Selected Press Release
Title Taking the Mystery out of Mystery Shopping
Date Published 01/01/2004
Author Mark Michelson
Publication Quirk's Marketing Review

What is Mystery Shopping?

Mystery shopping is known by many names. Secret Shopping, Performance

Evaluations, Service Monitoring, Anonymous Customers, Quality Auditing,

Service Investigations, Trained Consumers, Service Checks and Frontline

Evaluations to name a few.

Mystery shopping, by any name, is an evaluation of the shopping / buying

process provided by trained shoppers who know in advance what they are to

evaluate. Mystery shoppers visit or call businesses posed as ordinary

customers and provide detailed evaluations of their experience using written

reports or questionnaires.

Mystery shopping provides companies with a means of monitoring service from

the consumers' perspective. It gives management the ability to be the

proverbial "fly on the wall." Mystery shopping is used in a wide variety of

industries such as retail, manufacturing, hospitality (hotels, restaurants,

resorts), property management, multi-family housing, banking/financial,

petroleum and c-store, entertainment, travel, utilities,

business-to-business, even medical.

Mystery shopping is not new. Mystery shopping got its start over 50 years

ago as a way to check on employee integrity and minimize theft primarily in

the financial services industry. For several decades now, companies have

been using mystery shopping to evaluate employee service and sales

performance, monitor pricing and product quality, keep an eye on the

competition and ensure compliance with industry and government regulations.

Today many progressive companies integrate mystery shopping with employee

training / incentive programs and customer satisfaction measurement.

So why does it seem everyone is "suddenly" interested in mystery shopping?

It may be attributed to any of the following: an apparently increasing decay

in customer service; the growth of chain stores; competitive pressures; and

the fact that more companies are promoting mystery shopping services.

Perhaps it seems more popular now because companies are getting positive,

tangible and actionable results with their programs.

For companies in competitive industries where product pricing and assortment

are no longer unique selling propositions, customer service is often the key

to success or failure. Consider the following well known marketing mantras:

. Why Customers Leave...

69% Poor Service

13% Product Dissatisfaction

9% Competitive Reasons

5% Other Friends

3% Move Away

1% Die

. It costs 5 (7 10, etc.) times more to find a new customer than to keep an

existing one.

. One unhappy customer will tell 10 other people of their bad experience

with service. These people may then tell 10 others, and so on.

. What gets measured, gets done.

The benefits of a mystery shopping program are numerous. A well designed

program can help train and motivate front-line employees. It effectively

communicates to employees what is most important in serving customers. It

can be used to measure customer satisfaction along with other methods. It's

an important competitive tool in monitoring pricing, promotions and product

quality. It can be used to identify potential problems before they develop

into major problems.

Big Brother Is Watching

Mystery shopping is used most often as an evaluation of an individual's

performance. When evaluating an individual, it is critical that the

evaluation is objective and factual. To ensure employee performance

evaluation is factual, several states even require mystery shoppers to have

licenses. While companies should use mystery shopping to improve employee

service or sales skills, and not as a device to spy on them to catch them

doing something wrong, it is nonetheless reflective of the employee's

ability to do their job.

To take "big brother" out of the picture, it has become more popular to use

mystery shopping as a vehicle for presenting awards - either on-the-spot or

as part of an overall bonus program. The net effect of awards based mystery

shopping is that it has become much more important to employees and

managers, which is a good thing.

Employees need to be involved in order for a mystery shopping program to be

successful. With bonuses and awards at stake, employees and managers may

dispute the reports more frequently and often get involved with playing

"spot the shopper." This also has a positive side effect in that employees

begin treating everyone as the potential mystery shopper. The strangest

argument against a poor report is "I knew that was the shopper!" If this

were the case, then why didn't the employee go out of their way to make sure

the experience was positive?

Who are the Mystery Shoppers?

In most cases, almost anyone can be a mystery shopper. Mystery shoppers are

regular people, typically working part-time as either independent

contractors or employees, who are trained to conduct performance

evaluations. For consumers, mystery shopping is an intriguing concept that

allows them to play an important role in improving customer service while

earning some part-time income and benefits.

Shoppers are recruited through classified advertising or referrals. Recently

it has become increasingly more difficult to recruit qualified, reliable

shoppers no thanks to numerous scam operations (see article on Mystery

Shopping Facts and Fiction). Due to these scams many applicants today are

seeking unrealistic opportunities to get rich quick or get free big-ticket

merchandise such as TV's. Most good shoppers are genuinely seeking to play a

role in improving customer service rather than an income opportunity.

Most shopping companies will have candidates complete an application, at no

cost, and match shoppers with assignments based on the clients' typical

customer profile. For instance, when shopping apartments, there are luxury

apartments as well as low income housing. How believable would it be to send

a low income shopper to a luxury apartment? Also there may be special

requirements for the shop such as when evaluating optical stores - a shopper

must wear glasses to complete a transaction.

The training mystery shoppers receive depends on the client's objectives and

the company that hires them. In most cases, shoppers are trained over the

phone and through written instructions. Shoppers may be trained in person or

required to perform "test" shops to evaluate their skills before doing an

actual assignment.

How Does Mystery Shopping Compare With Other Research?

Mystery shopping is somewhat different compared with other marketing

research methods. It requires more involvement with the training and

operations departments than the marketing or advertising departments of

clients. It is more labor intensive. It is both qualitative and

quantitative. It's research by observation.

Shopping programs require a tremendous effort in recruiting, qualifying,

scheduling, training and managing shoppers. In addition, individual shopper

reports must be distributed, collected, reviewed, tabulated and summarized

in a short time frame. Shopping reports are used by all levels of a client

company, and distributing the summary reports in a timely manner is


Who Provides Mystery Shopping Services?

