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Mystery shopping: Billion dollar industry keeps retailers in check

Broadcast: January 9, 2001 | Reporter: Jacquie Perrin; Producer: Richard Wright; Researcher: James Dunne

You might see them but you probably won't know they're there - if they're doing their job properly.

They're called mystery shoppers. And there are thousands of them across the country: people who shop for a living to make sure that your shopping experience is good enough to keep you coming back.

Everybody's had a bad experience trying to get the customer service they deserve: like checking into a hotel that has botched your reservation. You may have asked for a non-smoking room somewhere on the first few floors of the hotel. Instead, you've been booked into a smoker's room on an upper floor.

The hotel made a mistake, but the desk clerk doesn't seem to care. You want better service and so does hotel management.

"The guest who walks away unhappy and maybe doesn't tell us, is a guest we might lose and we really can't improve on our services if we don't know," says Ina Whitehead, director of rooms at Toronto's Westin Harbour Castle hotel.

Big hotel chains depend on mystery shoppers like David Lipton, to get a customer eye view. Lipton is president of SQM Inc. He once worked at a hotel front desk. Now his company does the mystery shopping for Westin Hotels.

Lipton scrutinizes a hotel from check in to check out. He looks for things like friendly and helpful staff, clean rooms, and good service.

The 'eyes' have it

"There's a real thrill to it, you know. It has all the aura of the undercover agent," says Joan Pajunen, president of Trend Seek International. "You get to do something you love which is to go out and shop. Imagine being paid to go out and shop."

Pajunen used to be a mystery shopper. Now she's a retail consultant.

"Good mystery shoppers have great eyes," Pajunen told Marketplace. "They're really curious and they see lots of little things that should be tweaked."

Pajunen says it costs a lot more to attract a new customer than to keep an old one, so retailers want to please. All successful retailers, she notes, use mystery shoppers.

A growing industry

Mystery shopping is a billion dollar industry in North America. In Canada, the A. C. Neilsen company is one of the biggest players, with 500 mystery shoppers in the field.

Fred Phillips is head of Store Observation Services for A. C. Nielsen. He says today's customer is driving that trend.

"I think there's a definite difference in the customers' approach to how they shop, and part of that is the maturing of the baby boom generation," Phillips says. "They have more disposable income and they want more service. They're not so price conscious, they're more service conscious nowadays."

We accompanied one of A. C. Nielson's top agents on a hidden camera shopping spree.

Dave has four years in the field. He asked us to conceal his identity. He took us to several locations, including a restaurant and a grocery store. Dave told us the two most common problems he finds are store employees' lack of interest and lack of knowledge.

"Some companies just aren't training their employees well enough to give them enough knowledge to give us what we're looking for when we're shopping," Dave explained.

A.C. Neilsen shoppers go through a rigorous training program. Those who make the grade can earn $10 an hour. For Dave there's the bonus of striking a blow for the ill-served consumer.

"It certainly gives me the opportunity to voice my opinion and maybe it's a voice that will be heard down the road... to assist providing a better shopping experience for somebody else," Dave said.

Driven by profits?

But not all mystery shoppers are used to enhance the customer's experience. Brian was a mystery shopper for the Cineplex Odeon theatre chain for two years.

There were certain things Brian was trained to look for, such as whether there was garbage on the floor and whether employees were wearing their name tags. But he had some concerns about some of the other things he had to look for.

"When we went there we had to ask for a small popcorn and a small drink," Brian explained. "At that point they were supposed to say 'Would you like to up-size?' It seemed to me these things were as important to them in the questionnaire as whether the projection quality was good, whether the sound was good."

Instead of promoting consumer comfort Brian felt his sleuth work was really used to pump up company profits.

Retail consultant Joan Pajunen says mystery shopping is only useful to a company that uses the information wisely.

"The performance of the employee... is really the mirror image of management, so this is really a management report," Pajunen explains. "So before that manager gets on the phone and starts to haul some poor sales associate in East Podunk over the counter, he or she should take a hard look in the mirror, because they are just delivering that which management expects."

