DONG as the integrated energy company

Barcelona, September 2005

Søren Biune, Senior Vice President, Marketing

We use our energy oncreating customer loyalty

Introduction - we are up against some hardcore facts

Why is branding one of the major drivers in creating loyalty

Internal focus and use of integrated communication

Lessons learnt

Agenda

The Danish energy sector seen from a customer persp ective – Household segment

They couldn’t care less

Energy is not only a low, but a very low interest-product… except if there is no heating, electricity or they can’t understand the invoice

They do not even know how much they use annually

They can’t tell how much they pay

They do hardly know who to contact if they have a problem

Less than 3% have swopped energy supplier now 2 years after deregulation

The Danish energy sector seen from a customer persp ective – Commercial customers

They care but do not want to spend too much time on it

Want a personal contact, who they can rely on

Expect you to be the specialist

Expect to be kept up to date with new topics that can save time and money

Like to be treated personally and events are often highly valuated

More than 40% have swopped power supplier now 2 years after deregulation

Price is not the only parameter in all segments

“If you have a good reputation, it is easier to get through”

Creating a strong brand image

Company image = the cumulative perception of the co mpany

Which values are connected to DONG, and what is the perception of DONG internally and externally?

Which values should characterise DONG?

Environment

Well-established Service

Trust worthy

The energy expert

Innovation/dynamic

The innovative and dynamic energy expert

…with knowledge and experience in constantly developing and offering new forms of energy-products and services in close cooperation with our customers

Our overall strategy is to become the integrated energy company.

DONGs future position on the energy market

Today Tomorrow

Value proces in- and external for DONG

Service-mindedExtrovertHumanCustomer orientedFlexible

DynamicDevelopment orientedCreativityInnovativeActive

ExperienceProfessionalSpecialistsAnalyticalResult oriented

ReliableResponsibleHonestValue for money

Engagement

Engagement

InnovativeCommitted

Assumption to make DONG a well-established energy company

The fundamental values for DONG

Crucial for the customers to choose DONG

We will make a difference

CompetentResponsible

Large carStation carSafe & solidReliableOlder modelExpensiveNot the fastest

Internally

Large carSafe & solidStableExpensiveHigh quality

Externally

DONG today

QualitySafetyReliableFastModernValue for money

Internally

ModernTechniqueSafetyDesignFast

Externally

Now Future

LargeHeavySlowStrongHard to turn aroundSolidEfficientProud

Internally

SolidLargeMajesticSlowStrongNot dangerous

Externally

DONG today

StrongPredatorSmoothElegantFastPersevering

Internally

FastStrongMajesticStrength

Externally

Now Future

The brand essence:

Image is the major driver in relation to customer s atisfaction

Det bruger vi energien på…

Creation of loyalty (Large industrial customers)What is most important to the customers?

Note: Number of interview 263Source: MarkedsConsult

0.60

0.04 0.06

0.16 0.16

Image Expectations Products& services

Customer relations

Price

Creation of ImageWhat is most important to the customers?

Note: Number of interview 263Source: MarkedsConsult

0,10

0,13

0,17

0,220,20

0,05

Service orientated

Energy expert

Economicwell-

established

Trustworthy EnvironmentalInnovative

2004-2

Branding and communication platform

Det bruger vi energien på…

Showtime – corporate films based on DONG’s core valu es and our main sponsorship of the Danish National Footballteam

CRM – situation oriented action programme

� Branding/Lead generation� DM,TeleSales, � Internet as lead generator� Advertising, Events� Sales visit� Member get member � Survey/questionnaire

The customers

way throughIntergas

� Why does the customer wantto go (Win-back activity)

Lapse of customers

Prospects

� Sales visit, offer� DM, TS, Conference� Events, evaluation

Keeping the customer happy

� Billing and insert� Customer inquiry/� or pro active contact

Customer Contract

� Letter and Information pack

� Main message/Next product/ Service – Direct Debit 1-3 years contract

Welcome

� Data collection� Data mining� TeleSales, DM� Booking of sales visits

Response handling

� Data input to the CRM-system� Checklist, segmentation� Contract & CRM plan � Syndicated mailings

New customer

� How are you call/visit/DM� evaluation to score satisfaction

Customer satisfaction/loyalty

The loyalty programme – ”The customer pulse”

Results

Branding, PR together with our CRM-activitiesbased on DONG’s core values

have made a difference in how our customers, employees and the Danish population in general

look upon DONG as an innovative, integrated energy company

Top of mind – unaided first choice

Sample: Age 30-60

Ultimo 2002% June 2005%

DONGNesa

ElsamEnergi E2

OKHNG

Københavns EnergiSeasShell

Energi danmark

715

4

64

5

4

33

399

64

6

12

4

11

Total knowledge aided

Ultimo 2002%

June 2005%

Sample: Age 30-60

Statoil

OK

Shell

DONGNesa

Energi Danmark

HNG

Naturgas Fyn

Københavns energi

Midt Nord

E2

96

95

95

81

79

58

43

41

38

34

30

93

96

95

98

83

61

38

50

43

Loyalty segmentation – Private customersAre DONG’s customers going elsewhere?

AmbasadørDen trofaste

kunde

Den kritiske

kunde

Den troløse

kunde

Kernekunde

DKI: xx%low

high Kernekunde

high

Satisfactionlow

Loya

lty

The faithful customer

AmbassadorCore customer

The unfaithful customer

The critical customer

2003: 2%2002: 1%

2003: 30%2002: 36%

2003: 7%2002: 9%

2003: 5%2002: 7%

2003: 56%2002: 47%

Loyalty segmentation – B2B

AmbasadørDen trofaste

kunde

Den kritiske

kunde

Den troløse

kunde

Kernekunde

DKI: xx%low

high Kernekunde

high

Satisfactionlow

Loya

lty

The faithful customer

AmbassadorCore customer

The unfaithful customer

The critical customer

2004-2: 2%2002: 5%

2004-2: 42%2002: 54%

2004-2: 11%2002: 9%

2004-2: 8%2002: 15%

2004-2: 37%2002: 17%

Satisfaction – B2B

7067

6567

7270 71 71

Satisfaction with DONG

DONG compared to ideal

DONG’s abilityto live up to expectations

Overall satisfaction

2002

2004-2

Loyalty – B2B

64 63 64

6872

70

Choose DONG again Recommend DONG to others

Loyalty

2002

2004-2

The importance of the ”Customer pulse programme”

69

78

7168

65

69 69

74

80

7674

7173

71

Image Expectations Products & Services

Customerservice

Value Satisfaction Loyalty

Outside the programme

Inside the programme

76

74

7776

80

7677

78

Satisfaction – Private customers (2003)

Overall satisfaction DONG

DONG compared with

ideal

Does DONG give you what you

expect?

Pleased with DONG

2003

2002

74

73

74

78 78 78

Loyalty– Private customers (2003)

Chose DONG again Recommend DONG to other

Loyalty

2003

2002

Customer satisfaction index of selected Nordic ener gy companies and DONG – Private customers

Vattenfall 57.0Fortum 52.7Sydkraft 54.9

DONG 78.0

Source: MarkedsConsult/Svenskt Kvalitetsindex

2003

Overall view of how we have performed after the lib eralization in 2003

Minor loss of customers – due to effective dialogue programme and imagebuilding.

Gained 30% of the Funen market within 2 months

Succesfull X-sale programme of electricity and other services from DONG to existing B2B customers and prospects