Star Tribune - Money and Business, April 2005. Chris Serres

A retailer’s next customer just might be an undercover operative checking up on service.

From a corner table at a popular coffee shop in downtown Minneapolis, Earl Forkner spoke in the hushed tones of an undercover agent about to witness a crime.

“There are 10 tables in this room. Five of them are occupied. Three people are using laptops,” said Forkner, who scanned the room while sipping his latte. “The woman at the coffee counter immediately greeted us.”

But Forkner, 69, a retired air force officer who lives in Northfield, is not there to stake out a crime scene.

He is a “mystery shopper," one of thousands of contract workers nationwide paid to evaluate businesses while masquerading as regular shoppers.

Later that day, Forkner sent his employer, Sensors Quality Management Inc. of Toronto, a detailed report about his experience - describing everything from the look and taste of the coffee to the restroom’s hygiene and the server’s demeanor. Within hours, a copy of the report was posted on the internal website of the coffee shop’s parent company for all employees to see.

Though mystery shoppers have been around for decades, the business has grown rapidly in recent years as retailers battle for customers and attempt to differentiate themselves with better service. According to the Mystery Shopping providers Association, a trade group based in Dallas, about 1 million people nationwide are mystery shoppers - about double the number five years ago.

Retail analysts say the industry is an outgrowth of mass merchandising. In an era in which nearly every square foot of vacant urban real estate is being filled with cookie-cutter chain stores that peddle many of the same products, service is one of the few ways that companies can set themselves apart from the pack.

Shoppers Must be at ease playing undercover sleuth

“There is so much sameness out there in retail,” said Laura Livers, president of Shop’n Check of Norcross, Ga., the nation’s largest mystery-shopping company with about 140,000 contract workers nationwide.

“What determines whether someone goes to Wal-Mart, Sears or Kohl’s? The determining factor is usually service, and mystery shopping is one of the few ways you objectively measure service,” Livers said.

But mystery shopping is a tough way to make a living. For detailed, “jobs,” as the assignments are usually called, shoppers much answer more than 100 questions. It can take an experienced shopper up to three hours to fill out a report. A routine excursion to a fast good restaurant pays about $8, and that doesn’t include the cost of gas.

And people who don’t feel comfortable playing the sleuth need not apply. Mystery shoppers often must play cat-and-mouse games with the store security, duck into restrooms to jot down notes and pretend they are talking to friends on their cell phone when they are actually leaving detailed messages describing a store on their home answering machines.

Low pay

“Someone who tells you that he can make $200, 000 a year mystery shopping is lying. It’s impossible,” said Ron Welty, president of IntelliShop, a mystery-shopping firm based in Perrysburg, Ohio. “If you do a very high volume of shops, you might be able to make a living. But you can’t get rich as a mystery shopper.”

Most mystery shoppers are part-time college students, stay at home moms and retirees in search of some extra cash. Forkner makes $100 to $200 a month, which supplements his retirement income. Because of high fuel prices, Forkner has begun turning down assignments outside the Twin Cities.

But despite the meager pay, most mystery shoppers take their assignments seriously.

“I was in retail sales for 17 years, and I was mystery shopped myself,” said Jennifer, 36, a stay at home mother from Minneapolis who agreed to speak only if her last name was not used. “Accuracy is huge to me. I’ve been quoted inaccurately when I was shopped and I know how that feels.”

So seriously does Jennifer take her job that she surveys stores with a hidden microphone attached to a digital tape recorder about the size of a cigarette lighter. She checks her watch frequently to record the precise amount of time, down to the second that it takes for store personnel to greet her.

The jobs can get repetitive Jennifer said. A department store chain might want to survey all it shops in a metro market; then its competitor will follow suit. “You can get real tired of trying on shoes,” she said.

But there are perks. Market research firms reward their best shoppers with plum assignments, such as reviewing upscale restaurants or staying at hotels for several night with all expenses paid. In March, a mystery shopping firm paid Jennifer $150 to review service at a steak restaurant in the Twin Cities.

“Its nice when you get reimbursed for what you buy when you don’t just go in, try some thing on and leave,” she said.

Too many questions

Occasionally, shoppers give themselves away by asking to many questions or taking too many notes. Others turn the assignments into power trips and use their positions as a threat to get better service.

“Mystery shoppers wield a lot of power. A bad evaluation can cost someone’s job,” Jennings said. “Some (mystery shoppers) use that as a weapon. They say “Hey, I’m a mystery shopper so you better give me good service. Some people just feel like they’ve got to grab power wherever it comes in their lives.”