Putting shoppers to good use

Geoff Hogarth is the marketing manager for Pioneer Petroleums. He says the company uses mystery shoppers because it's a positive tool for change.

Pioneer sends a mystery shopper to each of the company's 160 gas stations once a month. Employees who do well are rewarded with cash bonuses for high scores on a twelve point report card.

"They're looking to see that... there's a friendly greeting provided, that there's a proper uniform worn, that there's a name tag, that they get bonus bucks... and that their payment was processed quickly and efficiently in a proper manner and that they were given a friendly.... 'Thank you very much,'" Hogarth told Marketplace.

Comments from mystery shoppers have inpired Pioneer to change its customer service practices. For instance, as prices kept climbing, Pioneer's employees stopped asking drivers whether they wanted more expensive premium gasoline.

For consumers, there's some comfort in knowing that there is an army of experts shopping on their behalf, and managers who are listening to what they say, but even the most avid proponents of mystery shopping agree that's no substitute for speaking out against bad service.

"Nothing speaks more loudly than a customer that doesn't come back to your business," says A.C. Nielson's Fred Phillips.

The professional mystery shoppers insist the most effective mystery shopper is you.

Link to CBC Article


Seize the Oppurtunity

Foodservice and Hospitality, Friday, August 2000. David Lipton

A complaint is often regarded as a bad thing, but in a service-oriented industry, this couldn’t be further from the truth. Complaints provide an opportunity to seize the moment, turning the experience of a disappointed customer into an opportunity to identify the establishment’s overlooked problems and improve customer service. An, of course, by properly appeasing the customers who voiced concerns in the first place, a business can be sure to retain those once-dissatisfied patients.

Customers have an expectation that something will actually be done about their complaint, and fulfilling this expectation will benefit the business as much as it benefits the customer. Actions can range from a sincere apology (which at least acknowledges the validity of the complain), to a refund, a product replacement, or even future product discounts or coupons. When deciding how to resolve a situation, the establishment should take into account the cost of satisfying the customer versus the cost of losing future patronage. Since it can cost up to five times as much to attract a new customer as it does to retain an existing one, it’s in the company’s best interest not to let complainers go. As long as customers receive something of value, they’re apt to hold a more positive image of the company in their minds, and they’re more likely to remain customers in the future.

The key, however, is to handle the complaint quickly. Between 54 and 70 per cent of dissatisfied customers will do business again with an organization if their complain id resolved in a merely acceptable amount of time, while 95 per cent will return if the complaint is resolved quickly. The only way to ensure complaints are dealt with in a timely manner is to empower front-line workers to resolve complaints the moment they become known.

That’s why it’s imperative that employees who have direct contact with customers, such as wait staff or cashiers, are aware of the operation’s complaint system, guidelines and procedures. It’s equally important to provide extensive training in handling customer complaints for all customer-contact employees. In many cases, front-line employees feel frustrated when they can’t fix the situation. It’s exceedingly common to hear “let me check with my manager” or “there’s nothing I can do” from servers, but employees need to have faith that their employees will make the right decisions- in fact, they should openly encourage them to be proactive when responding to customer concerns. That said, clear guidelines should be set to assist employees in their decision-making, which could, for example, include monetary guidelines for the limit on what can be spent in order to resolve a complaint.

Of course, an employee can’t satisfactorily address a concern if it’s impossible for the customer to voice it. To facilitate the complaint process, many companies use toll-free customer service numbers or comment cards – by eliminating the trouble involved, the operation will be able to hear more complaints, fix the problems more easily and lose fewer customers in the process. If a dissatisfied customer has no way to complain, they’ll silently take their business elsewhere and you’ll ever know there was a problem.

In any hospitality-oriented business, it’s important to stay focused on customer satisfaction at all times. That’s why handling complaints in a proactive manner, and even going as far as to actively encourage customers to voice complaints, is common sense for any service-driven organization. Ignoring a problem will only make it worse, while handling it properly is sure to keep customers happy.


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