Innovation Junkies Podcast

Mike Vermillion on Prioritizing Customer Experience

Mike Vermillion of J.D. Power and Associates joins the Jeffs to talk about the importance of customer experience and Net Promoter Score (NPS). They unpack what NPS is and how organizations can deploy it, the connection between company culture and customer experience, and innovations that will change the customer journey.

Mike Vermillion:
When you’re thinking about your customers and their journey, that you understand what those key moments of truth are, and asking those diagnostic questions is helpful, because that’s going to help you plan your process, but also address shortcomings.

Jeff Standridge (Intro):
If you want to drastically improve your business, learn proven growth strategies, and generate sustained results for your organization, you’ve come to the right place. Welcome to, The Innovation Junkies Podcast.

Is your growth plan missing the mark? Take advantage of our strategic growth diagnostic from Innovation Junkie. Growth DX helps you benchmark your company and leadership team with a set of best practices across six critical pillars of every successful growth plan. Visit innovationjunkie.com/growthdx to learn more. Now, on to the episode.

Jeff Standridge:
Hey guys, welcome to another episode of the Innovation Junkies podcast. My name’s Jeff Standridge.

Mike Vermillion:
Hey, and this is Jeff Amerine. Glad to be back.

Jeff Standridge:
What are we doing today, Jeff?

Jeff Amerine:
We’ve got an absolutely fantastic guy on that I’ll tell you, in full disclosure, I’ve known for more than 40 years. We were both Naval academy graduates, and I’ve actually known him since about 1981. But, let me tell you a little bit about his background.
Mike Vermillion is a Senior Managing Director with J.D. Power, Global Business Intelligence Group. He is responsible for the growth of the segment’s business by leading growth initiatives, and key capability developments. He’s a key thought leader in customer service excellence. He recently authored a forthcoming book that’s called, J.D. Power’s Guide to the Net Promoter Score. We’re all familiar with Net Promoter. It’s really cool. He’s got a lot of depth of experience in that area. He brings more than 25 years of experience to the organization of strategy and product management fields. Prior to joining J.D. Power, he held senior executive roles in a number of big companies like Proctor and Gamble, Dun and Bradstreet, and NAVEX Global Market Risk Partners. He’s a Naval academy graduate and a University of Chicago MBA. We’re really glad to have Mike Vermillion on with us today.

Jeff Standridge:
Hey, Mike.

Mike Vermillion:
Hey guys, how you doing?

Jeff Standridge:
Very, very good. As I often say, if I were any better, I’d have to be twins. Now, great to have you with us today. You’re joining us from out West, as we would say here in the mid-South.

Mike Vermillion:
Yeah. I’m based in Southern California. Moved out here in 2015 after spending many, many years in the New York City area. We’re pretty happy with the weather at this point.

Jeff Standridge:
Yeah, I guess so, I guess so. Well, Mike, before we get started, we like to have a random musing on our podcast, and it has nothing to do with anything we’re going to be talking about in the podcast necessarily, it could, I guess, but today’s random musing is, what technology from a science fiction movie would you most like to have?

Mike Vermillion:
Yeah. I can’t remember the name of the movie off the top of my head, you guys probably know it, but it’s that movie about the pre-crime unit where the ball is etched, and then it rolls down, and then it’s got the name of the person who’s about to commit a crime, and then the pre-crime unit goes out and helicopters in and prevents the crime that was going to happen. I just remember that technology. I think it was Tom Cruise, maybe, where he’s at the-

Jeff Amerine:
Minority Report.

Mike Vermillion:
What’s that?

Jeff Amerine:
Minority Report.

Mike Vermillion:
Minority Report, yeah. So, you remember that technology, where it’s like a whiteboard or something, but he’s got the different things on the board and he’s moving them around with his hands and it’s all kind of connected. I thought that was really cool. Microsoft surface tried to replicate that at one point, but would love to see that technology come to life.

