendly lighting solutions. This presents you with an opportunity to sell more LED lamps and land more LED retrofit jobs which, ultimately, can help increase your revenues and drive profits.
LED lighting overview.
LED lighting products are more energy efficient and last longer than traditional lighting solutions, which makes them an excellent option for a wide variety of commercial and industrial applications. LED lighting is being used at airports, retail stores, hospitals, parking structures, universities, gas stations, restaurants, museums, manufacturing facilities and bridges, among others.
The energy savings and significantly longer lifespan afforded by LED lights translates into a greater return-on-investment for homeowners and business owners. As a result, the number of LED lighting retrofit projects is increasing nationwide. In addition, small businesses that outfit their facilities with LED lights might be able to take advantage of Section 179D, which is an LED light tax deduction included in the Energy Policy Act of 2005.
The EISA Act.
The cornerstone of our nation’s numerous energy reduction initiatives is the Energy Independence and Security Act (EISA), which was signed into law by President George Bush on December 19, 2007. Title III of EISA focuses on “energy savings through improved standards for lighting” and requires 25% or greater efficiency for household lights that have traditionally used between 40 and 100 watts of electricity. It is important to note that certain specialty bulbs, including three-way bulbs and refrigerator bulbs, are exempt from this requirement.
ROI is shining bright.
Making the switch to LED lighting is a smart financial move for your customers. While LED fixtures come with a higher price point than traditional lighting fixtures, they offer a bigger return-on-investment (ROI). To put this into perspective, here is a cost comparison for a commercial LED retrofit project that involved 100 units.
| Standard Lights | LED Lights |
| Initial investment | Initial investment |
| $500 ($5/each) | $5,000 ($50/each) |
| Wattage | Wattage |
| 15,000 watts (150w/each) | 2,500 watts (25w/each) |
| Electricity cost (.12/kWh) | Electricity cost (.12/kWh) |
| $15,700/year | $2,600/year |
| Lifespan | Lifespan |
| 1,250 hours | 50,000 hours |
| Replacement unit cost | Replacement unit cost |
| $3,504/year | $0 |
| Total annual cost | Total annual cost |
| $19,200 | $2,600 |
| Total cost | Total cost |
| $110,500 | $20,000 (a $90,500 savings) |
| Break-even point | Break-even point |
| Not applicable | About 5 months |
The potential savings for your customers will vary based on the size and the scope of the project(s) at hand, and in the LED applications that are required. For example, homeowners and small businesses can spend between $5,000 and $30,000 on an LED retrofit. Large companies, commercial entities and government-mandated projects can easily have LED budgets up to half a million dollars or more for new developments and/or retrofits.
LED retrofit jobs to target.
Nobody knows your contracting business like you. So, when it comes time to target potential retrofit projects, start with those that are within your capabilities to ensure optimum success. For example, you might want to contact small retail stores, restaurants, homeowners, or healthcare practices in your geographic area.
Once you start building your portfolio of LED retrofit projects, you can begin contacting home builders and apartment complexes, and larger establishments such as hotels, warehouses, shopping malls and automotive dealers. Over time, you will increase your brand awareness, differentiate you from the competition, and position your contractor business for success through professional referrals and, possibly, federal, state and/or local government contracts.
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