What's the Mystery.
Mystery shopping is a powerful tool that banks can use for a variety of purposes, including strengthening sales culture and improving customer service.
The technique uses a professional "shopper" who contacts the bank, either in person or on the telephone, and conducts a transaction--such as asking a question, inquiring about an account or opening an account. Immediately after completing the shop, the shopper completes a questionnaire describing the service provided by the employee. The evaluation can be repeated periodically.
Bank management can use evaluation scores to identify adherence to sales and service standards, to pinpoint strengths and weaknesses and measure progress in improving problem areas.
Mystery shopping originated in the retail sector in the 1960s, making it one of the oldest market research tools used by bank professionals. Back then, mystery shopping was fairly unsophisticated and primarily used shoppers to observe retail conditions and measure how prominently a product was displayed. The banking industry began using mystery shopping in the 1970s to monitor the interaction between branch staff and customers. At first, bank professionals used shopping to evaluate the sales process, cross-selling, employee product knowledge and customer relation skills. The programs were usually conducted annually or, at best, semiannually. The evaluations served as benchmarks or diagnostic assessments of sales and service.
In the early to mid-1980s, bank professionals began to use mystery shopping as part of a program to improve employee performance. When mystery shoppers tested more frequently--as was already being done in the retail sector--bank employees learned to treat each customer more carefully. They behaved this way because they realized that almost any customer could be a mystery shopper. And branch managers received a report about the employee's performance whenever a mystery shopper visited.
Many bankers took a page from the retail marketer's handbook and began mystery shopping monthly, bimonthly or quarterly. Almost all bankers provided their branch managers with report cards describing employee performance and adherence and nonadherence to sales and service standards. Some banks integrated the results of the shopping program into their incentive programs.
Today mystery shopping plays an even more prominent role in helping banks build and maintain sales cultures. The reasons are the nature of the marketplace; the competition from other banks and nonbanks; the savvy information-hungry consumer; employee turnover; and, the expense associated with large branch networks and multiple distribution channels.
Thirty years of industry experience with mystery shopping has demonstrated that as sales professionalism and customer service improve, so does customer satisfaction and customer loyalty.
One of the first steps in building a sales-and-service culture is to determine the customer's requirements and the specific cues and sales and service behaviors that tell customers their needs are being met. The next step is to instill those behaviors into the bank's sales culture by creating guidelines and procedures for handling customer inquiries and transactions. The bank should then continually monitor the performance of employees, letting the employees know how well they are adhering to the sales and service guidelines.
Implementing mystery shopping
Most banks follow a well-structured plan for implementing a successful mystery shopping program.
1. Establish a clear objective. It might be to measure and motivate adherence to your sales and service guidelines. Or you may want to diagnostically assess your sales and service practices versus the competition. Then again it might be to check on compliance with regulatory guidelines and the law.
2 Select the right form of mystery shopping. Ongoing programs--monthly, bimonthly or quarterly--will help you continually measure and motivate. Benchmark or diagnostic mystery shopping programs help you assess your sales and services practices and uncover your strengths and weaknesses. Benchmark programs are usually conducted once or twice a year and help identify specific areas where sales and service can be improved.
3. It's extremely important to simulate an actual customer experience. It's best to do this by recruiting professional mystery shoppers who closely match the profile of your customer base. The shoppers should be objective, unbiased and smart. This will help limit shopper detection and provide for easy acceptance by management.
4. To help ensure a credible program, recruit mystery shoppers who have the aptitude and ability to complete the mystery shops. Train the shoppers thoroughly. The training should cover the program objective unless it is for regulatory compliance. If it is for regulatory compliance, check with your compliance officer and legal counsel before informing the shoppers about the true objective of the program. Be sure to review the scripts and conduct role-plays to ensure the shoppers are comfortable with the scenarios. And be sure to cover the questionnaires and your sales and service guidelines with the shoppers.
