A Quick

Reference Guide

MYSTERY SHOPPING
A Critical Industry for Thousands of Businesses

TABLE OF CONTENTS

• The Mystery Shopping Industry… A Definition

• Customer Experience Management and Measurement
• The Mystery Shopping Business Model
• The Big Issue: Preserving the Independent Contractor Status
• Conclusion
THE MYSTERY SHOPPING INDUSTRY… A DEFINITION

Mystery shopping has been a standard business practice used as far back as the early 1940s, when retail
became a major force in the U.S. economy. Since then it has evolved as a tool used externally by market
research companies and watchdog organizations, and internally by companies themselves. Mystery shopping:

• Measures quality of service

• Evaluates compliance with regulations and workforce development objectives
• Gathers specific information about products and services.

The mystery shopper’s specific identity and purpose is generally not known by the employees of the
establishment being evaluated. But as a staple of American business practices and a critical tool for nurturing
workforce development, mystery shoppers pose as actual customers or users of a service – by purchasing
a product, asking questions, registering complaints or behaving in a certain way – and then document
their experiences and/or other findings. Companies use this vital information to make key adjustments to
their operations.

Mystery shopping, which outputs an objective snapshot of a business’s performance, is used in virtually all
business-to-consumer industries as the primary essential tool utilized to assess and improve the customer
service experience.

Typical Mystery Shopping Clients

Mystery shopping programs are used by a large percentage of industries including but not limited to:

• Retailers of all types – clothing, grocery, department, sporting, etc

• Fast casual restaurant chains • Fine dining restaurants
• Financial institutions • Insurance Companies
• Home builders • Apartment communities
• Physicians • Healthcare companies and facilities
• Automotive Sales and Service • Hotels, resorts and timeshare
• Theme parks, museums, theaters • Educational institutions
• Professional and amateur sports • Gaming industry
• Government agencies (i.e., DOT) • Municipal government (libraries, parks)

Virtually every other industry sector whose companies have customers engaging with their respective brands
utilizes mystery shopping programs in some capacity. The sizable investments made by all industries in
market research, along with their investments in developing programs for customer service delivery and
workforce development, are validated and protected through the use of mystery shopping programs.

/ MysteryShop.org
Mystery Shopping Overview

Mystery shopping is a management tool that verifies whether a company’s operational policies are
consistently executed by:

• Measuring employee performance and productivity.

• Measuring the extent to which a company’s team supports their brand identity.
• Uncovering the disconnect between corporate culture, policy, and customer experience.
• Quantifying the company’s workforce impact, and the need for future investment in human resource
capital and job development.

Mystery shopping also promotes high quality standards, and incentivizes a greater competitive marketplace. It
develops the data that a company needs in order to author, implement and adjust employee training programs
and best practices, to ensure a stable workforce delivering exceptional customer service.

Mystery Shopping Operations

In its simplest form, mystery shopping involves contracting with hundreds of thousands of pre-recruited, highly
observant, ordinary Americans, across the United States to anonymously evaluate a business in their spare time
for nominal supplemental income.

These “Mystery Shoppers” make objective observations about their interaction with a business, and document
their specific observations about areas such as customer service, sales ability, merchandising, product quality,
operations and compliance. While every measurement method has its limitations, the anonymous secret
assessment of mystery shopping delivers a highly successful tool for measuring how well company policies are
implemented and brand experience is reinforced at every customer touch point.

/ MysteryShop.org
CUSTOMER EXPERIENCE MANAGEMENT AND MEASUREMENT

Managing the customer experience is the largest investment some businesses make in their operations and can be
the most critical component to their success. Achieving a high degree of alignment between customers’ desires and
expectations and the processes designed to meet them is key in achieving the optimal customer experience.

Desires and expectations change, and in a free market economy competitors may introduce new products
or services that redefine customers’ perceptions of what is innovative and attractive. Thus, the process of
measuring a customer’s expectations is an ongoing mission. And developing a workforce that consistently
represents the company’s brand promise and implements its processes and policies when working with
customers is complex, time consuming and costly.

