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Nuon Energy’s VP Customer: creating a competitive advantage

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As the utilities industry fights to retain customers, Nuon Energy has created a customer centric model that it hopes will reap the rewards over the long term.

The importance of the customer journey is fuelling important changes within the energy and utilities sector.

Energy providers often score poorly for customer satisfaction levels by failing to put their customers before sales targets, research has found, which does not sit well within the current climate of savvier customers and price comparison websites.

The response from other sectors experiencing similar challenges has been to adopt a more consumer-centric attitude, and use it as a competitive advantage.

Energy companies are now toying with this idea, but some are further ahead of this trend than others – one of them being Nuon Energy, the Dutch utilities company, part of Swedish state-owned Vattenfall who acquired Nuon in 2009.

Nuon has performed an operational pivot where its new structure was created. The company is now “thinking of the customer first, and then organizing the rest of the company out of, and around, them” says Cindy Kroon, Nuon’s VP of Customers.

Last October, this new Nuon launched, “saying good-bye to the traditional set-up of a marketing service and sales organization” and welcomed a tighter, more focused, company where each operational silo came together with an end goal “to make the customer experience maximum [sic] in their respective professions.”

This is Kroon’s remit: to place the customer journey as a core pillar in Nuon’s present and future.

She readily admits to having a lot of help though; it helps large scale transformations to have them adopted internally by the company and its workforce.

“[The process] was actually quite easy, because the organization and all our employees believed it was the right way to go, so there was a lot of enthusiasm around.”

For Kroon, this would have been the hardest part of initiating any formal changes to Nuon.

Her reasoning being that “systems or processes can be changed manually, whereas a belief within humans is more complex.”

When Kroon was tasked with Nuon’s pivot, her first decision was to “enthuse the people of the organization to believe that great customer and energy sector experience is not something of a hobby, or soft, or even optional, but integral to everyone in every function at Nuon.”

Not only did Nuon need to sow these ideas within different entities, from finance to risk to the executive team, but once aligned, they needed to activate an organization-wide change.

It required financial and legal insights and the integration of an “experimental mind-frame.”

“Even though it’s scary and it requires a huge amount of effort, it’s worth it because we believe that it is going to make a difference.”

That difference is expected to feed into the wider challenge the energy sector faces of retaining customers.

As the energy sector experience remains low compared to other sectors, and price comparison sites make it ever easier to switch providers, the industry is desperately seeking a perception change to ratify both investors and customers.

The end goal is for the company to both enjoy more satisfied customers without affecting the bottom line; Nuon is hoping that its integrated business model creates a competitive edge against a set of more traditional businesses in Northern Europe.

Kroon isn’t keen to reveal if the energy company has seen any results yet because they’re still part way through the transition, but she reveals that, “we have seen some glimpses of the benefits we’re looking forward to.”

Now on a crossroads, Kroon and Nuon have a chance to reflect on the past year of change to see if they should adopt new strategies and iterate a more fine-tuned approach to the next year of pivoting.

Kroon however is confident about her company’s customer-centric mission so far: “the only thing I would do differently is that I would have done it two years earlier,” she laughs.

She also admits though that, not only was it “a daring move within the industry”, but it also resulted in casualties.

“There were some ugly sides to our pivot, because by integrating all of these functions we had to let go of several managers who had been a part of the company for a long time, and who had done their jobs well…but it was also a cost saving exercise and even though it was difficult, it was better in the end I think.”

The industry itself also presented opportunities and challenges for Kroon and her remit.

For a start, the energy sector experience trend has provided a catalyst for new entrants to capitalize on lowering support for traditional companies and gain significant market share in the process.

“The difficult thing about this market is you can’t differentiate on our actual product. The gas coming out of the pipeline, or the electricity from the socket, is the same, so we have to look at our service as something to change.”

The aim therefore is to be the preference of customers, to “deliver the type of service our customers expect, or to even exceed those expectations.”

One example was how customers requested Nuon to reward loyalty instead of new gifts, the sort of activity that can be common in the energy sector.

In response, the firm introduced a loyalty product where they give up to 25% discount on an electricity tariff for as long as they stay with the energy provider, whereas new customers start on 10%.

Another sector specific challenge facing Kroon is the level of technological development utilities have undergone over a short period of time.

Fossil fuel activity has been heavily scrutinized because of its volatility and controversial nature over the last decade, and so there have been several gains within renewable energy that Nuon has had to factor in.

In fact, Nuon is one of the largest European wind investors and recognizes that decentral technological developments that allow customers to ‘do it yourself’ is what Kroon and her team need to think more about.

Kroon, her company, and its competitors, are having to keep abreast of these developments, “which 10 years ago would have been unimaginable – for example, solar panel developments have rendered them much more energy efficient, improving their value within the entire production landscape.”

She goes on to say that on particularly sunny days in Germany, production of solar energy outstrips demand, representing a complete disruption to the traditional energy market, “turning it upside down, allowing for households to become de-centralized, changing the pace of the industry.”

That technologically driven pace has been supplemented by savvier and more socially aware consumers who are opting for diversified energy feeds, and it’s up to firms like Nuon to respond accordingly to improve the energy sector experience.

“Together with out customers, we have to see what they are most interested in and supporting them in their personal needs and how they want to interact with their energy provider, us.”

Nuon’s transition from traditional energy firm to their tight, focused, outfit provides a clue to where the sector is heading.

It is suggestive of an industry that places the customer’s opinion at the apex of it’s operations, sales and marketing divisions – but Kroon doesn’t expect people to settle on their laurels now the future is looking clearer.

“Customers have become quite vocal and demanding over the last few years. The annual churn rate in the Netherlands is 15.1% and still rising; there is a demonstration that people know what they want and will seek out companies that will provide those needs.”

“For us, it will mean in the coming years that we need to work more with our customers by listening to their needs, becoming more agile and adaptable, or even experimental, when it comes to figuring out what works and doesn’t work.”

This outlook has the double advantage of subliminally changing the culture of Nuon too.

For example, the organization has become “less afraid of making mistakes, of testing things, and being open about when errors occur.”

Nuon has had to act in a more agile fashion and with its newfound “relationship with our customers, we can work together to define the path to success.”

The path, as Kroon reflects, will iterate and affect the energy market’s products and services forever, and it’s all down to the importance placed on the customer and their journey.