Woodlawn Associates

Management Consulting

Iain Drummond

About Iain Drummond

Iain Drummond is a partner at Woodlawn Associates.

Defending against Aereo: Can Broadcasters and Multichannel Operators Come Together to Fight off the Latest OTT Challenge?

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Aereo, the internet TV start-up that allows New Yorkers to watch live and time shifted content from broadcast networks over the internet, is in the news again as it seeks a declaratory judgment against CBS.  Simply put, the Aereo lawsuit asks a federal court in New York to explicitly rule Aereo’s service does not violate broadcasters’ copyrights and that the court’s ruling applies nationwide.

The legal battles between Aereo and broadcasters are likely to continue for years and seem destined for the Supreme Court.  (See Figure 1.)  While we wait to see what happens in the courts, we think broadcasters and their cable, telco, and satellite distribution partners should do more to undermine Aereo’s value proposition.  However, they are hamstrung by broadcasters’ uncertainty about whether to partner with multichannel operators in the age of internet TV or disintermediate them.

Figure 1: U.S. Federal Courts and Aereo Lawsuits

Aereo Court Graphic

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Electrical Potential: Reducing Customer Acquisition Cost and Increasing Lifetime Value in Solar and Competitive Electricity

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Two of the most compelling stories in energy over the past few years have been the rapid growth of competitive electricity supply (“CES”) and rooftop solar. Although the two industries directly compete in some states, we have worked with executives in each industry who know relatively little about the other. However, we believe CES and solar businesses could help one another reduce customer acquisition costs and solar companies could help CES businesses stabilize cash flows over a longer period and increase customer lifetime value.

Both industries have enjoyed rapid growth in recent years. Eleven million consumers in 13 states plus the District of Columbia buy power generation services from competitive suppliers. (For the most part these consumers continue to buy electricity delivery services from a local monopoly utility.) The number of residential CES customers has grown at 16% annually since 2008 and more than half the consumers in some markets buy from a competitive supplier.

Meanwhile, the amount of residential solar capacity installed each year has grown at an annual rate of 56%. One of the key drivers of this growth has been the emergence of third-party-owner financing models, in which consumers spend little or no money up front but agree to host systems at their homes and buy the power produced for 15 to 20 years. Another has been a precipitous fall in the cost of solar equipment.

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Solar Dealers Spend $5373 to Acquire Each Customer

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Woodlawn recently examined the sales and marketing practices of residential solar dealer/installers in the United States.  We collected detailed quantitative and qualitative information from a representative cross section of U.S. solar installers.  With this, we were able to answer questions such as:

  • What is the average solar customer acquisition cost? (An average of $5373, or 16.9% of revenue)
  • What is the “typical” marketing mix?
  • Which channels account for the most customers?
  • Which marketing channels are most effective in terms of new customers per dollar spent?
  • How can dealers optimize their mix of channels?
  • How can dealers maximize the potential of each channel?

You can download an extract.  Please feel free to contact us with any questions.

Solar Distribution: Lessons from Residential Construction, Energy, and Infrastructure-Related Products

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Woodlawn recently examined the go-to-market approaches of industries such as residential load centers (“fuse boxes”), hot water heaters, roofing materials, flooring materials, standby generator sets, windows, and central air conditioning to see what lessons they might teach us about solar distribution as the market grows and distribution matures.

Here are some of our key findings:

  • In industries with “complex” sales, such as generators, windows, and air conditioning, dealers are a significant part of the channel
  • In these industries, dealers tend to buy directly from manufacturers or from exclusive distributors
  • Industries with more commoditized products, such as roofing, load centers, and hot water heaters, tend to rely more on wholesalers
  • Wholesalers are rarely good at market development.  Their value is in inventory, terms, and bundling of related products from different manufacturers
  • Where sales are made indirectly, producers often have sales and marketing teams that “skip” levels of the distribution chain to generate goodwill, familiarity, and assist downstream partners with marketing and unusually large contracts.

Download a detailed summary of our findings here.  Also, see a slightly updated version that appeared in Solar Industry.

Multiple Device Data Plans for Wireless Operators

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The growth in data traffic on wireless networks over the past several years has been truly astonishing.  The trend is likely to continue, too, as faster data speeds, reduced latency, more capable devices, and lower cost encourage customers to connect more types of devices to the network and use them more heavily.  It is not surprising, therefore, that many operators believe wireless data services are the key to maintaining or growing average revenue per user.

However, while individuals, families, and businesses are likely to use more data, they are unlikely to tolerate separate, full-priced data plans for each device.  Very soon, one individual could conceivably want wireless internet access for a laptop, home computer, smartphone, tablet computer, camera, video camera, gaming device, e-reader, automobile, and numerous “smart” appliances.  Therefore, operators need to develop offers that give customers a simple and affordable way to connect multiple devices while growing revenues at least as fast as costs.

In addition to driving revenue, multiple-device data plans have the potential to significantly reduce churn.  Customers with a large investment in devices are unlikely to switch carriers if doing so requires upgrading their entire device collection.  One little-recognized implication of this is that operators able to get compatible radios embedded in more consumer products will have considerable advantage in attracting customers and minimizing churn.

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