Mystery shopping helps businesses keep an eye on service

The Charlotte Observer, October 10, 2004. By Leigh Dyer

A few years ago, top executives at Charlotte-based Belk, Inc. debated how to enforce one of their store policies: Every customer who enters a Belk department store should be approached and offered help within 60 seconds.

They found their answer in mystery shopping.

Up to 20,000 times a year, undercover customers enter Belk stores to check how often the goal is met. The results are tracked. Store managers' annual bonuses are tied to the findings.

Belk is among thousands of retailers, restaurants, hotels, movie theaters, banks and other public-serving businesses that use secret shopping to monitor their customer service. Mystery shopping has experienced explosive growth in recent years, topping $600 million in annual revenue. And thanks to improvements in technology, companies have grown more sophisticated in what they can accomplish.

The industry's growth is a reflection of the increasing importance of objectively measuring customer service. Retailers and service businesses struggle to distinguish themselves in increasingly competitive industries.

Since Belk started its program, the company has added more measurements to its mystery shopping: how often employees thank customers by name after purchases, and how often they suggest additional pairs of shoes while waiting on customers in the shoe department.

“We were interested in statistically valid observations,” said company spokesman Steve Pernotto. The fact that it was an objective method of measuring public service helped employees embrace the idea, he said.

When stores meet goals, such as employees making the 60-second approach on 85 percent of mystery shopping visits, a manager can get up to 5 percent added to his or her annual bonus, Pernotto said.

Since the program began, Belk's sales have outperformed many of the company's competitors in the department store industry. Pernotto said the privately held company invests “six figures” annually in the program.

Mystery shopping started about 50 years ago as a way for banks to catch embezzling employees. In the era of paper receipts, it sometimes took spies to catch tellers skimming cash.

In the last decade, the Internet has allowed companies to recruit secret shoppers, make assignments and take reports online, making the analyzing of information faster and cheaper.

In the last few years, new software has broadened the ways companies can use the feedback – they can break out results for older shoppers, for example, or for Spanish-speaking shoppers.

“Interest in mystery shopping overall has really picked up in the last five years,” said Kevin Bray of Clemson, S.C.-based Sparks Research, which has a database of more than 20,000 mystery shoppers and counts Belk among its clients.

The Mystery Shopping Provider Association, a leading trade group, has about 150 members. But the actual tally of mystery shopping companies is probably closer to 1,000, industry insiders say. When a retailer hires a shopping provider, the provider generally charges around $100 for each mystery shopping report, with prices varying to the complexity of what is being tracked.

Undercover customers

Mystery shoppers work as independent contractors, earning fees that range from $7 to $30 per visit. They often get perks such as free meals, merchandise, luxury hotel stays or movie tickets, depending on which business they visit. But filling out reports can take hours, and few mystery shoppers find it lucrative enough to make a living.

Last week, the Mystery Shopping Provider Association Web site had 115 available mystery shopping assignments in North Carolina and 58 assignments in South Carolina.

For Bryan Chun of Charlotte, it's just a way to earn extra dollars for home improvements on top of his three other jobs. He mystery shops about 10 times a month.

On a recent mystery shopping visit, Chun went to a Charlotte-area location of a coffeehouse chain on a Tuesday afternoon. (The Observer agreed to withhold the business's name.) He noted unswept cigarette butts outside the shop.

Once Chun was inside, the barista immediately greeted him, unknowingly earning a positive score. Chun timed how long it took to prepare his drink.

He stopped inside the restroom – all was clean. Then, he performed a final test: wandering to the merchandise section to see if an employee offered help within the required three minutes. The barista offered help right away.

A positive 20-minute shop, though Chun said he has met friendlier employees. Filling out the computerized 58-question report would take about 45 minutes.

“It's just like school – I'm not giving everybody A's,” said Chun.

He recognizes the importance of encouraging good customer service, he said.

“My wife says I do this too much and should cut back. I just do it because I believe in it.”

The results

Businesses that use mystery shopping often experience increases in sales and profits, said Steven Maskell, director of sales and marketing for Atlanta-based Shop ‘n Chek, Inc. One telecommunications client reported a 44 percent sales increase in the six months following changes instituted as a result of mystery shopping findings, he said.

