By Dr. Pawan Singh

Customer experiences—whether they be a sale, an inquiry, a conversation with a manager or a walk down a store aisle—are at the heart of every customer relationship. These are the moments of truth for a company. Ultimately, these experiences drive customer satisfaction, loyalty and spending. So it is no wonder retailers are so interested in understanding exactly what the customer is experiencing.

Nearly every large retail brand employs or has employed mystery shopping to help management gain insight into their stores’ performance. For decades, mystery shopping has been the research tool of choice to measure customer experiences. While mystery shopping might work to identify issues on a case-by-case basis, it cannot generate the volume and reliability of intelligence that retailers need to truly improve the customer shopping experience. In the past, implementing an enterprise-wide system for collecting feedback from individual customers might have been cost-prohibitive and technologically daunting, however, enterprise feedback management (EFM) providers are perfecting this process. And evidence shows that customers are very willing to give feedback when asked.

If you’re using a mystery shopping program alone to generate customer intelligence and make strategic decisions instead of asking your customers for feedback directly, here’s what you might be missing:

Volume of Data

Mystery shopping is inherently time- and resource-intensive. Mystery shoppers have to travel to and spend time in each store trying to recreate as many true customer experiences as possible. The result is very few data points can be collected for a given store or entity each week or month.

If a mystery shopper has one unpleasant experience in a single store, that experience is then projected to the entire store and all of its employees for that time period. It’s not hard to see why this is problematic. Imagine obtaining 100 data points for that same store in a month where 75 percent of the customers said that a sales associate was “unfriendly” towards them. Now that’s a trend worth investigating.

Utilizing an EFM solution means more data points that yield higher reliability and greater ability to analyze issues at a granular level. Retailers can drill down to individual stores or departments and be confident that the feedback they are receiving is representative of the larger sample set. Statistically, mystery shopping cannot hold up at such a granular level where there are typically 3 or less data points on which to base analyses.

Validity of Data

Mystery shopping is prone to human bias and the law of small numbers. While there are many mystery shopping companies and individual mystery shoppers who truly understand how to properly conduct a mystery shop, there are many more who don’t. The industry is fragmented and quality control is limited. As a result, the reliability of each mystery shopping report becomes suspect. If a retailer is trying to derive insights from data points, which are unreliable, the conclusions generated are almost certain to be misleading if not downright wrong—leading the retailer down a path that ultimately harms their customers or misinforms their spending. And even if retailers are simply looking at mystery shopping reports as a window into customers’ experiences or as a means to highlight possible issues, they should want the view to be an accurate one.

With an EFM solution, which collects customer insights directly, the feedback and data points gathered will average out individual biases and provide a large enough sample set to make the insights statistically relevant.

Depth of Data

Mystery shoppers try to recreate a customer’s shopping experience. In doing this, they may “see” what a customer sees. However, they can never recreate what a customer might feel or a customer’s preferences. There is a gold mine of useful insights buried in customers’ experiences. How do they shop? Which brands are they interested in? Are they concerned with service or speed? Do they notice when the store isn’t clean?

Mystery shoppers cannot garner the answers to these questions, because they cannot be measured strictly by observation. A typical mystery shopping report might note that the check out area was cluttered. What it can never do is measure whether customers would (a) notice this and (b) if they did, how much of an impact it had on their satisfaction or likelihood to return to that store.

Companies cannot perfect every aspect of their stores. They must prioritize time and resources. With an EFM approach, companies can gain insights into what truly matters for customers, exploring every dimension of the shopping experience, and address the issues that, ultimately, are most important for customers.

Cost of Data

Because mystery shopping is resource-intensive, it is also costly. Each data point costs a lot, and incremental data points do not get cheaper. With current economic pressures, retailers are being forced to make hard decisions and cut costs across the board. Unfortunately, this creates a conflict of interest.

Many retailers solve this conflict by limiting the number of mystery shoppers utilized or the frequency with which they use them. However, this undermines the whole effort. Retailers are left with:

• Not enough data points because they are cutting costs;
• Snapshots in time with little-to-no data continuity because they are trying to cut costs; or
• A situation where they are forced to spend a small fortune to get the volume of data they need, which might not be useful anyway due to the reasons stated previously.

The goal of customer feedback is to derive insights that inform operational improvements and strategic decisions. But if the feedback itself is unreliable, then one of two things will happen: 1) Trusting the data, retailers will make misguided decisions; or 2) Retailers will learn to mistrust the data.

It doesn’t take many wrong decisions or failed initiatives for a retailer to realize the data is not useful. And at that point, a mystery shopping program becomes a wasted expense.

By asking customers about their experience directly using an EFM solution, retailers can add data points without adding costs, which will reduce overall costs of getting the feedback. Ultimately, retailers won’t make costly mistakes when reacting to the feedback.

What Can You Do?

There are already hundreds, if not thousands, of customers who are actively experiencing nearly every aspect of shopping daily. Why not ask them? Today, enterprise feedback solutions, with the ability to collect detailed store-by-store customer data, are an inexpensive way of providing a retailer with exponentially more data points, deeper insights and less-biased feedback than mystery shopping. When deployed correctly, EFM solution should adhered to these principles:

• Engage customers for feedback. Studies show that they are willing to share their experiences.
• Ask customers for feedback properly. The feedback system should be simple for customers to access and use and it should be designed to minimize bias and fraudulent activity.
• Act! The system should empower organizations to act on the feedback because customers will expect it. They have taken the time to provide valuable and reliable data to a company. They want to see it put to good use.

Dr. Pawan Singh is CEO of customer intelligence measurement company PeriscopeIQ. (Photo by PinkMoose.)

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