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Who Really Sells a Multifamily Energy Project?


A casual observer would assume that “vendors” and “contractors” sell energy efficiency projects to multifamily building owners.  In reality, the energy managers and other internal champions connected to those buildings wind up doing most of the “selling.”  They’re the ones who lobby to gain consensus among their peers in property management, facilities and engineering; persuade senior management to prioritize the initiative; and, ultimately convince capital budgeting to approve the needed funds.  And if the tenants’ cooperation is needed to make the proposed initiative a success, those tenants need to be sold on the idea as well.

Who Really Sells a Multifamily Energy Project?

With all of this “selling” going on, energy managers are smart to embrace two winning strategies commonly seen among the world’s top sales professionals.  The first is understanding all of the benefits of your proposed initiative and then expressing them in ways that resonate with your prospect.  The second is ensuring that all communication with your prospect is both compelling and concise. 

Let’s talk about benefits first.  You need to understand all of the benefits your proposed initiative could provide: utility-cost financial, non-utility-cost financial, and non-financial.  While utility-cost financial benefits may be the most obvious, they are rarely the most compelling. Non-utility-cost financial benefits include improved tenant retention or attraction, higher rental rates, lower capitalization rates, and/or higher asset value – all of which are factors that handily trump energy savings.  This is especially true in situations where the tenants are sub-metered for a large portion of the building’s energy use and would receive the lion’s share of any savings.

Moreover, some seemingly non-financial benefits (e.g., securing an ENERGY STAR® Label as a result of improved energy performance, or seeing a rise in tenant satisfaction as a result of improved thermal comfort or better lighting quality) can drive additional non-utility-cost financial benefits (e.g., improved tenant attraction/retention).  Take the time to explore these types of interactions between benefit categories.  Fortunately, there are plenty of case studies where energy-efficiency and other sustainability initiatives have produced a wide variety of benefits beyond utility-cost financial savings.  Compiling the evidence needed for your proposal should be fairly easy once you start looking.

There is a second important dimension of sales professionalism that energy managers would do well to embrace:  ensuring that each and every value proposition is communicated in a compelling and concise way.  Have the benefits of your proposed initiative been reframed so that they can be measured with the yardsticks that your decision-maker is already using to measure success?  For example, could you equate your project’s annual energy and maintenance savings to a number of additional rental months, or perhaps a certain percentage increase in rental rate, at the subject property?

Of course, no matter how compelling your proposal is, if no one reads it, project approval will remain elusive.  Given the ever-shrinking attention span of today’s decision-makers, your value proposition must be communicated in a single-page narrative combined with a one-page financial analysis.  The narrative should have a compelling headline; quantitative targets that will be met if the initiative is approved; and, a rationale for change that focuses on the “why” rather than the “what, how, how much and when.”  The one-page narrative should also include a high-level summary of projected costs and benefits; the steps taken so far to advance this initiative; and, one or more specific action steps that the reader is being asked to take.   All of these points need to fit on a single page, blank on the back, that can be read in less than four minutes.

The financial analysis should also fit on a single page.  It should feature all of the cash inflows and outflows over the analysis term.  It should clearly list both the “popular” metrics (simple payback, return on investment, and internal rate of return) and the “proper” metrics (net present value, modified internal rate of return, and savings-to-investment ratio).  Keep in mind, while the popular metrics are very commonly requested, they typically lead to suboptimal decisions, particularly when you’re proposing higher-first-cost, longer-lived, premium-efficiency solutions.  For that reason, both the one-page narrative and any oral presentation of the proposal should migrate the discussion away from the popular metrics and toward the proper ones in order to support the wisest decision.

Take the time to delineate the various benefits. Reframe those benefits so they genuinely resonate with decision-makers.  And finally, use one-page narratives and one-page financial analyses to make your case.  Remember, if your proposal isn’t read, it can’t be approved.  And if it is read, and if your prospect can easily understand how your initiative would make the subject property easier to manage and/or more valuable, your chances of securing approval are greatly improved.

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Posted by Mark Jewell