Mystery shopping improves bottom line for businesses
Keeping a satisfied, repeat customer is an ongoing challenge
that all retail outlets face, especially when it comes to
building a solid bottom line.
Many factors - positive and negative - can influence bottom
line performance, so quantifying the financial return on
investment of any new initiative can be difficult. One solution
for maintaining customer loyalty is the implementation of a
solid mystery shopping program.
"Most companies create a mystery shopping program around a
singular need, like an employee incentive or franchisee
compliance program," Matt Wozniak, president and CEO of National
Shopping Service, said. "The department responsible for
administering the mystery shopping program gathers the field
observations and disseminates the information to their group.
However, there is a plethora of data that can be extracted and
utilized by almost every department within an organization."
The behavioral return on investment in mystery shopping
programs can be readily measured, though, provided the results
are effectively used to change employee behavior.
For example, if a mystery shopping program reveals that
employees fail to acknowledge customers when they enter the
store 50 percent of the time, the company might take specific
steps to ensure that employees understand that it is expected of
them to greet customers within 30 seconds of arrival. Subsequent
mystery shopping might reveal that customers are greeted within
30 seconds 95 percent of the time. Thus, the return for the
company is that a specific expected employee behavior has
improved by 45 percent.
The financial value of that improvement may be hard to gauge,
but consider the benefits of customer retention: a customer who
is made to feel welcome and valued is far more likely to do
business with a company than a customer who is ignored.
"Customer turnover and defection is a killer for businesses,"
said Wozniak. "Keeping a customer for three to six months
probably won't be long enough to recover your initial
acquisition expense (advertising, promotions, etc.) for that
customer."
There's no end to the ways a business can subtly build its
bottom line, such as suggestive selling, soft selling, or
add-ons. To an extent, all of it works. And it works even better
when combined with the goal of maintaining a satisfied repeat
customer.
"The numbers can be staggering when you look at how minute
changes in frontline staff behavior can influence revenues into
millions of dollars," Wozniak said. "If done correctly,
companies can generate a happier, better informed and more
satisfied repeat customer."
As a hypothetical example, Wozniak says that at a store
averaging 7,000 transactions per week in a 100-store chain,
motivating the frontline staff with incentive programs,
actionable mystery shopping feedback and refresher training on
suggestive selling can improve bottom line numbers dramatically.
"Just increasing the frequency of suggestive selling on items
valued at $1 from the typical 10 percent to 11 percent of
transactions, the annual gross revenue can increase by
$364,000," Wozniak explained. "The trick is discovering how
managers can motivate frontline employees to consistently and
effectively offer revenue-increasing items or services to the
daily customer flow."
Implementing a non-biased monitoring tool like a mystery
shopping program, along with enhanced training and constructive
feedback, is a step toward the goal of maintaining customer
loyalty.
"Most staff members at a convenience store, for example, are
initially uncomfortable selling because they're cashiers, after
all, not salespeople," Wozniak said. "They feel as though they
are bugging the customer or are being forced by management to
sell something the customer didn't want in the first place. And
at peak customer flow times, suggestive selling becomes just
another task that slows down queue times.
"If frontline staff understands effective and unobtrusive
selling techniques and has feedback tied to incentive on their
performance, the end result will be happier customers, staff
receiving positive reinforcement for a job well done, and
greater revenue - a win-win-win."
Mystery shopping programs produce valuable information about
customer expectations for a business's product or service, and
how the staff follows company directives. It's all about the
perception of brand performance and how it affects the bottom
line.
"Contrary to popular belief, most customers don't want an
exceptional, over-the-top experience during every interaction,"
Wozniak said. "They want a routine, pleasant, stress-free,
predictable interaction. Exceeding the customer's expectations
every visit is not realistic and is not obtainable for any
period of time.
"The key is to identify the correct opportunities for
exceptional service and then execute your plan flawlessly and
exceptionally."
To determine which customer behaviors affect a business's
revenue and expenses, Wozniak suggests making a list of four
steps.
Step 1: Outline what you want your customers to do more often
or less often. Wozniak emphasizes that each item must be
"measurable" and something "to be observed."
"This list would not include customer feelings, opinions or
attitudes. Only things that can be measured and observed,"
Wozniak said.
Step 2: Wozniak suggests reviewing the list created in Step 1
and remove any items that cannot be influenced by staff
interaction or equipment speed. The new list should only include
items where specific staff behavior (or equipment performance)
can influence customer behavior.
Step 3: Determine how the staff will need to be trained to
affect each customer behavior modification, how it will be
measured, how the incentives to perform will be implemented, and
what equipment needs to be upgraded, refurbished or replaced -
plus the cost to implement each part of the step.
Step 4: Create a potential revenue generation (or savings) for
each customer behavior alteration process. These will be
estimates.
In addition, historical references can be gleaned from mystery
shopping providers based on an industry's specific needs.
"For example, 'What will we save if we reduce returns by 2
percent?' or 'What will we save if we can reduce shrinkage by 4
percent?'" Wozniak suggests. "Or to implement suggestive
selling, a retailer could ask, 'What would the affect be on
gross revenue if we increase 10 percent of all sales by $2.50?'
or 'What will the savings be if our 800 complaint line receives
7 percent fewer calls?'
"By comparing the costs in Step 3 to the potential additional
revenue or savings in Step 4, a list of viable staff and
equipment changes can then be put into place."
Wozniak points out that covert operatives - or mystery shoppers
- are typically a business's existing customers. These shoppers
are ideal for research because "they retain their individual
perceptions of quality, service and cleanliness, but have been
given fundamental client-based expectations."
"Mystery shop data is best viewed over time, taking the
aggregate picture as a more accurate representation of how your
customers see you and your operation," Wozniak said.
The theory is: Though customers generally are not experts in
the businesses where they shop, they do know good service when
they receive it, a quality product when they purchase it, and a
maintained facility when they see it.
"Customers want to be comfortable with a business and know that
they'll always be treated right," Wozniak concluded. "Customers
also know that on those occasions when a business falls short -
and they will - they'll make an 'exceptional' recovery to show
that they're needed, and they want their business."
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