Jeff Amerine:
Oh, that’s pretty cool.

Jeff Standridge:
Very good. How about you, Amerine?

Jeff Amerine:
Yeah. Yeah, I was sitting here thinking about it. Of course, the obvious one is, I’d love to have a personal warp drive and a rocket so that I could travel through space. I think that’d be interesting. It’s a little aspirational there. I would say the other one is, there was a movie called Altered Carbon, which was kind of intriguing, where they looked at our flesh and our body as a skin, they called it. Your essence and your soul were in this disc that would pop into the back of your neck. If you wanted to go from being a fat old man, like I am now, to somebody that’s 6’5″ with 0 percent body fat, totally possible with that technology.

Jeff Standridge:
There you go.

Jeff Amerine:
I think that would be cool.

Jeff Standridge:
Very interesting. Yeah.

Jeff Amerine:
What about you, Jeff?

Jeff Standridge:
Well, mine’s pretty basic. I’ve become a fan of aviation over the last 12 months or so, and started flying quite a lot. I think the accessibility of a flying automobile, kind of like George Jetson, where I could hop in and have my car parked here, and I could drive down the street, or I could say, “You know what, traffic’s really bad here. I think I’m going to get up at about 1500 feet and I’m just going to bypass it all.” Just the time saving that occurs when you’re… I’m not talking about commercial flight, I’m talking about, when you have aviation available at your fingertips, no TSA check-in, no traffic, be able to get up, get down. I think that would be mine.

Jeff Amerine:
Yeah. Complete autopilot too. Totally autonomous. If you want to have a few bourbons on the way to wherever you can.

Jeff Standridge:
Yeah. That would require new technology, which would require the FAA approval, I guess. Anyway.

Mike Vermillion:
I think so. That’s right.

Jeff Standridge:
Mike, great to have you with us today. I want to start with one of your forethought areas in the… We’re one of the thought leaders in the areas of customer service excellence. I would maybe like to just start there in terms of, how do you describe, in your experience, some of the major tenets of customer service excellence?
Mike Vermillion:
Yeah. Thanks, Jeff. I lead the customer service excellence practice here at J.D. Power. We eat, live, and breathe this stuff every day. We’re out working with the biggest brands in the country across different industries to address this question. I think an important starting point is that you want to be customer-focused. By being customer-focused, we don’t necessarily mean just a letter or a memo from the CEO, just telling the organization to do better, but really the organization needs to have a true understanding of what is important to customers, and what matters most to them. That’s really the starting point.
From there, you have to recognize that your customers, or whether they’re B2B customers, or if you’re a B2C business and you’re thinking about consumers, they’re going to be judging you and judging their customer experience with your brand or your company, not based on necessarily your competitor. It’s really going to be based on their last best experience anywhere. Nobody gets off the phone with the bank and says, “Hey, that was a pretty good phone call for a bank.” What they are comparing that to is their last great experience at Amazon, or their last great experience with Zappos. That’s really a starting point.

Jeff Standridge:
Very good.

Jeff Amerine:
Talk about-

Jeff Standridge:
Go ahead, Jeff.

Jeff Amerine:
Well, I was going to-

Mike Vermillion:
I was going to-

Jeff Amerine:
You first.

Mike Vermillion:
This happens to me all the time. People love talking about customer experience, and as soon as they find out what I do for a living, I hear their last great horror story about being on hold with the wealth management firm or the last awful experience they had, checking in for their flight or whatever. Yeah, let’s dive into it.

Jeff Standridge:
Go ahead, Jeff.

Jeff Amerine:
Well, yeah. I was going to say, you’ve developed this depth of experience around customer experience and around customer service excellence. Talk to us a little bit about this new book that you’re going to release and Net Promoter Score, and how that can be parlayed to great effect and impact for businesses.

