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ROI in the Lighting Industry - Cost vs. Value

Friday, March 30, 2018 By Kate Reynolds

Q: “What do you think your biggest challenge will be this year?”

That was one of the questions we included on a recent survey given to SPECS attendees in Dallas. The majority of answers we received were some variation of the following:

A: “Cost”

A: “Budget”

A: “Keeping cost down”

I’m sure this is not a surprise.

Return on Investment is the basis of most – if not all – business decisions. For the decisions that it does not act as the sole deciding factor, it’s at least a significant contributing one. When it comes to selling an idea, service or product, there’s just no getting around it.

So, in the wake of new technology allowing for sensors, controls and the full integration of building systems, how do we move this conversation from a discussion of cost to more of a value-based scenario?

In this industry specifically, it has to start with the realization that lighting is a gateway. It’s no longer just a vehicle for illumination, it’s the vehicle for technology, digitization, connectivity and integration.

I rounded up a panel of our subject matter experts – hot off the trade show circuit – to share their insights on this very topic. We all truly hope you find this information both thought-provoking and useful.

Our belief is that by engaging in conversations such as this one and encouraging curiosity across the industry, all parties involved will be able to better navigate the changing landscape and collectively find answers. If you have any questions or comments, please don’t hesitate to reach out.


Q: What’s the biggest difference between the cost of lighting vs. the value of it?

LED conversions lead to significant energy savings and the ability to secure rebates. And, in a “Good, Better, Best” scenario, it’s a good first step. But what about the additional benefits like:

  • Longer life
  • Controllability
  • Connectivity
  • Increased safety
  • Lower environmental impact
  • Light flexibility (directionality)
  • Maintenance avoidance and maintenance savings
  • Eco-friendly – mercury-free, non-toxic chemicals used in their production, 100% recyclable
  • Design flexibility (aesthetics)
  • Dimmable
  • Color options

“Anybody can come in and say, ‘it’s $12 for a tube and I’ll put in 500 for you’. The cost is the cost at the end of the day. However, leveraging all of these other benefits and factors is what creates the value. This is the conversation we all need to start having.” – Kristen Cooke, Application Engineer

“Energy efficient lighting systems are evaluated on their ROI exclusively right now. And while LED is the most energy efficient light source to date, and probably the pinnacle of efficiency, its ability to bring additional value to a workplace or retail location cannot be measured in energy efficiency alone. Lighting as a multi-service platform that can have an impact on conversion rates, customer experience, employee comfort and productivity. Its ability to connect people and enable analytics has to be part of the evaluation as well. So instead of just thinking about it in terms of lighting, we have to start thinking about it in terms of technology, and realize that people’s expectation of technology is rapidly changing. The tangible benefits of lighting have to be weighed with the value of connected lighting.” – Erin Plivelich, President, Illumetek Corp.

“With the price of LED products consistently dropping, it’s no longer just a question of energy savings, it’s about the value they bring immediately with efficiency and maintenance savings, and the fact that your lighting infrastructure can house all of the future potential with IoT, data analytics, asset protection, customer trends, etc.” – Aaron Woloszyn

Q: In the lighting industry today many manufactures are moving toward sensor enabled fixtures that include the ability to connect, but do not have to be used right away. It’s a scalable option that makes sense, yet there’s still a certain aversion to taking the leap. Why is that?

“Lighting is always there, and has traditionally been viewed as a burden to maintain and an expense to operate, vs. lighting as something that can contribute to design aesthetics, improve employee and customer comfort, and come equipped to provide information to help maintain, operate, and improve business.” – Diane Weber, 20 Year Industry Veteran and Illumetek’s Director of Business Development

Q: When will we see the tipping point? What will cause that shift in mindset?

1. Customer Experience and Competitive Advantage

Connected LED technology can take some of the pain points out of brick and mortar shopping such as the slow crowded check-out line. They want to find parking spaces faster, have better access to sales and coupons, know where to find their favorite products that just got moved across the store, ask for help without having to hunt down a person, have a more immersive mobile experience. Technology makes all of those asks possible.

Taking advantage of the omni-channel experience for customers is possible with a connected system. Can the shoppers experience begin even before they arrive at the store, can you improve interaction and engagement with the customer by offering coupons or recipes if a particular food item has been purchased.

Improving conversion rates is key to brick and mortar success because you already have a more committed customer – they’ve made the trek and crossed your threshold.” – Erin Plivelich

“Sales are driven by customers and customers will want to be in stores perceived as clean and welcoming. Using lighting and controls to maximize customer comfort will get people in and keep them there spending money. Grocery stores are a great example. Spending the time and money on the front to determine colors and styles of lamp that are going to make food such as meat most appealing will pay back in great dividends. Additionally, using controls to determine light levels so the store is well-lit and welcoming, but not jarring in the transition from out to in is something that while not always verbalized is a subconscious positive association.” – Kristen Cooke

2. The Realization that the “Future” is NOW

“Waiting to adopt these measures isn’t an option. By the time a retailer figures out they should have done this, it may be too late. Their competitors have already done it and have gained market share. You never want to be the last to do something. No one remembers the last person who walked on the moon. When it comes to the technology, I believe there is plenty of support for complete IoT and digitization connectivity to be implemented today. The tech “not being ready”, shouldn’t be an excuse at this time.

Today’s world is all about customer experience. Retailers who lose touch with their customers and fail to change the customer experience in their stores, will most likely fail as well. Grocery stores have been the quickest to adapt, adding marketplace style eateries, bar/wine areas for people to drink, self-check outs, online ordering with drive-thru pick up, etc. A gas station is much more than just a gas station today. Think Sheetz or Get-Go, you can fill up your car, go inside grab some made to order food, a bottle of wine and even some groceries for the week. Customer experience is the key and people want the option to be efficient about what, where, how they shop.” – Aaron Woloszyn, Retail Sales Executive

3. When IoT is Considered an Investment Instead of a Novelty – Must Have vs. Nice to Have?

“Investments in the future are often incremental and depend on interacting with tech to reveal its full potential. Smartphones have revolutionized the way we shop, communicate and consume information. But first we needed to literally get the technology into our hands before the content and marketing for a mobile society was able to reach us.

What people need to realize is anything that brings automation to building management serves to put focus back on core business.” – Diane Weber

Q: What are your hopes for Illumetek – and our customers – as we all navigate this changing landscape?

“The sky is the limit with controls possibilities. Selling a LED project today, a big focus is the low maintenance and longevity of the solutions. Obviously we don’t want a one and done approach and, to be honest, I think we would do our customers a disservice if we looked at it that way. Becoming the lighting and controls expert resource is a position we need to achieve with our contacts. Our and our customers’ future successes depends on the ability to grow with the technology. Looking at the controls piece as building blocks and presenting it as a living system that can grow will achieve that.” – Kristen Cooke

Filed under: Illumetek, LED

About Illumetek

Illumetek is a National Program Management company facilitating installs, updates, compliance and rebates for Lighting, Electrical, and associated Controls. If you have additional questions regarding LED lighting technology or design, please feel free to contact us anytime.

Reach out to Illumetek

Illumetek is a National Program Management company facilitating installs, updates, compliance and rebates for Lighting, Electrical, and associated Controls. Contact us today!