Mystery Shopping can be bad for company health

In their book “Loyalty Myths”, Keiningham et al use the experience of Safeway in America to illustrate the dangers of mystery shopping1. They explain how Safeway based its strategy in the 1990s on delivering superior customer service and invested in an extensive mystery shopping programme to monitor employees’ performance in delivering it. Employees were expected to do things like thank customers by name, offer to carry their groceries to the car, smile and make eye contact: all very desirable customer service behaviours which should lead to customer satisfaction. And they did. Throughout the 1990s Safeway’s customer satisfaction levels and financial returns were very high. However, in stark contrast to the teachings of the Service-Profit Chain2, customer satisfaction and employee satisfaction were moving in opposite directions. This was because employees who failed to achieve a target mystery shopping score were sent for remedial training (called Smile School by the employees!!), and could be dismissed if their performance failed to improve. Moreover, female employees’ feeling that the smiling and eye contact could send the wrong signals to some male shoppers was confirmed by an increase in the number of sexual harassment incidents committed by customers. This led to a number of charges filed against Safeway by the employees’ union and some individual female employees. In the end, the Service-Profit Chain wasn’t wrong. Poor employee morale adversely affected customer satisfaction and Safeway’s financial performance. According to the American Customer Satisfaction Index3, Safeway’s customer satisfaction levels rose substantially from 70% to a high of 78% by 2000 as a result of its focus on customer service. However, as problems with employees intensified, the customer satisfaction gains were virtually all lost, Safeway’s score falling back to 71% by 2003.

References
1. Keiningham, Vavra, Aksoy and Wallard ( 2005) “Loyalty Myths”, John Wiley & Sons, Hoboken, New Jersey
2. Heskett, Sasser and Schlesinger (1997) “The Service-Profit Chain”, Free Press, New York
3. www.theacsi.org