The goal of mystery shopping is to collect as many facts as possible about a particular sales experience, and mystery-shopping firms strongly discourage their shoppers from inserting opinion into their reports.

“Subjective statements like, “she was rude” or “the service was lousy” are unacceptable,” Jennings said. You’ll have more impact if you state the facts, if you say that you walked in the door and the sales manager turned away and didn't return for another three minutes. The moment that you blame or judge, you lose credibility. Let the facts speak for themselves.”

Most mystery shoppers are simply people who appreciate good service and who think they are making a difference in the way customers are treated, Jennings said.

Recently, Forkner said he had to wait several minutes for service at a local fast- food restaurant while one cashier talked on a cell phone and the other counted cash. He chronicled the entire experience in his report.

“If what I’m doing helps to bring customer service back,” Forkner said, “I feel as if I’m doing society a favor.”

- How to Take the Mystery Out of Mystery Shopping

Canadian Grocer, November 2004. Shellee Fitzgerald

Your eyes and ears, mystery shoppers can uncover how your store is measuring up, but do your homework before enlisting the services of a mystery shopping firm.

It is a widely held belief in the retail world that for every customer who complains about the service they receive while shopping there are another 26 who don't bother, they simply leave the store and there's a very real risk that they won't return. In fact, according to the U.S.-based Mystery Shopping Providers Association (MSPA), 69% of lost customers are a result of poor customer service.

Fierce competition, not only from other grocers but also from alternative channels, means customers have more choice than ever before as to where to spend their dollars. Obviously, customer service is a critical point of differentiation from your competitors. And although you recognize this and may be spending lots of money training your staff on how to give your customers the best possible experience in your store, how do you know if this training is really being used and that you aren't just throwing your money away?

Mystery shopping companies insist that this is where they can help. Although the concept of using mystery shoppers to evaluate a store's performance and adherence to standards is nothing new – it's been around since the '40's – in recent years, retailers have latched onto it hoping to gain a competitive edge.

Indeed, there are numerous advantages to using mystery shoppers. By providing feedback from the front lines, mystery shopping reports can pinpoint strengths and weaknesses in your business and ultimately help you boost profits, build customer loyalty and improve the performance of your staff.

“They can work, because obviously having another pair of eyes and another set of experiences looking at something that you do all of the time is really good,” says Len Kubas, president of Kubas Consultants in Toronto. “You get a different perspective.”

And unlike customer comment cards, surveys or even focus groups, mystery shopping reports are completed by trained shoppers who go into your store to anonymously measure specific criteria – determined by you – thereby offering an objective, rather than subjective, evaluation of your store's performance.

“It's factual, we're not measuring perception and that is probably the largest difference within that market research environment,” says Sean Cavanagh, president of Oakville, Ont.-based Tenox Appraisal Systems, Inc., a key player in the industry, “It's reality versus perception.”

While there are clearly many benefits to having a mystery shopping program, you'll have to do some investigating of your own to determine which company will best meet your needs. Here are some key points to consider:

•  First and foremost, make sure the company you're considering is reputable. Mystery shopping is a US$1.5 billion industry (worldwide), and a quick web search will yield a seemingly endless number of companies offering mystery shopping services; not all are reliable or above board. Cavanagh says before making any decisions, retailers should ask the company to provide them with references from clients and make sure to “check those references.” How long the company has been in business and whether or not it has a roster of long-term clients is also a good indication of its performance.

Dawn Boyce, mystery shopping division manager at CV Marketing Research in Abbotsford, B.C. says another way to gauge if a company is reputable is to find out if it's a member of MSPA, the largest professional trade association in the industry. Boyce says members “have to agree to certain standards and rules” set out by the association such as conducting services in an honest and ethical manner.

•  Another important factor to consider when selecting a mystery shopping services provider is whether or not it has experience in your industry. Different companies will specialize in different industries so to get the most bang for your buck it's smart to go with a company that understands the specific challenges of the grocery industry. “It's [grocery] a far more complex shopping experience, from the context that it's very departmentalized,” says Cavanagh, whose company counts grocers among its clients, although he would not reveal which ones. “You've got upwards of 10 different individuals who can actually be evaluated during a visit,” he says, noting that mystery shoppers have to go through and evaluate each of the departments: deli, produce, checkout, customer service and so on. The “shop,” therefore, can take longer, than in other retail outlets and the questionnaire the shopper must complete following the visit typically has more questions and thus more data to review, tabulate and summarize.

•  The geographical reach of the mystery shopping company is an important consideration. If you're an independent you need to hire a firm that can deploy shoppers to your community. If you're a chain operating in several communities or provinces, then you need a service provider who has shoppers in all of those areas so you can get a complete picture of what is happening in your stores and measure whether your customers in Halifax are having the same shopping experience as those in Abbotsford, B.C. or Calgary. “If they're [shoppers] not where you need them to be, it's not helpful,” says CV Marketing's Boyce.