There are many different types of companies that provide mystery shopping

services. These include marketing research firms, training companies,

private investigators, security providers, merchandisers, temporary

agencies, insurance agencies and companies that specialize only in mystery

shopping. There are well over 500 established companies in the U.S. that

provide mystery shopping services. Most are regional or local, though there

are many that conduct shopping on a national or international basis.

Some points to consider in choosing a mystery shopping service provider:

. Assists in developing a custom report based on specific client objectives

and employee training guidelines

. Has a large pool of shoppers to meet the client's needs.

. An ability to qualify and train shoppers to perform specific evaluations.

. Can provide fast turnaround on evaluations and summary reports.

. Has experience with or knowledge of the client's industry. Many shopping

companies specialize in particular industries.

. A good reputation with their clients and shoppers. Does not charge a fee

for shoppers to apply.

. Guarantees the quality of their service and shows a willingness to provide

a re-shop or credit for any suspect shops.

How Much Does Mystery Shopping Cost?

Costs for mystery shopping can vary considerably. The cost depends on the

complexity of the shop, difficulty in recruiting, incentives for shoppers

(such as free meals), frequency and quantity of shops, length of reports and

reporting distribution requirements. The costs generally range anywhere from

$25 to $125, with an average fee of around $65 per shop.

There are some basic expenses involved with mystery shopping including

recruiting, printing, long distance, postage/freight, field labor,

management, data entry and analysis. Some companies charge additional fees

to set up a program or provide summary reports. However, most companies seem

willing to absorb these costs with an on-going, frequent program. Any

required purchase expenses also must be calculated into the overall cost of

a program. To allow for flexibility when purchases are required, shoppers

should be given an option to either return the merchandise (which could be

used as another point of evaluation), or keep the merchandise at a minimal

or reduced cost (such as 50% on clothing). Of course meals cannot be

returned and are typically considered as part of a shoppers' benefits.

What Makes a Shopping Program Effective?

. Program must be based on clearly defined objectives with emphasis on

existing training, desired behaviors and standards compliance.

. Communicate the program widely among all employees. Let them know what is

expected in their evaluation and what would qualify for a possible award.

Share results with employees in a positive manner.

. Questionnaires, or evaluation forms, must be designed to provide

objective, observational feedback with a system to allow for checks and

balances. A mixture of open and closed ended questions with some narrative

for suggested improvements from the shoppers' perspective is advised.

Questionnaires should specify the behavior to be measured. Do not ask "was

the employee friendly, smiling, courteous and professional" as the employee

may be courteous, but not friendly and smiling. Break questions such as

these into three different questions.

. Some questions may be more important than others. If using a scoring

system, which is recommended, appropriate weighting of questions is

critical. Some questions may not need to have points allocated to them at

all, but may be necessary for the overall framing of the evaluation.

. Questionnaires should be easy for shoppers to complete and should include

specific illustrations where necessary to clarify the point of evaluation.

. Category summaries make reporting easier to analyze and digest. A summary

page with all category scores and location, shopper and date information is

very helpful. Category scores are based on an accumulation of points from

individual questions within each category. Categories may include areas such

as Telephone, Physical Appearance, Product Quality, Greeting, Understanding

Needs, Suggestive Selling, Closing and Follow-Up.

. Recruiting, qualifying and training shoppers that closely match the

clients' typical customer profile. Shoppers must be able to provide clear,

complete and accurate evaluations.

. Provide shoppers with specific scenarios and clear written instructions.

To ensure all shoppers are providing evaluations on the same issues,

instruct all shoppers to ask for the same, or similar products and ask the

same kinds of questions. At a minimum shoppers should be given training over

the phone and through easy to follow written instructions. In addition, try

to schedule all shops to be completed during equal periods. i.e. weekends or

weekday evenings only.

. Quality control completed evaluation reports before distribution to the

client. Every report must be checked for validity, accuracy, consistency and

objectivity. Shoppers may need to be contacted to confirm their evaluation


. Reporting on a timely basis. A shopping report has a short shelf life. The

individual store reports must be tabulated and distributed to the stores

within 30 days of the shop - or much sooner if possible. Summary reports for

each district, region, division, department, etc. must be formatted in an

manner that is easy to read and understand and also distributed in a timely


. A shopping program should not be used as a one-time audit. An established,

on-going program, where employees know that any customer could be the

mystery shopper are more effective and objective than single shot audits.

The Future of Mystery Shopping

With the new technologies, mystery shopping is changing much like other

research. The need for faster turnaround on shopping reports has resulted in

service providers seeking more efficient ways to distribute and collect

reports. Today many service providers have shoppers complete their

evaluation forms on the internet, by e-mail, through fax-on-demand or by


With the burgeoning competition among service providers, the call to form an

industry association has been growing louder. An association would need to

incorporate the various kinds of service providers, set standards for

dealing with clients and shoppers, act as a unified voice to counter

damaging mystery shopping scams and vocalize industry concerns regarding use

of independent contractors, licensing regulations and government control.

More companies are discovering mystery shopping and developing new ways to

use mystery shopping programs to improve their business. Several new uses

include problem shopping, where the shopper presents a problem that the

employee must solve; using shoppers as coaches - where after the shop is

completed, the shopper then consults with the store manager on their

observations and suggested improvements; and having employees showcased,

when the shopper presents an award, it is an event celebrated throughout the

store. No doubt, there will continue to be more growth and innovation of

mystery shopping programs