Examples of mystery shopping results: One fast-food chain noticed mystery shoppers reporting a pattern of yucky lettuce in sandwiches, and was able to trace it to a particular farm supplier, Maskell said. And a telecommunications retailer discovered it wasn't meeting its goal of always having a Spanish-speaking employee on hand. Mystery shoppers found Spanish-speakers weren't assigned to every shift, so the company revamped its scheduling system, Maskell said.

Shop ‘n Chek has 282 mystery shoppers registered in Charlotte, more than double the number it had five years ago, he said.

Each of Cato Corp.'s 500-plus clothing stores is visited by a mystery shopper a minimum of three times a year, said John Cato, CEO of the Charlotte-based company. Cato incorporates mystery shopping into employee performance evaluations, he said.

Matthews-based Harris Teeter regularly uses mystery shopping in its grocery stores, checking on factors such as whether enough registers are open to avoid long lines. Mystery shopping research was behind the company's decision to implement free carry-out grocery service, said spokeswoman Jennifer Panetta.

And Charlotte-based Wachovia Corp. occasionally uses mystery shoppers to supplement customer surveys. Often, it's used after the bank launches a new product to make sure employees are giving the right answers to questions, said Kelly McSwain-Campbell, director of customer satisfaction research.

Not every company is a fan of mystery shopping. Matthews-based Family Dollar Stores Inc. does not use mystery shopping because the company feels it gets enough feedback through methods such as surveys, focus groups and customer intercepts in stores, said company spokesman George Mahoney.

Historically, some employees haven't liked the practice. To some, it carries an image of Big Brother ready to punish.

But those in the industry see mystery shopping as a useful tool. Instead of punishment, it can be used as a way to devise new types of training, said David Lipton, president of Canada-based mystery shopping provider SQM. The company recruits shoppers around the U.S. and counts 139 active shoppers in Charlotte.

Some companies have begun using mystery shoppers to present a certificate or other award to a top-notch employee immediately after the shopping assignment is completed.

Said Lipton: “Companies are using it more for development rather than discipline.”

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The Peterborough Examiner, Friday, July 23, 2004. Gary Ball

“Shopping?”

Monique shakes with laughter. “I am the queen of all shoppers,” she says. “I can shop ‘til I drop at any given time. I don’t have to stop. Oh, maybe a bite to eat now and again, but after that, I’m back on the mall”

But she doesn’t suffer from an untreated shopping addiction. Monique is a professional, secret shopper or mystery shopper.
Her name and home community (in the Peterborough area) have been changed to shield her identity, those agencies who hire her and of their clients… the businesses which use secret shoppers in efforts to maintain their standards.

What mystery shopping means is that she is paid (in cash, or in goods and services, or a combination) to go shopping.

She’s been at it for better than two years and isn’t quite certain that she hasn’t died and gone to heaven.

“I love it,” she says. “I never thought I’d ever find a job that I love as much as I do this one.”

It was actually a call from her sister that got Monique started exploring the little-known world of mystery shopping.

“My sister called me and said “Oh my gosh. You aren’t going to believe this. There’s an ad in the paper and they want to pay someone to go shopping. Check it out.”

Monique did.

An internet search engine turned up all kinds of hits. A Better Business Bureau assured her that mystery shopping was a legitimate industry.

She filed an application over the Internet, did a little bit of online testing and started taking shopping assignments.

Although she does shopping work for a number of agencies, Shoppers Quality Management (SQM), of Toronto, is at the top of her list and a key player in the Canadian mystery shopping industry. SQM was founded 11 years ago by David Lipton and Craig Henry. Henry attended high school in Peterborough.
The two attended Ryerson in Toronto and graduated together from the tourism program and went their separate ways.

In a telephone interview, Henry says circumstances combined just over 11 years ago to leave both men unemployed.

“We both had been exposed over the years to having these mystery guests come into the hotel to see what was going on.”

Both agreed that the mystery shopping companies really shouldn’t (as was the practice) be trying to determine corporate strategy for the clients.

Instead they should, Henry says, be working with the client companies to design shopping programs that actually measure how company plans were being carried out by front-line employees at individual outlets.

