The most recent HBR (Harvard Business Review) features Kevin Peters, president of Office Depot, taking on mystery shopping himself (at first) to drive results. He discovered what most of our clients tell us; Mystery shopping works.

The problem is most companies (and unfortunately sometimes their supplier) don’t do it correctly. When they don’t get the results they hope for, they end up “throwing out the baby with the bath water.”

In summary,
- Office Depot had a mystery shopping program that did not work.
- The president went out the stores and did the job himself.
- Peters found they were not measuring the right things.
- Office Depot is now recalibrating and rolling out to its stores
- Talking directly to his customers in the store yielded information that Peters was not getting through his executives or customer satisfaction survey program.
- Peters wanted to find more ways to find out why people are leaving the store without making a purchase.

Our take on the story
The mystery shopping program was set up for failure before it ever began.

It is unfortunate that Office Depot probably wasted hundreds of thousands of dollars in what could have been easily identified upfront. “If you don’t ask the right questions, you will not get the right answers.”

We love Harvard Business Review but they did sort of take the angle of the president doing the old “if you want the job done right do it yourself” mantra. While this was novel for the article, in reality really cannot happen across any chain in a meaningful or sustainable way.

Although we do not know it for a fact, the provider they mention is probably not doing their new program anymore (nor is Peters) and the person or team who brought the provider in and managed the program is probably not at Office Depot either. The person or team in charge of Customer Experience has a great opportunity in front of them; not just because they recalibrated their mystery shop program, but because they still have huge opportunities.

The opportunity is the huge open gap on the non-purchaser side of the customer experience.

There was something else that was alluded to but not pointed out. What about the people who made a purchase, but would have bought more? They are screaming for customer intercepts. I wonder if the president will do them too?

My bottom line
I love that Peters got his hands dirty in the store and actually talked to the customers. it is a great lesson for all retail executives. We just want them to be successful in the long term; not because HBR said so, but their customer, their employees and their stock price need them to be.

If you would like additional insights on why most mystery shopping programs do not work (and what to do about it) or are interested in finding out how to understand why customers leave your store and do not make a purchase, let us know. In the meantime, we look forward to sharing future insights that can help you succeed in your position and create a future full of possibility.

If you are not yet convinced that this multi-faceted approach is essential for the greatest success, then we’ll show you the benefits:

How Mystery Shopping Works

• Mystery shopping relies upon observations on how the staff members perform
• They evaluate things like how many staff members were on the floor at the store, checkout times, compliance to known company policies, the overall level of knowledge of staff, and the speed of checkout.
• Mystery shoppers are objective in their approach, but they are looking at the fine details.

How Customer Satisfaction Data Works

• Actual customers are subjective, and at the end of the day, it isn’t always the fine details that determine how pleased they were with their shopping experience. The overall vibe they get can determine whether or not they will come back, even if they can’t pinpoint something about the experience that they didn’t appreciate.
• While customers may not be totally objective, they are the ones that have a direct impact on business revenue.
• Customers are surveyed at random.

Essentially, a well-rounded mystery shopping program that incorporates both of the components outlined above, provides feedback from two different and essential perspectives. As a retailer, you may choose to focus more heavily on one type of feedback over another, but having it all available to you will have the greatest benefit to your success.

Mystery shopping focuses on staff performance — how well the company executes its operations and customer service objectives based on fact-based observations. Since shoppers are given detailed guidelines in advance on what to look for, mystery shoppers typically visit the store 1 – 4 times each month and focus on quality control, training and incentives. Additionally, Mystery Shoppers are recruited based on demographic profiles that closely match those of a company’s real customers.

Mystery Shoppers are paid to be very objective and detailed, reporting on specific visits or calls and observing 100% accurately the precise number of customers and employees in-store, service times down to the second, what was in or out of compliance during the visit.. Each evaluation is then used independently to make improvements to operations and training. It is not difficult to see how much valuable information can be gathered from the mystery shopper’s point of view of employee performance.

However, customers have a completely different vantage point; a thoroughly subjective one. Many see employee performance in a completely different light. This is where customer surveys become very important, measuring what the customers really think and feel about the company, its services, its products and its marketing.

Customer surveys are not based on fact; they’re based on individual opinion. But that opinion is as valuable as a mystery shopper’s report. Generally, comsumers are sampled at random from a qualified population to extrapolate results that represent a significantly larger population. Encouraged to freely express their highly subjective opinions, individual surveys are not predictive of every customer’s experience unless sufficient samples are taken and results analyzed in aggregate.

Although customers lack the pre-arranged guidelines and objective focus of the mystery shopper, customers aren’t dummies. They’re not afraid to express their opinions on whether there were enough employees available to serve customers, if service times were adequate, and whether other criteria met their standards. Customer’s attention spans are typically short, limiting the details that can be gotten, but that does not make the information any less valuable.

The best mystery shopping programs combine the viewpoints, perceptions and facts from both sides for a complete picture of the customer experience.

Business people always look for ways to gain an advantage for their company. It’s often the small (and sometime not so obvious) edge that makes all the difference in results. In the current economy, the typical apparel retail store has a conversion rate of 18%. That means 100 people walk through the doors and 82 walk out without having made a purchase. Just a small uptick in percentage can have a huge financial impact. An increase of just 5% – from 18% to 23% could result in $8,176,000 in sales per 100 stores. 5% = over $8 million dollars.

Could the Customers Who DON’T Buy Be the Key to Success?

