Selected Article
Title See That Lady in the Sweatpants!
Date Published 02/22/2003
Author C-Store News
Publication C-Store News

See that lady in the sweatpants

MARCH 22, 2004 -- buying the chocolate bar? Bet she's one of them. What about the college student asking to use the bathroom or the retiree who can't find the sugar for his coffee? Think one of them is the plant?

The resurgence of the mystery-shopping industry can be credited in large part to convenience store operators. These retailers have developed their once-simple programs that focused on parking-lot trash into useful tools for remerchandising stores, reforming operations and rewarding employees.

"The c-store industry is ahead of the curve with mystery shopping, because operators want to give customers a common experience and the large number of locations makes that difficult," said Warren Porter, a Toronto-based consultant to mystery shopping firms. "There's been a maturation of shopper programs, with c-store operators often marrying them to merchandising programs, perfecting the way they use the data and pushing mystery-shopping providers to help them accomplish these goals."

In one example of change, Porter recently worked with a convenience retailer who added a mystery shop component to a merchandising audit. "We realized 70 percent of this retailer's questions for their mystery shop didn't require the shop to be a 'mystery' just unannounced," he said. "When the merchandiser checked on whether a product was in stock, he also could look to see if the washrooms were clean. This provided a huge cost savings for the chain, which didn't have to pay for two exclusive programs."

Cost has been a strong driver for improving shopper programs. Per-shop costs may run from the high teens to $100, depending on the program's complexity, the length of time the shopper is in the store, the size of the contract and how badly the provider wants the chain's business.

"Retailers are getting better at using the data, because they need to improve their ROI," Porter said. "If you are spending $1.5 million on a mystery shopper program, it has to drive action. If the program is suffering from dusty-binder syndrome and the data isn't being used in employee incentive programs or to bring change, it's going to be put on the chopping block."

The recent trend in the c-store industry, however, is to add, not cut mystery shopper programs. The majority of chains with 25 or more stores are using or seeking mystery shoppers, said Ron Welty, president of IntelliShop, a Perrysburg, Ohio-based firm.

"Instant reward programs are becoming a popular way for c-store operators to focus on one specific area, such as suggestive selling," he said. "The rewards don't have to be budget busters, as long as employees are being recognized."

Other operators are taking the mystery out of the shop, he noted. "We've had more c-stores use shoppers to focus on their image. The shopper will announce themselves to the staff, take digital pictures to see if the store is meeting signage requirements, cleanliness standards, those types of things."

Rally on a Roll

The team at Rally Stores Inc. believes in the value of mystery shopping. The Clearwater, Fla.-based chain of eight stores operates two units with Subway programs, four with proprietary Big Daddy Subs and Salads, and one store with chicken and hot entrees. Rally's mystery shopper program has evolved into a management tool that evaluates almost all facets of the stores' foodservice operations and the customer's experience.

"In the past, we didn't get enough value out of our mystery shopper program," said Mark Perreault, Rally's vice president/general manager. "It focused more on store appearance, with a few lines about the customer transaction."

Rally dropped the program for a year and realigned the effort to better match management's goals. "We didn't want it to be an easy 100 so that people could pound their chests and say how great they were

doing. We wanted to really expose some of the flaws in our operation and make sure there was interest around the tough parts of our business, such as making sure there was enough grab-and-go foods in rotation and personnel were busy, productive and making eye contact with the customer."

Today, Rally stores are shopped by IntelliShop twice per month. One shop zeros in on the foodservice offering. Areas to be evaluated during the lunch rush include: How many people are in line? What is the average time a person waits, per sub? Did the employee make eye contact? How many employees waited on the customer? Were they friendly? Did employees offer a Sub Club Card? Did they offer a Meal Deal?

Rally's other monthly shop focuses on product merchandising, suggestive selling, recognizing customers at the pump via the intercom and other areas of operation. What were people doing when the shopper walked in talking on the phone, helping customers, cleaning, merchandising?

Shoppers also note if they witness anything fun happening between employees or between employees and customers. "That is something employees get bonus points for. We're trying to nurture that in terms of company culture," Perreault said.