5. Be sure to inform your employees about the shopping program (but do not tell them when or where the shops will occur). This will help build support for the program and will clearly communicate to employees the importance management places on employee adherence to its sales and service guidelines.
6. Develop a questionnaire that is easy to understand and complete. Be sure that the shoppers complete the questionnaire immediately after completing their assignments. This will help ensure that the shoppers are accurately recording the sales and service performance of your employees.
7. The mystery shopping reports should clearly identify your strengths and weaknesses. The reporting program should provide the flexibility to provide feedback to your branches.
8. Consider developing a 0-100 scoring system that objectively measures employee performance. This will help you easily identify the degree of adherence or non-adherence to your sales and service guidelines.
9. If the purpose of the shopping program is to motivate and recognize performance, consider including the results in an incentive program.
The benefits of mystery shopping
The new millennium has brought with it emerging consumer markets (African Americans, Hispanics, Asians, females, seniors and so forth) that are information hungry and making new demands on banks. Consumers learn and react quickly, especially when they are not treated well or properly informed about the banks products and associated terms and conditions. This heightens the importance of a developing a well-trained staff that provides a superior level of service that meets customer needs. Washington bank regulators, consumer advocates, Wall Street and shareholders are responding to these market forces. They want to make sure that consumers are not misled--and that they are treated fairly, have access to financial services and are encouraged to purchase suitable financial products. Mystery shopping can help your bank develop market share in these communities and ensure that your sales and service practices are fair.
Mystery shopping will help you uncover areas where your bank can improve. It will pinpoint your strengths and weaknesses for training and policy refinements and help you take maximum advantage of sales and service opportunities. More importantly, you can assess the sales and service process; evaluate employee product knowledge--and differences across loan and deposit products--investigate the discovery skills of your employees; and learn how your employees treat customers.
Unlike other research tools that only measure the encounter with current customers, mystery shopping can be used to measure and improve the sales and service experience encountered by potential customers. It tells you whether the potential customer-employee interaction is consistent and of a nature that adheres to your standards, while maximizing customer satisfaction and sales.
Banks face many new challenges today, and mystery shopping will continue to play a prominent role in helping banks improve sales and service. It will help banks ensure the optimal performance of multiple delivery channels while maintaining reasonable management oversight of sales practices for compliance and legal reasons. And mystery shopping will help banks reinforce the importance of sales and service to the frontline staff. Ultimately this will help banks improve sales and shareholder value by controlling attrition and improving customer loyalty.
Paul C. Lubin is president and CEO of Barry Leeds & Associates, New York The company specializes in mystery shopping, compliance testing and other types of market research and consultation for the financial services industry.
Frequent Uses of Mystery Shopping
* Instill a sales culture.
* Increase sales by leveraging the branch network and alternative delivery channels.
* Discover strengths and weaknesses.
* Assess and refine training.
* Improve service and customer satisfaction.
* Motivate and reward employee performance.
* Benchmark performance against the competition.
* Ensure a uniform customer experience across the branch network.
* Support the brand promise.
* Competitive intelligence.
* Assess compliance with regulatory guidelines and the law.
* Truth In Lending/Truth In Savings.
* Are we providing adequate information so that consumers can make appropriate purchase decisions?
* Equal Credit Opportunity Act and Fair Housing Act.
* Are we inviting minorities and non-minorities to apply?
* Are we providing a similar level of assistance to minorities and non-minorities?
* Nondeposit investment and insurance products.
* Do consumers have a clear understanding of the nature of the investment products they are purchasing and that they are not EDIC insured?
What should You Measure?
Offer a seat and stand to greet.
Ask for and use the customer's name.
Pre-position the sales process.
Ask questions to uncover primary need.
Discover secondary needs.
Uncover the customer's financial position.
Make available suitable products.
Recommend a product.
DEMONSTRATE HOW PRODUCT MEETS NEEDS
Tie features and benefits to needs.
Confirm needs are met.
Ask for the business.
Schedule a time to follow up.
Offer an application.
Provide a brochure.
Provide the customer with a business card.