We’re used to asking for feedback from shoppers. Most retailers focus their data gathering on customers who’ve made a purchase. Surveys on the sales receipt, in the shopping bag or on your website and email follow up are commonly recognized and effective tools. It’s important to know what your customers think and get a critical understanding of their observations and experience of your stores, your merchandise and employees. What if you could find out why the ones who didn’t buy left your store empty-handed? Asking the right questions of those shoppers provides insight you can’t get any other way. Understanding their perceptions of your stores and learning what they see, think and feel gives you the edge you can use to improve your stores, your customer satisfaction and your bottom line by turning shoppers into buyers.

Improvement Can be Quick

Sales increase in direct proportion to customer satisfaction. Much of the measure of customer satisfaction is wrapped up in customer perception. How shoppers feel in your stores. How they feel about your sales associates, about your stores cleanliness and your displays. Knowing what people experience, think and perceive – particularly those who don’t buy gives you a fresh perspective on the key drivers of an improved experience. Often the answers are simple and the improvements quick and easy. But if you’re not asking the right questions of the right shoppers, you’ll never gather the information that will give you the edge.

How Customer Intercepts Work Best

Start by asking carefully designed questions of the shoppers who leave your stores without buying. What if you learned for example, that a large percentage of your customers in a certain region just weren’t finding what they were looking for? Perhaps you’re an apparel retailer and you overlooked the fact that your customers wanted a greater selection of seasonal sweaters in the Northeast and brighter colors in the Southwest? Maybe you’re an electronics retailer who learns that your employees don’t have enough knowledge in various departments and without answers your customers lose confidence and don’t buy. Suppose you were to learn that customers’ ‘feelings’ caused them to leave you stores? They might tell you the displays are too crowded or the stores weren’t clean enough. Maybe you’ll learn that customers couldn’t find a salesperson to answer their questions and they didn’t feel properly cared for. Maybe they just couldn’t find what they wanted.

Asking The Right Questions Translates to Critical Improvement

When a national pharmacy chain needed to understand what was happening in the aisles of their stores they relied on shopper intercepts to find a solution. Specifically, their Market Research Manager wanted to know why so many shoppers came to the pain aisle, but didn’t make a purchase there. Intercepting customers in the aisles and asking the right questions resulted in the manager getting the data needed to improve that aisle; increase sales and to improve other aisles so their customers could more easily find and purchase exactly what they were looking for. The right answers from the right shoppers increased their bottom line. They just had to ask the questions.

Using the Data to Make Actionable Changes

It’s not an uncommon for retailers to gather data but be at a loss to understand and implement actions from it. An experienced provider makes all the difference. They’ll work with you to create the questions, determine what you need to get a workable, statistically valid sample. They’ll show you how to interpret the data gathered and translate it into the actions and improvements that convert more shoppers into buyers. It can be a big ‘aha moment’ when you realize that the best information can come from the people who aren’t buying. You’ve done the work to get them into your store. Finding out why they’re not buying by running a strong Shopper Intercept program can turn things around quickly and profitably.

“What gets measured gets done,” says Rich. And after years of observing many ineffective programs which resulted in frustration for agencies, brands and retailers and, in some cases, reluctance to start over without a structured process in place, ICC/Decision Services has created The Springboard Process to take the guess work out of launching critical customer experience programs such as shopper intercepts, secret shopping, retail audits, customer satisfaction and employee engagement surveys.

The process begins with an initial meeting where executives are introduced to their personal Customer Experience Team from ICC/DS Quality Assurance, IT and Account Management departments. The new team works together to establish goals, develop surveys and determine the proper frequency and sample sizes of tests to be conducted. The process continues as ICC/Decision Services runs test shops and reviews proposed programs before a full-scale launch. Customized Enterprise Reporting sites created for each client means data is delivered according to their needs and preferences.

“The Springboard Process assures that data gathered will lead to actionable results and provides real value,” says Rich. For more information about the Springboard Process and ICC/Decision Services visit www.iccds.com

About ICC/Decision Services
ICC/Decision Services was founded in 1979 to design and execute Customer Experience Management programs. ICC/Decision Services offers a wide range of qualitative and quantitative business tools, including mystery shopping, store audits, customer feedback and employee satisfaction surveys. Clients include Coach, 7-11, L.L. Bean, CVS, Foot Locker, Walmart and others. The company is headquartered at 561 7th Avenue New York, NY 10018, U.S.A. Phone: (800) 444-1717. E-mail: info@iccds.com.

Although all companies have some type of Customer Service Department and some have adopted customer experience programs to measure and react to the data, most do not have an integrated approach to apply the learning across the organization and back into the marketplace. What gets in the way of integration? If customer programs are used at all, they are used and isolated within organizational silos. See if this sounds familiar. Marketing owns the Customer Satisfaction Survey, Operations owns the Mystery Shop Program, Market Research owns the Customer Intercepts and Human Resources owns the Employee Engagement Program. But who owns the customer relationship?

The reality is that marketers don’t do this with any other asset in their company. The COO makes sure that the widget is the sole focus of the company from raw material to distribution. The CFO makes sure that every bean is counted along that path and knows exactly what the effect of a bean spent in Silo One means to Silo Four. Perhaps it is time to introduce the CCO, the Chief Customer Officer.

Don’t laugh. We have a high ranking executive to champion every other asset in the company, but we don’t have one whose sole purpose is to look out for the, “most important asset.” Companies are already moving quickly into the area of Social Media and you will soon see the advent of the Chief Community Officer, so the development of this new C-suite position makes sense and should not be out of the realm of possibility.

If the customer is truly your company’s greatest asset, then stewarding that relationship has to be more than lip service. The customer experience has to have a seat in the board room and filter its way all the way through the organization as an integrated strategy focus. Now that would be walking the walk.