•  When consulting a mystery shopping company, you should find out what level of customer service they can provide and how flexible they're willing to be. Will the company customize a program for you? Will it deploy shoppers when you want and deliver reports when you want them? To what extent will it guide you through the process from helping you design your questionnaire to making sense of the information gathered? How fast is the turnaround of the reports? What technologies are used? The industry is largely Internet-driven these days and most companies use the web to make information quickly available to clients. “I think one of the strong points of any mystery shopping company is the flexibility to adapt to their client's needs,” says Karen Dolan, director of sales and marketing at Premier Service Consulting in Montreal.

•  According to MSPA you should also ask about the company's roster of shoppers – does it have a large enough pool of shoppers to meet your needs? David Lipton, president of Toronto's Sensors Quality Management Inc., another big player in the Canadian market that counts at least two grocery chains among its clients – and which boasts a private databank of 10 000 active shoppers – says you should find out if the provider has its own shoppers or if it shares from a common pool. The latter, he says, “presents a lot of conflict of interest and integrity issues.”

Boyce says next you have to ask how shoppers are selected. “It's fairly easy to get a databank of shoppers,” she says, “but what's your application like? Are there some screening-type questions on there? Once you've used a shopper how do you keep track of how well they've performed?” Boyce, like MSPA, suggests that you steer clear of companies that charge shoppers a fee to apply for work. “How they treat their shoppers is important,” she says, adding there are many of websites you can visit to see what mystery shoppers themselves are saying about how a particular company treats them.

Premier Service's Dolan says good companies will put their potential shoppers through a “rigorous” screening process. “We have a lot of testing that we do with our shoppers and they have to do sample mystery shopping projects first before they're accepted to shop for us and we rate them as well.”

•  The quality of the reports the provider generates is, of course, vital. What sort of quality controls does the company have to ensure the integrity of its reports? Once the shopper files a report, most reputable mystery shopping companies will put the reports through an editing and cross-checking process before passing them on the client. Tenox Appraisal Systems' Cavanagh says validation of the reports is key. “Validation is a huge piece in mystery shopping – in our company all of our mystery shoppers have to send back validation of the visit, they have to send us their receipts . . . not all companies do that,” he says.

•  Price is another big consideration when it comes to choosing a mystery shopping provider. The cost of implementing a mystery shop program varies widely depending on the number of shops you want completed, how fast you want to get the results back (many companies can provide a 24 hour turnaround, if you're willing to pay for it) and the level of detail you desire from the reports. Some companies will offer extra services – for an extra fee – such as training in customer service skills to help clients implement an action plan.

But as an independent can you afford a mystery shopping program? Most companies insist you can. Martin Hoffmitz, vice-president of client partnering at Sensors Quality Management, says: “We work collaboratively with each different grocery group to understand what their budgets are and then work within those budgets. That's an important process because there are a lot of different ways to balance the price-benefit equation,” he says. “An independent grocer with two units has to be handled very differently from a large, national chain.”

Although fewer shopping reports, due to budgets constraints, might mean it will take you longer to get a clear picture of what's going on in your business, CV Market Research's Boyce says, “It's still going to be very valid information.”

However, if mystery shopping is simply beyond your budget, Len Kubas suggests you take it into your own hands. He says you can approach this a couple of ways: first, have your managers act as mystery shoppers at other stores within your chain. “Have one manager look at another operation and use that as kind of constructive criticism.” Kubas says that by keeping it in-house you get two people benefiting from it – the person who des the mystery shop and the manager whose store is being “shopped.” He says this alternative way of conducting mystery shopping can be “very” effective but urges retailers to make sure to use it as a learning tool and ensure there's no retribution or one-upmanship.

“The second way, which is a good way, is actually shopping your competitor's stores,” says Kubas. “What you're really doing is having them go and look at the store and the experience and everything like that and see what they're doing that's great and what they're doing that you could be doing.” Kuba advises you to go further a field when doing this to avoid your immediate competitors figuring out who you are and what you're doing.

•  As a final bit of advice, the MSPA says you should find out if the company “guarantees the quality of their service and shows a willingness to provide a re-shop or credit for any suspect shops.” Make sure you ask about this up front.

Since everyone in the retail business knows that it costs much more to get new customers through your doors than it does to keep existing ones, making sure your customer service is top-notch is critical. There are numerous companies out there that can help you measure just how good your service is. So shop around and see which one works best for you.