If any component of the sophisticated factors that lead to customer satisfaction is out of alignment:

1. Customers will have unsatisfying experiences

2. The company is likely to achieve lower sales, customer retention, profits and overall ROI
3. A negative economic halo effect can be created over a specific market district or the overall brand
4. The resulting economic underperformance leads to higher unemployment and less tax receipts

Benefits of a Mystery Shopping Program

The aggregate data from an ongoing mystery shopping program can then be used to:

• Make adjustments to operational policies

• Develop and adjust workforce training programs
• Enhance the alignment between management’s performance expectations and actual
store-level performance.
• Accurately measure Return On Investment (ROI) in product, brand, and the workforce.

/ MysteryShop.org
THE MYSTERY SHOPPING BUSINESS MODEL

Every business interaction comes down to two factors:

1. Is the customer satisfied?

2. Is the business empowering its employees, as ambassadors of the brand, to deliver this satisfaction?

Mystery shoppers answer these two questions and provide America’s businesses with the unique customer
intelligence required to generate meaningful and relative improvements upon their own respective
businesses. These independent contractors make time to pose as everyday consumers, across diverse
ethnic, age, socioeconomic and gender stratum, in order to measure customer experiences and identify the
situations that can impact workforce training and development - all in a “real world” environment—helping
a business to see itself as its customers see it.

Just as business interactions can be assessed by several simple core factors, the operating components of
a model mystery shopping platform require a handful of logical, yet critical, elements.

The operation of a successful mystery shopping program depends on:

1. Large numbers of people. To assure reliable measurement, a significant number of mystery shoppers are
needed, so that feedback is representative of a large, varied segment of the consumer population, leading
to more accurate impressions of the broader customer experience. A typical company may arrange 5,000
or more “mystery shops” a month for a client all across the country. The vast number of mystery shoppers
also ensures that the workforce being “shopped” doesn’t become too familiar with particular mystery
shoppers, which can compromise anonymity and invalidate the results.
2. A wide variety of demographic segments. When planning a “shop,” all demographics must be considered.
When businesses serve a diverse population, they want assurance that their customer service addresses that
diversity. Clients may have a particular interest in selecting key demographics; many are looking for a wide
range of genders, ages, socio-economic backgrounds, employment status and ethnography.
3. Resources across the country. Mystery shopping companies offer services to clients all across the country,
which is especially important for national chain store retailers, restaurants, financial institutions and other
businesses with multiple locations throughout the U.S. Many companies contract with mystery shoppers in
virtually every state in the country. A provider company must be able to contract with believable local shoppers
who are familiar with their specific market. To do this, they must keep a sufficiently large and diverse database
of mystery shoppers to be able to serve their clients and engage qualified mystery shoppers to perform the
shops whenever and wherever the clients request them.

/ MysteryShop.org
Shoppers Classified as Independent Contractors
In order for companies to have access to vast numbers of mystery shoppers representing the wide range
of socio-economic demographics and geographic diversity that their business clients require, the individual
mystery shoppers that companies arrange to conduct mystery shopping evaluations must be independent
contractors.

The sheer volume, scope and geographical spread of mystery shops call for the flexibility and efficiency
offered by independent contacting; this type of business is simply not possible or economically feasible in the
typical employee/employer model. The key to successful mystery shopping is the ability to retain access to
enough independent contractors throughout the United States so that each client’s location, call center or
on-line portals can be “shopped” on a consistent basis with different mystery shoppers. Without this construct,
the critical element of anonymity is lost and the feedback is worthless and invalid — in essence, the business
receives tainted data.

Shopper Statistics

• 63% of mystery shoppers obtain access to mystery shopping opportunities through three or more Mystery
Shopping Provider Companies, which helps solidify their status as independent contractors
• 53% of mystery shoppers have been working as independent contractor shoppers for three years or
more, which demonstrates a stable core of experienced professional mystery shoppers
• 81% of mystery shoppers perform fewer than 20 shops a month as part-time independent contractors
• Mystery shoppers, on average, perform shops for 3.75 different industries, which shows that shoppers
gain mystery shopping experience in multiple industries and thereby preserve their anonymity while
honing their skills and professionalism.