Mike Vermillion:
Yeah. Net Promoter Score… This is a book we’re working on, we do have an active practice around it. J.D. Power doesn’t lead with Net Promoter Score, we lead with something called, customer satisfaction. We support Net Promoter Score, because a lot of our clients are interested in it and they’ve got it deployed in some fashion. The reason we’re working on a book about it is because, Net Promoter Score, or NPS, is a really simple concept, but it’s also very complex at the same time.
What we find is that, executives like it because it’s easy to understand, easy to explain. It’s easy to train the frontline on it. It’s easier for the frontline to understand what it is. Some of the things you have to think about when you’re using NPS as a measure of… It’s not really satisfaction, it’s really about loyalty and advocacy. Number one, the math behind it is actually torturous. It leaves out a large chunk of your customer base because it’s only looking at the promoters and detractors, it’s leaving out the neutrals. Another-

Jeff Standridge:
Mike, let me interrupt you there. If you would, just give our listeners a brief summary of Net Promoter. I know Jeff and I are familiar with it and we use it, but give our listeners just a brief summary of what it is, and then I want to pick up where we left off.
Mike Vermillion:
Yeah. NPS is based on a scale of negative 100 to positive 100. What you do is, you go out and ask on a scale of zero to 10, would you recommend a brand to family and friends? It’s a highly personal question. The people at the top say nines and tens are considered promoters and the people at the bottom… Forget exactly what the range is, but something like zero to four, zero to five are considered detractors. Everybody else is in neutral. The actual calculation is the promoters minus the detractors, and then you multiply by 100, and that’s your NPS result.

Jeff Standridge:
Perfect. Perfect. Thank you. We were talking about the actual NPS and the deployment and use of it.

Mike Vermillion:
Yeah, yeah. The NPS question is typically the first question in a survey. It’s typically accompanied by a second open-ended question, which asks, “Why did you give us that NPS rating?” That’s tax and then text analytics. In the end, once you know your NPS result, the next question is, what do we do with it? How do we improve it? Right? What we find companies doing is, they’ll try to do some data mining around those open-ended questions. They’ll start asking the question, which group do we focus on? Do we focus on the promoters and advancing them? Do we focus on the detractors and figure out how to save those customers, or where do we focus on the neutrals and move them into the promoter category? But beyond that, it’s just not very actionable. What you really want to do, is build what we call an NPS driver’s model. That’s something that we do in our research because we include the NPS question in our benchmark studies. Then from there, we go explore the different aspects of the customer journey. We’re able to build out an NPS driver model so we can tell you exactly what’s driving the NPS result.

Jeff Standridge:
Is your book outlining some of the aspects of that and how to actually deploy the score, how to use the score, how to mine the data around it? Tell us a little more about your…

Mike Vermillion:
Yeah. That’s exactly right, Jeff. There are different aspects to it. One of the things we do is, we’re partnered with the Drucker Institute, who publishes a report every year on the best-run companies in America. We contribute the NPS data and the customer satisfaction data to that study. As part of that relationship, we go out and work with companies that are measuring NPS themselves, and just verify that they’re doing it the right way.
Part of the book is focused on the science aspect and the actual measurement. There are roles around sample and calculation and different aspects that way. Another big chunk of it is, what you’re doing with the results, and how you’re communicating those to executives, how you’re communicating that to the organization in a way that’s not only correct but also actionable and it makes sense. It’s kind of a 360 view of the measurement, and then how to make it actionable.

Jeff Standridge:
Whom do you hope will adopt this book and use it in its best and highest form?

Mike Vermillion:
That’s a great question. A couple different groups. There’s typically a group inside the organization that is focused on measurement and insights and analysis around the customer experience. That’s one group. A second group will be the executives and the people running the businesses themselves who are getting these NPS results from the CX group, and then scratching their heads with, okay, now what do I do with this? How do I improve it?

Jeff Standridge:
Got it, got it.

Mike Vermillion:
Yeah.

Jeff Standridge:
Your role today is in the Global Business Intelligence Group within J.D. Power Associates. Talk to us a little bit about your role in the organization, and what is a day in the life of Mike look like?