Each year, Rally's mystery shop evaluation form is reexamined. "If the program is not in line with objectives, you have to question the value of it," Perreault said. "Or if we are getting good scores consistently in one area, maybe we need to cull that or focus on another area. I want the mystery shopping staff to be tough on us."

An example of one change stemming from Rally's shopper reports: Wholesaler Eby-Brown Co. now makes deliveries late at night so that product is off the floor, counted and on the shelf before the early morning rush starts.

Because Perreault and his management team are able to access each report online within 24 hours of the shop, quick action can be taken. "We can counsel where we need to counsel or applaud when we should applaud," he said.

Indeed, Rally's managers are budgeted $200 a month to use as employee reward money, in sales contests or other incentives. Many managers use a portion of this cash to immediately reward good shopper scores. Last year, shopper scores were made a criteria for awarding manager bonus monies.

Since scores can be subjective, IntelliShop's shoppers describe what they see or don't see during their time in the store. "These details give us more insight into what they were feeling at the moment and further justify the points awarded," Perreault said. "Or, they may open up a question. Then, we look at surveillance tapes and see if the shopper missed anything. If so, the points are reissued."

Rally executives won't debate a poor customer-service score, however. "If the shopper feels like it was poor service, it was poor service," Perreault said. "A mystery shopper may go into a store and her experience could feel 100 percent. Another may have a very similar experience and quantify it at 80 percent or 90 percent. We are in the customer perception business. Each customer is very individual like the shoppers."

Shoppers In the House

While most retailers use third-party providers, a few have succeeded with the do-it-yourself approach. Sheetz Inc., for example, has had an in-house program for five years. It grew out of Sheetz's GUEST initiative of the 1980s, when employees were handed $10 if they offered an appropriate Greeting; wore a full Uniform; asked "Will there be anything Else?"; Smiled; and said "Thank you."

"Back then, there would be a little moment of celebration and life would go on," said Peggy Faulk, regional director of operations for the chain of 300 stores based in Altoona, Pa. "Our shoppers were college students, interns, family members and other temporary employees."

Today, the program has evolved into an evaluation and reward system that assesses customer transactions, foodservice and beverage operations, restrooms, outside cleanliness and display merchandising inside and outside the store. Five full-time employees, whose identities are known only to President Stan Sheetz, the program's coordinator and a few others Faulk doesn't know them shop each Sheetz store twice per month.

Mystery shoppers' routes, which often include overnight stops, take them into 12 to 15 stores per day or day and half, with visits occurring between 6 a.m. and 3 a.m. Each quarter, every store is shopped during the first, second and third shifts, during daylight on a weekend and during nighttime on a weekend. Routes are varied, with shoppers sometimes running them backward.

Shopper territories are rotated to give management different perspectives. "This way, we know how employees treat new customers," Faulk said. "But our shoppers also are aware of conversations taking place with customers ahead of them in line. Are employees being courteous and professional with regular customers? If there is a complaint made when the shopper is in the store, we know it and can nip the problem in the bud."

Each shop lasts five minutes, maximum. Shoppers walk through, visit the restrooms, make a purchase and leave. Then, they drive to another location, for instance the parking lot of a grocery store, and fill out their shopper's report.

Each store's scores are averaged for the quarter. Bonuses for hourly employees are based solely on mystery shopper performance. "The name of the person who checks out the mystery shopper is recorded, but this is a team shop," Faulk explained. "The person running the register may not be the person who cleaned the restroom or gas islands."

To be eligible for a bonus, each Sheetz store must average a score of at least 85 up from 80 when the program began. Dollars are divvied by the number of hours each employee worked that quarter, with full-timers receiving a larger portion of the pool because they have a bigger impact on the store's score.

Since the program's inception, Sheetz store employees have scored consistently well on keeping products in-stock and on professionalism, with restroom scores a close third. When it comes to smiling though, many associates could take a few tips from Miss America contestants.

"We are looking for attentive service, offering a greeting, making eye contact, being personable or offering a smile and saying, 'Thank you,'" Faulk said. "It's not easy to give each person individualized service and constantly smile."