A presentation on how mystery shopping can be used to improve customer experiences - given in Sofia Bulgaria

1. Improving the Customer Experience
With Mystery Shopping
Presented by
Mark Michelson
MSPA Founding President
Chairman of the Global Board
Sofia, Bulgaria
Mystery Shopping Day
28 October 2008

2. Why Customers Leave
• When product pricing and assortment are no longer unique selling
propositions, customer service is often the key to success or
failure.
– Why Customers Leave...
• 69% Poor Service
• 13% Product Dissatisfaction
• 9% Competitive Reasons
• 5% Other Friends
• 3% Move Away
• 1% Die

3. The Value of Mystery Shopping
• Ensure that what happens at the “moment of truth” is what the
company intends to happen
– Covert observations and interactions
– Overt auditing of operations
• Provide early warning system for potential problems
– e.g. Discrimination, theft, product quality issues, etc.
• Monitor brand standards to maintain consistency
• Incentive system for management and staff
– “What gets measured gets done” - Tom Peters
• Provide objective feedback for training purposes
• Competitive evaluations
• Manufacturer promotions

4. Best Uses of Mystery Shopping
• Operations
– Management and store reports
– Training to improve customer service
– Bonus programs
– Loss prevention
– Ensure facilities are in good condition
– Ensure merchandising and products are up to standards
• Marketing
– Reinforce promotions
• Ensure signage is promoting current ad campaigns
• Loyalty programs mentioned
• Increase sales - suggest additional products
– Incentive programs
– Competitive pricing.

5. Mystery Shopping
vs. Marketing Research
• Related and complimentary, but not the same
• Different tools: Compare hammer vs. drill
– Both used in construction, but for different purposes
• Marketing Research:
– Based on customer and prospect opinions/perceptions
– Determine needs/desires and how to fulfill those needs/desires
• Mystery Shopping
– Monitor operations to determine whether the customer
experience is executed as planned by the company.

6. Mystery Shopping Techniques
• In-Person Shops
– Customer service evaluations
– Operational auditing
• Merchandising auditing
• Price auditing
– Incentive based shops
• On-the-spot vs. point based
– Competitive shops
• Integrity shops
– Employee theft - requires PI licensing
• Telephone Shops
– Non-recorded and Audio recorded
• E-commerce shops
• Video shops

7. Improving the Customer Experience
• Satisfaction = Experience > Expectation
• Defining vs. Designing Customer Experiences
– Defining = Quantifying and describing what already exists
– Designing = Creating new experiences based on customer
needs and what can actually be delivered
• How does one design customer experiences?
– Marketing Research to understand customer needs, brand
perceptions and competitive strengths and weaknesses
– Mystery shopping to understand experience through eyes and
ears of the customer

8. The 7 P’s of Improving
Customer Experiences
• Product/Service Delivery - Quality, Quantity, Timing
• People - Service = Helpful & Friendly
• Place - Buying vs. Selling Environment
• Promotions - Creating Expectations - External vs. Internal
• Pricing - Visible, Correct, Easy to Understand
• Positioning - Competitive Strengths/Weaknesses
• Promise Keeping - Brand standards deliver on the promise

9. Product/Service Delivery -
Exceeding Expectations
• Understand what is expected - what is the story?
– How expectations are created - advertising, word of mouth
• Ensure product/service consistency
– Establish standards around measurable specifications
• Quality, Quantity, Timing
– Products in stock when supposed to be in stock
– Service Delivery is more than face-to-face interaction
• Telephone, convenient access
– Create back up plans for delivery failures
• Make sure everyone knows what to do

10. People - Part 1
Understanding Customers
• More than demographics and segmentation
• Anticipating needs
• How does your experience fit into daily rituals and pathways
– Mom & Kids
– Busy / No Time
– Born to shop
– Just killing time
– Men
• Understand each type and have a plan to identify and serve each

11. People - Part 2
Designing Roles for Employees
• Actors on a stage
• Casting Correctly - Hire for the right roles
• Create Scripts - Understand Roles With Job Descriptions
• Provide Proper Props
• Measure What is Expected
• Reward on Performance

12. Place - Creating a Buying
Environment
• “We shape our buildings, then they shape us”
• Winston Churchill
• Looks for best ways to facilitate specific interactions
– Navigation
– Hierarchy of Communications
– KAPOD - Knowledge at Point of Decision
– Customer Consulting
– Payments/Checkout
• Comfort
• Customers can only buy what they can carry

13. Promotions - Creating Expectations
• Defining and creating a compelling reason to buy now
• External -
– Be careful to not promise more than can be delivered
• Advertising - What you say about yourself
• PR - What the press says about you
• Word of Mouth - What your customers and staff say about you
– How are rumors countered by staff at the retail level?
• Internal
– Signage - The true value of a sign
– Sales - Reinforcing the reason to buy now
– Customer Loyalty Programs
• Are loyalty programs being actively promoted?
• Are your customers being treated as though they are valuable?

14. Pricing
• Visible
– Price signage placed near product
– Easy to read
• Correct
– Prices are accurate
• Easy to Understand
– Do the math for the customer
– Not misleading

15. Competitive Positioning
• The value of being Number One
• Competitive Strengths and Weaknesses
• Shopping the competition
• Defining your ranking

16. Promise Keeping
• Branding is more than signs
– More than image and identity
– Branding is the customer experience with your company
• Delivering on brand standards
– What does your brand stand for?
• Value? Quality? Reliability? Protection?
– Meeting and exceeding expectations
– There are no ordinary moments
– Celebrating winning moments and the people who create them
– How do your salespeople bring your brand to life?
• What words and phrases do they use to describe your brand?
• What do they say about competitive brands?
• Are they consistently promoting your business in a positive manner?

17. Making the Most of
Your Mystery Shopping
• Engage staff in development of your program
– Ask them what should be measured, and how they should be
rewarded.
• Be transparent
– Promote the mystery shopping program at frontline level
• Reward positive behavior
– Instant rewards for individuals, cumulative scores for stores and
management
• Keep it Simple
– Set reward standards around 4 or 5 key issues/phrases
• Publish results
– Rewards can be more than monetary, recognition is critical

18. Questions and Answers

19. Improving the Customer Experience
With Mystery Shopping
Presented by
Mark Michelson
MSPA Founding President
Chairman of the Global Board
Sofia, Bulgaria
Mystery Shopping Day
28 October 2008