Mike Vermillion:
Yeah. GBI at J.D. Power, what we do is, we cover all of the industries outside of automotive that involve customer service. We’re interviewing about five million customers a year, asking them between 100 and 120 questions. We’re collecting millions and millions of data points around customer journeys, and customer satisfaction. Publishing close to 200 benchmark studies across different industries. Our biggest practices are in financial services, so banking and credit card, wealth management, lending. We’re also in insurance, mostly in the property and casualty space. We cover a little bit of healthcare. We do cover the travel and hospitality space, the utilities industry. It’s pretty wide ranging.
The way we’re organized is, that each of these practices have subject matter experts with deep experience in that particular vertical. The role that I play, and that my team plays is, we actually go across all the different industries with a focus on customer service.
A lot of that involves the contact center. The interaction you have with what’s called, an IVR or Interactive Voice Response, but also the phone conversations you’re having with agents. That even extends to the interactions you’re having with a bank or an insurance company, or an airline via chat or chatbot, with social media, even your experience on the website, or with an app. We’re wide-ranging in our team in terms of our industry focus, and then also the different channels that we cover.

Jeff Amerine:
Across these various industries that you look at and all these different mechanisms of interacting with customers… Net Promoter Score is one of the KPIs or measures that give some indication that they’re doing things right. Talk about, is there a pretty high correlation between the core culture of the company, and where they are on that customer service spectrum? You’d worry a little bit that the customer service piece, if you just focus on that, and there’s not things in the culture that are addressed, it might be just a veneer or a bandaid. Talk about the connection between culture and customer experience.

Mike Vermillion:
Yeah, it’s a strong connection. Basically, the idea is that if you have pissed-off employees, you’re not going to have happy customers. It’s just that simple. You really want to pay a lot of attention to your employee base to make sure that they’re engaged, that they’re not focused on quitting, which we’re seeing quite a bit of an uptick in over the past six months across the U.S. That not only… By engagement, we mean not just the typical culture stuff of making sure everybody’s getting the annual employee survey, and the company’s being responsive to that, but making sure that you’re hiring the right way, that you’re training your people properly, that they’re getting proper coaching and development. When we are working with an organization that’s struggling with customer satisfaction, that is one of the things we look at is employee engagement, but also how well you’re communicating with your employees. If the will is there, but also if the skill is there. Are they getting the proper training, and the proper tools to do their job?

Jeff Standridge:
Let’s shift our focus a little bit and talk about the use of business intelligence. I know that you’re leading a number of growth initiatives and capability developments, and new market entry. Let’s talk about the role of business intelligence in developing strategy.

Mike Vermillion:
Yeah, that’s a great question, Jeff. We do a lot of strategic work, because of the nature of our studies, which tend to be annual, and kind of longitudinal in nature. We’re looking at trends over time. We’re also looking at the competitive landscape. In terms of strategy, our starting point always is, the customer. What’s important to the customer and understanding what’s important to them. Then breaking that down in terms of what we call factors and attributes, but also in terms of key moments of truth.
For example, you’re waiting in line at Starbucks for a cup of coffee, we would ask you, “How satisfied were you with the amount of time that you had to wait in line?” We also ask, “How many minutes did you actually wait in line?” We’re always surprised, like at Starbucks, that people are happy standing in line for 10 minutes or 15 minutes. It’s not that big of a deal to them. But in other industries, like at a hotel, when you’re going to check in, what we find is that there’s a breakpoint at about the four-minute mark where people are kind of happy to stand in line for up to four minutes, and then once you get past four minutes, satisfaction just drops off the table like a rock.
It’s really important that when you’re thinking about your customers and their journey, that you understand what those key moments of truth are, and asking those kind of diagnostic questions that is helpful, because that’s going to help you plan your process, but also address any shortcomings. That’s it, that’s the starting point.
Next area to go then, would be to understand the competitive landscape. Where is the competition, and then where are you relative to your competition? Then we break that… What we do is we break that down again by factor attribute, key moment of truth. What we’re looking for are the gaps.
The gaps are really opportunities for improvement, right? From there, in terms of strategy setting, it’s really important to focus. The mistake we see are companies that have a laundry list of things that they’re trying to fix, and there’s really no prioritization. Prioritization is really important. The way we help our clients prioritize is by looking at what’s going to move the needle the most in the shortest period of time at the least cost. Those are the three things that we take into consideration. Once you’ve got that prioritization done, now you’ve got a roadmap that you can act on. That’s the strategy development aspect.

