Lighting as a Service: What to Know, How to Succeed

David Ingram | Sep 3, '20

Lighting as a Service: What to Know, How to Succeed

Everybody’s talking about lighting as a service. After all, it seems perfect on paper: Steady income and a steady relationship with the client, who in turn, benefits from hands-off maintenance of their lighting and a much easier cash flow.

So why isn’t everybody offering it?

As it turns out, offering lighting as a service (LaaS) is a more complex and in-depth process than you might think. Here are some best practices to keep in mind when considering offering lighting as a service, so you can succeed right out of the gate the first time.

Best Practice #1: Build a Quality Foundation for Lighting Retrofit

Whether you’re a manufacturer, a lighting company, a retrofit company, or an ESCO, there is one common mistake when it comes to setting up LaaS, and that mistake is not committing.

Make no mistake: Lighting as a service is not a low-maintenance side offer you can tack on to bring in a little bit of recurring revenue. Go half-hearted on it, and it will simply confuse everybody and be completely ineffective.

Instead, you need to fully commit to setting it up well, getting the right details in place, marketing it, and managing it. And this may require a significant disruption to your existing business model. In other words, go big or go home.

Is it worth it? When done right, absolutely. A well-operated LaaS service can build a relationship with clients that allows for unforeseen levels of depth and growth. Instead of only being a vendor/installer, you can monitor the system, make recommendations, help them optimize their usage. It can turn you from a vendor into a trusted partner – and that’s a very good position to be in.

Best Practice #2: Keep Your Lighting as a Service Offer Simple

“Wait! Didn’t you just tell me to go big?”

Yes, but going big doesn’t mean “be complicated.” The simpler you can keep things, the better, and here’s why:

It’s easier to promote

You’re not the only person who’s going to be communicating about your LaaS offering. And if your customers ask questions about it, the last thing you want is them getting two different answers from two different people. Keep it simple so it’s easier for everybody to be on the same page. After all, who wants to sign up for something they don’t fully understand?

It protects your interests

If your LaaS offering has a lot of ambiguity or variables, that leaves the door wide open for customers to haggle, or in some cases, willfully misunderstand what you’re offering. And that can lead to a lot of trouble down the road.

It makes administration easier

Do you have time for a lot of extra administrative work? Us neither. If your LaaS offering is simple, clear, and well-defined, you’ve just saved yourself from a lot of headaches, a lot of questions, and a lot of rummaging through files to find out, for example, what ABC Company’s specific arrangement was, versus 123 Company’s.

So, when you’re developing your service, keep it as simple as possible. In a nutshell, the contract should say, “I’m going to loan you my product and install it in your facility, and I’ll be the one you call if anything is needed, and I’ll charge you a monthly fee for all of this.” Turn your LaaS service into one product, not a custom offering.

Best Practice #3: Enlist Lighting Retrofit Experts

How do you make your offering as simple and straightforward as possible? The best way is to enlist the help of experts who have been down this path before. Getting the right people to help you develop your offering is a great way to avoid future snags and turn your LaaS package into a smooth, streamlined, professionally designed service that practically runs itself.

While the offering itself may be simple, there’s a lot of ground to cover in the contract for lighting as a service. To protect yourself and your customers, here are some of the things you may want to consult an expert on:

  • Warranty coverage – It’s important to have adequate warranty coverage in your offering. For example, you may write a seven-year LaaS contract, but if your products only have a four-year warranty, then guess what? You’re on the hook for any product failures that take place during those last three years, which could be a massive hit on your balance sheet.
  • Property ownership/lease – What happens if the property changes hands? If the owner sells or the renter leaves, will the contract still be enforceable with the new owner or tenant?
  • Setting up financingOffering your own financing is a massive undertaking. A better option is to partner with a financing company who can take care of all the nuts and bolts of setting up the financial end of the contract.

Fortunately, there are experienced partners, like DLL and Linmore, within the SnapCount family who can step up and help you design the system, warranty it, finance it, and in short, make the process really simple. So even if you’re a small business and don’t have in-house expertise on these matters, you can still wind up with an excellent LaaS package to offer your customers. The key is to at least have an idea of what you want before approaching potential partners. That way, instead of starting from square one with no direction, they’ll know the general vision you have in mind, and can work with you to perfect and implement it.

The Time Is Right

There’s never been a better time to develop a Lighting as a Service offering. When things are shaky, the less cash expenditures required, the better. LaaS is a solution that pays for itself, delivers a better, safer working environment, and eliminates risk for the customer. And it’s a solution that diversifies your revenue while turning you into a trusted partner, not just a vendor.

The key is to obtain thorough, expert information, use it to develop a clear and simple offering, and then throw everything you have into making it succeed.

Do that, and you’ll set yourself up for success now and in the future.

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David Ingram

Written by David Ingram

Dave has an over 32 year career in the equipment financing industry, the last 20 with DLL in a number of commercial business development and relationship management roles. Since 2009, Dave has been the Commercial Leader of our Clean Tech business unit and has helped position DLL as one of the industry leaders in vendor project financing in the energy efficiency space. Dave and his team work with energy services companies, manufacturers, contractors and developers of renewable energy and energy efficiency solutions and helps customize a financial solution that enables the end-user customer to initiate a project with no out of pocket costs and enjoy the numerous financial and environmental impacts. He is also one of DLL’s Master Facilitators for the Commercial Academy and has facilitated sessions for DLL commercial members in various DLL offices internationally.

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