“We don’t care whether you figure your phone should be answered in two, five, or ten rings. We’ll just tell you whether or not it’s being answered the way you (the corporate client) think it should be done.

“Lets create a mystery shopping company that lets clients choose what their standards are. They’ve been around for X number of years and know their business.

“The thing they want to know (from mystery shoppers) is whether or not staff are able to maintain the specific standards they have set. That’s where SQM really began.”

Lipton and Henry did much of the mystery shopping and all kinds of other things, too, in the early days.
“Right now,” he says “our roster of active mystery shoppers in North America is pushing 8000,” Henry says.

“The preference is for local shoppers. If the assignment is in Peterborough, I’m not going to have somebody from Toronto to do it. I’m going to find somebody local. That keeps are travel and overnight costs down.”

Local shoppers are also more in tune, he says, with local conditions and practices.

Monique says her husband now calls her “secret agent 007” In reality, she is now what SQM call a “level-eight shopper” one rung down from top of the ladder (level nine) shopper, a category that would allow her to sign on for travel and resort secret shopping… taking trips to resorts, carry out specific and filling out reports as required by the client.

“Everything is online,” she says.

“I trained online and I report online. In two-and-a-half years of shopping I have never met (face to face) one single person in the industry. I know them by their voices, talk to them on the phone and online.”
Although precise procedures vary from shopping company to shopping company, and from assignment to assignment, mystery shoppers typically qualify to “shop” the premises of a specific client by achieving a certain level of experience and skill level (online tests and experience) or by climbing a tested shopper skills level as she does for SQM.

Initial steps, she says, would deal with fast-food and retail clients, with each succeeding step, passed in online tests, allowing a shopper to handle increasingly complex assignments.
“Big corporations can’t have their eyes on all of their stores at all times, so they hire people like myself to go and check things out,” Monique explains.

Her previous work experience includes factory work, secretarial work, bookkeeping and (experience which she used shopping) waiting on tables in bars, restaurants, and dance clubs.

That table experience, she says, really helps when she’s shopping fast food or restaurant chains.
“Sometimes people are just having a bad day. But in the (food) business you never know who’s at the counter. Anyone, at any time of the day, could be a secret shopper. The time is set by the client… in the middle of the day to two in the morning.”

Following instructions to the letter is key to survival as a mystery shopper. Grocery store shopping, for example, is done in a pattern set by the client, she says.

“You have to go to every department. You might be asked to pick out a product and ask for more information, but you can buy whatever you want. Takes about a half hour to do a grocery shop.”
Grocery lists in hand are okay, because virtually all shoppers, real or not, carry grocery lists. A clipboard, on the other hand, might lead her to being spotted as a mystery shopper.

“The amount of money you spend on a grocery shop is up to you. The customer will set a limit. For XYZ Groceries, it may be $35. You can spend more, but you’ll only be reimbursed for $35.”

So, yes, when she can she does her own shopping, at least part of it, as a secret shopper. In busy times (Christmas, Easter, etc) she may even end up buying groceries for extended family and friends… turning the goods she earns into cash. And that’s on top of the cash payment for the shopping report…. Perhaps $10 or $15 or $20.

Filing an online report typically takes something like a half-hour to 45 minutes.

“Some of the reports are almost multiple choice, check off yes or no. Some, they ask you to expand on your answers. Some reports may be two pages (online) long. Depends on the client. Others are four or five. It all depends on what the client is asking the shopper to do.

“You can be almost as busy as you want to be. I pick up a lot of shops outside of town, in communities of Oshawa, Ajax, or Pickering. I’ll make a loop and try to get all my shops grouped together. I might work two or three days a week.

On a precisely planned day that goes according to plan and schedule, Monique says, she can sometimes carry out 15 assignments. The cost of operating a vehicle is her own responsibility.

“I can make up to $300 in a good day… $20 or $30 at a time. On a day like that I leave home at 7:30 in the morning and I get home at 9:30 at night, when I really cram it. I’ve done hundreds and hundreds of shops in two-and-a-half years, probably over 1000.”

She can pick and choose assignments that let her purchase clothing or hardware items, things her family needs. Or she can plan outings, family excursions or holidays around shopping.