Jeff Standridge:
Got it. Very good.

Mike Vermillion:
Yep.

Jeff Amerine:
Where do you see all this… As you think about all that you’re doing, what are some of the interesting things that are coming out in terms of innovation that are going to change the way we think about customer journey, and the use of business intelligence? Give us the crystal ball view of the next five or so years of how some of this might change.

Mike Vermillion:
Yeah. A couple things. One thing we see a lot is the movement to what is called, self-service. This is everyone’s holy grail, that the customers can figure out how to serve themselves so that you don’t have to staff a large call center or contact center to do customer support. The problem that we see is that, the big investment in the movement towards self-service… Self-service would be, having a great interactive voice response system, having a great website, having a great app, anticipating what the questions are going to be so you can answer them before they’re even asked.
The problem we’re seeing is that, the technology people have taken this over, and their solution oftentimes is optimized from a technology point of view, and not from a customer point of view. It can be frustrating for customers to… I’m sure you guys have experienced this, when you call into a company and you start going through the menus where you have to press the buttons. It’s happened to me where I’ve got a menu, and the thing that I’m calling about, it’s not on the menu. It’s not one of the options, right? I just find myself screaming into the phone, “Operator help. Zero.”
Whatever, what’s the magic escape pod to get out of this menu? What we recommend is that, don’t hide that option. Make sure that it’s easy for a customer to punch out of that menu and get to a live person. That has a huge impact on customer satisfaction. In the end, you’ll be surprised that customers, especially with the younger generations, they don’t really like talking to people anyway. They’re more than happy to self serve, but if you haven’t set self-service up in a way that’s comprehensive and anticipates all the needs, you need to have that option to talk to a live person and make it easy.

Jeff Standridge:
How about those self-service options where it’s literally just a form on a website, and there’s no phone number to be found, there’s no way to interact with them in real-time via even a chatbot or anything like that. It’s literally just an email form, basically, on a website.

Mike Vermillion:
Yeah, that can be scary and frustrating, right?

Jeff Standridge:
Yeah.

Mike Vermillion:
If that’s your approach, and I think there’s a couple of well-known companies out there that we know that take that approach. They’re pretty confident in ease of use of their products and aren’t too concerned about it. I think what you’ll find is that, communities will develop where people are helping each other. I know if I have an issue with anything to do with Google, I’m going to Google my question and I’m going to find a community who’s already lived through that problem and has an answer for me. That’s my advice for consumers, for companies. If that’s the approach you want to take, I would suggest that they actually promote the communities and support them. That can be a real strategy, right? Sometimes the communities are picking up the issues faster than what you can internally, and they might be coming up with solutions that your team hasn’t thought of.

Jeff Amerine:
Yeah. Even the video guidance, the YouTube video guidance. A lot of times I’ll find myself like, forget about trying to get a hold of whoever the manufacturer is. If it’s some kind of issue with the piece of equipment, just find a YouTube instructional video about what to do, and invariably, there’s going to be a lot of stuff there. You would think if the companies would curate that a little bit that’s in a way, it’s community-based customer service that they didn’t have to pay for other than a little bit of curation of what’s good and what isn’t.

