Micheal Le Boeuf (1987) outlined the following statistics in his opening pages ‘Something to think about….’ which demonstrates the vital importance of both knowing and listening to customers which are still as important to today’s business environment as ever before.
1. A typical business hears from only 4 percent of its dissatisfied customers. The other 96 percent just quietly go away and 91 percent will never come back. That represents a serious financial loss for companies whose people don’t know how to treat customers, and a tremendous gain to those that do.
2. A survey on “why customers quit” found the following:
3% move away
5% develop other friendships
9% leave for competitive reasons
14% are dissatisfied with the product
68% quit because of an attitude of indifference towards the customers by the owner, manager or some employee
3. A typical dissatisfied customer will tell 8 to 10 people about his problem. One in five will tell twenty. It takes twelve positive service incidents to make up for one negative incident.
4. Seven out of ten complaining customers will do business with you again if you resolve the complaint in their favour. If you resolve it on the spot, 95% will do business with you again. On average, a satisfied complainer will tell five people about the problem and how it was satisfactorily resolved.
5. The average business spends six times more to attract new customers than it does to keep old ones. Yet customer loyalty is in most cases worth ten times the price of a single purchase.
The study was conducted in 1987, but the conclusions you can draw from it are as relevant today as ever. So, just to spell it out, here’s how mystery shopping can benefit your business and make some effort towards fighting the tide suggested by Le Boeuf’s study, based on Moorehead et al (1998):
1. Mystery Shopping identifies performance-related behavioural events. As we’ve seen in the previous study, most customers with an issue simply won’t tell you about it. Mystery shopping gives you a customer experienced and coached in spotting issues in your service who is guaranteed to report it back to you. You need to know what the problems are before you can fix them, and mystery shopping is a cost-effective and quick way to gain those insights.
2. Mystery Shopping measures the baseline performance of your staff; that is how frequently each staff member adheres to the desired organisational behaviour. Mystery shopping measures the occurrence of each behaviour over time. This allows management to view trends of each of the behaviours, such as the frequency of when the desired behaviour is adhered to and not adhered to (Customer Perceptions 2010). For example a report may show that staff are more likely to greet customers more frequently in the morning compared to in the evening. Again, once you know, you can take steps to remedy.
3. It helps identify the consequences of that performance. This means both from the point of view of staff members (what could some simple upselling questions do for their sales figures, for example) and the business as a whole – what’s the correlation between particular variables such as the correct greeting or profiling questions and the customer’s likelihood to purchase, or return, or recommend?
4. It creates the data vital to developing an appropriate intervention strategy. Depending on the results, there may be any number of intervention strategies that might be required to address issues in the business. Once you have the data, you can begin to address it. You might want to introduce incentives, bonus schemes or even simply recognition (which is often surprisingly effective in itself) for successful changes in staff behaviours.
5. Evaluate for performance improvement. Finally, mystery shopping is a good way to test the effectiveness of any of the actions you take. It’s not simply the case that we send one person into your store and hand over a document of nitpicks or complaints. We work with all our clients to produce tailored mystery shopping programmes conducive to practical actions after the fact, which themselves will be measurable in multiple ways.
We know how to build a mystery shopping programme (keep an eye on our blog here, we can certainly share some of the first principals), and we know how to take the raw data and make it useful. Mystery shopping is the most effective ways to gain the data about your own business that otherwise would be happening under the water line. If you want to discuss it with us, or how it might help your business, you can get in contact with us here.