“If I am going to be in Toronto on a luxury hotel shop, I ask for these shops two or three weeks in advance and then I’ll make plans with my husband to be in Toronto, pick up a show or something then get to stay in a nice hotel. Along the way, Toronto being a big city, there are more assignments available, so I’ll pick up other shops at the same time… groceries for the hotel room, maybe a restaurant for a meal or a beer.

Monique describes this sort of trip as a barter outing, paid for in part by goods and services (hotel room, meals, etc.) and partially in cash…$10 or $20 fees. Sometimes even basic auto maintenance costs…oil changes etc., can be covered by mystery shopping. Garden centers, hardware and home-building supply stores also use shoppers.

Some shopping assignments take precise timing, she says. Shopping the drive-throughs at a fast-food chain involves keeping track of time right down to the second.

All the outlets in a district, region, or even the province might be sampled by different shoppers at precisely the same time.

Reports may include reporting on employee uniforms, caps, name tags, and even the precise wording of a greeting and order request or suggestion.

“Would you like a doughnut or a muffin with that? Can I get you anything else today?”

The best assignments to date, she figures, have been the luxury Toronto hotels.

“First of all, you get to drive up and the valet takes you car. He is evaluated. The bellhop takes your bags and he is evaluated. The check-in is evaluated. The concierge service, too.

“All this time, you have to remember the people, their names and what they say to you. Were you shown all the features of your room service, where your robes are and where the pool is and the restaurants and bars?”

Some shops involve ordering from room service and keeping track of everything from the moment you arrive until the moment you leave, Monique says.

Sometimes a hotel shop means checking out its dining rooms, restaurants, and lounges.

“A lunch visit could be anywhere from $50 to $75 and on a dinner visit you could be reimbursed from $100 to $150, for two people. Hotel shops almost always involve male/female customers.
Sometimes, Monique says, the goods and services or the perks that go with being on assignment are the real profit for her.

“Sometimes you might be paid $20 to go and stay at a hotel. But you’re also getting a hotel stay for two for nothing. You’re eating in their restaurant or bar and they’re paying for it. Yes, there’s your time, but you could be at home in your own bed, or you could be in a luxury hotel, getting room service, meals, a spa treatment, or a massage.”

“I’ll be doing this forever. But don’t expect to quit your day job unless you don’t want to be home very much. You’d have to be on the road all the time. I work it into a couple of days a week. I have a family. I have a husband who is away all day. I want to spend by evenings with him. And I have children. I want to spend time with them.”

For someone who is single and willing to work with 10 or 20 different shopping services, she says, there is money to be made, but that level of mystery shopping will keep away from home for long periods of time.

“They’ll call. We need someone to do this assignment. We know you’re not in the area, but we’ll give you another $15 for gas. Your portfolio gets around, I guess. A (shopping service) phoned me out of the blue and asked if I’d do a job in Hamilton. They said “We’ll pay your mileage, 50 cents a kilometer and a $100 bonus. Count me in.”

“You don’t know anything. The client hires SQM and SQM hires us. You don’t know who you’re working for except that you’re working for SQM.”

Convenience stores, because of their sheer numbers, can be very profitable for mystery shoppers. Monique says since there’s almost one on every corner, shoppers might be limited to doing only six, or perhaps nine, on a given assignment to spread the word around.

“But if you can do six of them in 20 minutes each and they’re close together and pay $10 each, that’s the gravy in this business. But it doesn’t come up all the time”

Next up for Monique, she hopes, is to move to the top of the later to Step Nine.

“That’s air fare and resorts.”

Has her cover ever been blown?

“One day in a department store a clerk asked me if I was a mystery shopper. I said ‘What the hell’s that?’ She told me it was a shopper that came in to see how she did her job, how she took care of customers. We had quite a chat about it. I was shopping her that day, but I didn’t let on. That’s the only time.”

Business staff and regular shoppers alike can all play the game of trying to spot the “secret shopper.” Monique could be any shopper standing beside you in almost any business you patronize in the Peterborough area at virtually any time of the day or night.

Is that Monique two customers ahead of you at the checkout? Chances are you’ll never know for sure.

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