Mike Vermillion:
Yeah. I always forget about YouTube. We had a leaky toilet, and so I took the thing completely apart. I went down to the hardware store and I bought the most expensive repair kit possible. Then I get back and I’m putting the whole thing back together again, and there was a screw or something I couldn’t figure out which way it went on. I’m like, “Let me go to YouTube and figure this out.” I found a guy who had the exact same toilet, exact same issue. It turned out that you just needed to replace a washer. There was an 84-year-old grandmother who put in the comments of the YouTube video, “Thank you so much. I fixed this in a minute and a half and it cost me 50 cents.” I was so embarrassed for myself that I hadn’t thought of going to YouTube.

Jeff Amerine:
See, this is the problem of being a mechanical engineer, right?

Mike Vermillion:
That’s right. As an engineer, you want to take it apart and put it back together again.

Jeff Amerine:
Exactly. That’s great.

Jeff Standridge:
Mike, you do a lot of work in helping companies create strategy. One of the things that Jeff and I have observed is, the gap in a lot of companies executing that strategy and executing it persistently through to completion and fruition. Can you talk about… Do you guys do any work with your clients in terms of actually taking that strategy to the next step through execution, and how do you go about that?

Mike Vermillion:
Yeah, Jeff, that’s a great question. We have to do a lot of work in this area, because we work with a lot of Fortune 100 companies who’ve got huge staffs, tons of MBAs. They’re great at analytics and data and planning, but where we see the biggest companies falling down, is around execution and execution of strategy. The three areas that we look at, that we help them look at, are starting with what we call, Will, which is the question, do you actually have buy-in from the organization around the strategy. A lot of that has to do with communications, and are you communicating properly? Have you thought about how this strategy impacts customers but also impacts your organization and your frontline employees? Will, is number one.
Second, is skill. Does your organization have the training that they need to actually execute on? Do they actually have the tools that they need to do their job? A third thing to look at is, and this is something a client pointed out to me, was actual capacity. If you’ve got somebody who’s working 40 hours a week, and you’re asking them to take one more thing onto the wagon to execute, do they have the capacity to do that?
Then the third piece of execution is really focused on the frontline. Are you engaging with the frontline? Are you measuring the outcomes? Are you feeding the outcomes, and the customer feedback back to the front line? Are you actually listening to the frontline, and getting their ideas on how to improve a process or a policy, or even an idea for a product feature or some kind of an upgrade? That frontline engagement is where a lot of executives are just… They’re just uncomfortable with that. That’s something we get involved with quite a bit.

Jeff Standridge:
Fantastic, good stuff.

Mike Vermillion:
Yeah. We love it. I love my job. I love working with the brands. I really love working with the brands who are just bought in. We work with brands who are at the top and are just looking to build a bigger moat, but we also work with brands who are just in the basement, and they want to get out. But I really love working with those teams who are totally committed. One of the things that we’re seeing is that the role of customer service and customer satisfaction in strategies, is becoming more and more important over time because products and services are becoming so good, but they’re also becoming kind of… It’s a little bit of a commodity, because they’re becoming the same. Like in the wireless industry, the quality of the network used to be a huge issue. Today, the networks are fairly equal in terms of quality. I mean, there are distinctions. Really the way to compete and to win is around that customer experience that you’re delivering.

Jeff Standridge:
Today we’re talking with Mike Vermilion, he’s the Senior Managing Director of Global Business Intelligence with J.D. Power and Associates. It’s great to have you with us today.

Mike Vermillion:
Guys, great to be here. Thanks to everybody who’s listening to the podcast as well.

Jeff Amerine:
Yeah, it was great having you on. Thanks, Mike.

Mike Vermillion:
Thank you.

Jeff Standridge:
This has been another episode of The Innovation Junkies Podcast. Thank you for joining.

Jeff Amerine (Outro):
Feedback from listeners like you helps us create outstanding content. So, if you like this episode, be sure to rate us or leave a review. Also, don’t forget to subscribe to get the latest growth and innovation strategies. Thanks for tuning in to The Innovation Junkies Podcast.

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