Shopper Profiles: In Their Own Words

Names have been removed to maintain the anonymity of the shoppers.

• Mystery shopper, 55, Tupelo, MS: “I’ve been mystery shopping for over 25 years now. My shopping
monies are what pays for my family’s vacation every year.”
• Mystery shopper, 32, Overland Park, KS: “As a homemaker, I don’t have time to work full or part-time
outside the home. But as a mystery shopper, I can work when I want, as much as I want and for whom I
want without obligation. Now all my Bible study friends want to get into it too.”
• Mystery shopper, 62, Garden City, NY: “Truth be told, my wife Myra got me into mystery shopping after
she had done it for years. Now it is something that we can both do at our leisure together, and enjoy a
reimbursed meal or whatnot. And we make a little money on the side.”
• Mystery shopper, 22, Glendale, CA: “I love the fact that I get paid to make a difference. And mystery
shopping assignments fit my lifestyle as a student with a part-time job. Like, this weekend, I have no
exams and am not working at my job, so I was able to pick up two retail assignments, a dinner and a
theater check. My whole weekend is going to be great, and I’m getting paid for it!”
• Mystery shopper, 40, Detroit, MI: “It’s not big money, but it helps pay the bills. And since I’m not working
for a particular company, I work as much as I want or as little as I want.”

/ MysteryShop.org
THE BIG ISSUE:
PRESERVING THE INDEPENDENT CONTRACTOR STATUS

As business trends and consumer experiences grow and evolve, mystery shopping is becoming more
customized and its broader impact is more important than ever. Companies rely on mystery shopping to
provide an honest and complete image of the consumer experience within a company’s walls or website,
at the very moment the brand interaction occurs.

Without the independent contractor status for mystery shoppers:

• The companies that contract with mystery shoppers to perform the “shops” would need to hire “shoppers”
as employees, which would lead to such companies working with fewer “shoppers” and thereby limit
opportunities for individuals otherwise interested in performing mystery shops
• Because of the added administrative and related costs associated with hiring mystery shoppers as
employees – especially when combined with the relatively narrow profit margin for companies that
contract with mystery shoppers:
• The fees payable to mystery shoppers for performing “shops” would be reduced, which could result
in a decline in the supply of talented mystery shoppers
• Because the ability to spread the fixed-cost element of these new administrative costs would create
a material competitive advantage favoring larger companies, smaller companies would likely either
go out of business or be acquired by larger companies (the industry currently operates on a “level
playing field” because, to MSPA’s knowledge, 100% of these companies currently treat mystery
shoppers as independent contractors)
• Because a large percentage of mystery shoppers perform events as a quasi-leisure activity, a
requirement that they become an employee of a company would likely result in many mystery
shoppers exiting the industry
• Companies would lose a measurement tool that assists them in creating appropriately targeted workforce
development programs. As the Retail Federation of America states, retail supports 1 in 4 American jobs,
42 million jobs, and mystery shopping helps measure and improve the performance by retail employers
and their employees
• Consumers would lose the direct “voice” that mystery shopping provides, which operates to improve
customer experience management and enhance a customer’s actual experience
• The independent contractor mystery shoppers would lose the opportunity to earn extra income to
assist in improving their standard of living, contributing to a future college education fund, saving for a
special purchase or vacation, adding to their retirement benefits, or just helping to make ends meet in
difficult economic times
• The economy would lose the mystery shopping industry – an industry that has supported client companies
for over 70 years in their efforts to constantly and systematically measure and improve their business
operations.

/ MysteryShop.org
 MYSTERY SHOPPING: THE JOBS WE TOUCH

1,955,570

Secretary &
2,063,580 Administrative Assistants

Laborers & Freight,

Stock & Material Movers
2,068,460

Janitors & Cleaners

2,212,820*
Customer Service Representatives

3,314,870* Cashiers

Retail Salespeople
4,270,550*

General Office Clerks

2,828,140
Food Preparation & Servicing Workers

2,799,430* Registered Nurses

2,724,570 Waiters & Waitresses

2,289,010*

* Indicates a job that can directly be evaluated by mystery shopping.

*According to Forbes’ list of the “Most Common Jobs in the U.S.,”

mystery shopping can directly evaluate 56 percent of the top 10 jobs.

1 Jacquelyn Smith, “The Most Common and Rarest Jobs In The U.S.,” 2013, http://www.forbes.com/sites/jacquelynsmith/2013/01/24/the-most-common-and-rarest-jobs-in-the-u-s/.
CONCLUSION

Recruiting mystery shoppers as independent contractors to work in their spare time to covertly measure
a business’s performance is what the mystery shopping industry is all about. The data produced by the
hundreds of thousands of mystery shoppers – working at their convenience on projects they select –
enables a client company to gain a critical understanding of the actual experience of its customers. That
understanding has been a top priority and integral component of every successful company’s sales and
client-satisfaction strategy. The data produced by Mystery Shop studies keeps businesses healthy and
improves workforce productivity, and those results directly fuel economic growth and overall return on
investment in our economy.

Fast Facts

• Forbes salary and employment data from 2011, gathered from 1.2 million businesses all across
the country, show there are a massive 4,270,550 employees in: sales apparel, autos, appliances,
furniture and more.
• Once an item is sold, consumers are serviced by 3,314,870 cashiers across the country. Together,
that’s more than seven and a half million brand ambassadors touching the consumer experience
and influencing the overall brand impression. And that’s just in sales alone.
• Double that number and you’re closer to an accurate representation of the workforce impacted
by mystery shopping.

/ MysteryShop.org
Improving customer
experience is a top
strategic priority for
93% of companies.
Source: The State of Customer 75% of companies aim to
Experience, 2012 differentiate on the basis
of customer service.
Source: The State of Customer
Experience, 2012

MYSTERY SHOPPING IN A
CONSUMER-DRIVEN MARKET

LEARN MORE AT MYSTERYSHOP.ORG

The Mystery Shopping Providers Association of North America
(MSPA-NA) is a collection of the top North American companies
committed to offering mystery shopping and other customer
relationship programs. MSPA-NA comprises more than 300
companies worldwide, from the wide-ranging market research
firms to those companies that focus primarily on mystery
shopping programs.

/ MysteryShop.org
SYNOPSIS: MYSTERY SHOPPING AT A GLANCE

Mystery Shopping
• Since the early 1940’s mystery shopping has been a standard practice of American businesses to
measure quality of service, compliance with regulation, workforce development and to gather specific
information about products and services.

Industries
• Virtually every industry sector in the country whose companies have customers engaging with their brand
utilizes mystery shopping programs.

Overview
• Mystery shopping is a management tool that verifies whether a company’s operational policies are
consistently executed.

Operations
• In its simplest form, mystery shopping involves contracting with hundreds of thousands of pre-recruited,
highly observant, ordinary Americans, across the United States to anonymously evaluate a business in
their spare time and for nominal supplemental income.

Customer Experience Management and Measurement

• Managing the customer experience is the largest investment some businesses make in their operations,
and the process of measuring a customer’s expectations is an ongoing mission.

Benefits of a Mystery Shopping Program

• The business of mystery shopping provides the measurement tool that gives a company the flexibility to
personalize the measurement of its ROI in product, brand, and workforce.

Mystery Shopping Business Model

• Utilizing a large number of demographically diverse independent contractor mystery shoppers located
all across the country, mystery shopping provides America’s businesses with the unique customer
intelligence required to generate meaningful and relative improvements upon their business.

Independent Contractor Mystery Shoppers

• Providing flexibility for businesses to evaluate their operations, the independent contractor status also
provides individuals the flexibility to work when they want and earn much needed supplemental income for
their families.

The Big Issue

• The independent contractor status is essential to the business of mystery shopping.

Conclusion
• The data received from Mystery Shop studies keeps businesses healthy and improves workforce
productivity, and those results directly impact economic growth and overall return on investment in
our economy

/ MysteryShop.org