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Mystery Shopping Program

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					Mystery Shopping
Program
   Executive Summary
   October 2002
HPBAC Mystery Shopping
Objectives of the Program

    HPBAC set out to provide its members with effective
     feedback to improve their businesses using an
     independent third party.
    HPBAC hired a Mystery Shopping firm to audit and
     measure customer service through the use of mystery
     shoppers. The audits were completed in Oct. 2002.
    The results from these audits provided individual store
     results in the context of regional and national results,
     as well as identifying opportunities for improvement.


                     HPBAC Mystery Shopping
HPBAC Objectives

   To provide HPBAC retail members with tangible benefits
    to increase the value of membership
   To provide HPBAC retailers with an evaluation
    mechanism on an ongoing basis
   To demonstrate the value of Mystery Shopping to
    HPBAC retailers
   To develop education and training programs as indicated
    by the Mystery Shopping results


                     HPBAC Mystery Shopping
Background

   The Mystery Shopper supplier uses a scientific
    system to evaluate individual shopping experiences
    against the standards of other successful retailers – a
    system that has been applied in constructing the
    HPBAC audit.

   Annual audits of the retail industry have
    demonstrated that Canadian retail, in general, is not
    meeting customer expectations.


                    HPBAC Mystery Shopping
Overall Approach

   The store audit was developed by a committee of
    HPBAC members and staff with input from the Mystery
    Shopping firm, Eye on Retail (EOR)
   The audit was set up with 4 categories of questions
      Environment and First Impressions
      Welcome and Wanted
      Professional Behaviour
      Valued and Appreciated



                    HPBAC Mystery Shopping
Overview to Shopping
EOR research has established a weighting system for
the four core behaviours based on statistical analysis.
                  Valued and
                  Appreciated         Environment and First
                     20%                   Impression
                                              25%




                                       Welcome and
                Professional             Wanted
                 Behaviour                 20%
                    35%




                       HPBAC Mystery Shopping
HPBAC Mystery Shopping
Background


   The results of the HPBAC program indicate that
    the main opportunity areas for improvement are
    welcoming customers and selling skills.




                  HPBAC Mystery Shopping
Customer Service Benchmarks
   The HPBAC service audit was constructed to reflect the
    four core areas of service performance and was scored
    to reflect the target weighting from Mosaic/Eye On Retail
    Overview to Shopping Research.
      Environment & First Impressions (31 pts) – exterior,
      interior environment & displays
     Welcome     & Wanted (24 pts) – phone answering and
      greeting
                 Behaviour (42 pts) – sales skills
     Professional
     Valued & Appreciated (25 pts) – thanking on departure,
      shoppers recommending to friends/family

                       HPBAC Mystery Shopping
HPBAC Members Compared to
Canadian Retail Overall
Overall, HPBAC outlets outperformed EOR Retail Industry averages (notably
on “Welcome & Wanted”, and “Professional Behaviour”).
          90%              83.7%
                   87.4
          80%                                72.3%                    84.5    75.7%
                                                                                             73.4%

          70%                                                 65.0%

          60%                                                                         64.2


          50%                         56.3

          40%                                          40.6
          30%
          20%
          10%
           0%   Environment/ First    Welcome &        Professional    Valued &         Total
                  Impressions          Wanted           Behaviour     Appreciated

                                     Canadian Retail      HPBAC Members

                                     HPBAC Mystery Shopping
HPBAC Mystery Shopping
Regional Customer Service Performance
 Members were provided with regional and national results, as well as
 the retail industry norm, for comparison purposes.


                     Atlantic   Quebec   Ontario   Prairies   BCNWT   Canada    IND
                                                                               NORM
 Sample (N)            21         72       55         28       44      220
 Environment/         89.2%     82.1%     82.5%     87.4%     83.0%   83.7%    87.4%
 First Impressions
 Welcome &            80.4%     63.0%     70.1%     80.4%     81.3%   72.3%    56.3%
 Wanted
 Professional         75.9%     58.3%     67.5%     65.6%     67.2%   65.0%    40.6%
 Behaviour
 Valued &             87.2%     68.8%     76.7%     76.4%     79.7%   75.7%    84.5%
 Appreciated
 GRAND TOTAL          82.5%     67.4%     73.7%     76.3%     76.6%   73.4%    64.2%
                                HPBAC Mystery Shopping
HPBAC Mystery Shopping
Customer Service Performance - Environment
Environment and first impressions area was very strong – no glaring
weaknesses but some opportunity in Exterior and Display management:
                               Atlantic   Quebec     Ontario     Prairies   BCNWT        Canada
 Sample (N)                       21         72         55          28          44           220
 Exterior                       77.6%      75.9%       74.8%      91.2%       91.4%         80.4%
 Interior                       99.5%      88.9%       90.5%      97.6%       92.7%         92.2%
 Displays                       90.0%      83.5%       82.4%      82.5%       80.2%         83.0%
 Other                          97.6%      91.0%       91.8%      96.4%       94.3%         93.2%
 Total ‘Environment’            89.2%      82.1%       82.5%      87.4%       83.0%         83.7%

Exterior Environment: Parking lot, signage, walkways, windows, doors, logos, landscaping, outdoor room,
lighting;
Interior Environment: Temperature, odours, cleanliness, windows, door, floors, ceilings, mirrors, cash
counter;
Displays: Storefront, seasonal, current, cleanliness, repair, assembled, operational etc.
Other: Ease of finding store, staff grooming.
                                  HPBAC Mystery Shopping
HPBAC Mystery Shopping
Customer Service – Environment Opportunity Areas

  Five audit areas accounted for the modest shortfall vs. customer
  expectations in the „environment and first impressions‟ area:


                                Atlantic   Quebec    Ontario     Prairies   BCNWT     Canada
Sample (N)                         21        72          55         28         44       220
Visible HPBAC/APC/WETT           66.7%      41.7%      58.2%      78.6%      68.2%     58.2%
logos

Tidy landscape area              76.2%      69.4%      72.7%      92.9%      65.9%     73.2%
Clean outdoor room*              47.6%      70.8%      54.5%      64.3%      43.2%     58.2%
Exterior lights on at night**   100.0%      44.4%      50.0%      75.0%      100.0%    59.1%
Neat seasonal displays           61.9%      76.4%      72.7%      82.1%      77.3%     75.0%

*In most cases indicates absence of outdoor room
                                     HPBAC Mystery Shopping
**In most cases indicates not-applicable as store visited during daytime
 HPBAC Mystery Shopping
 Customer Service – Welcome & Wanted Opportunities
     The key opportunity areas here relate to the speed of greeting or
     acknowledging customers after entry, and approaching them to begin the
     sales process:
                                 Atlantic    Quebec      Ontario    Prairies    BCNWT         Canada
   Sample (N)                        21         72          55          28          44           220
   Phone answered in 3 rings       90.5%      91.7%       85.5%       96.4%       88.6%         90.0%
   Polite/cordial on phone         95.2%      90.3%       87.3%       96.4%       97.7%         92.3%
   Time for greeting*              70.5%      50.3%       58.2%       66.1%       71.4%         60.4%
   Time to be approached*          85.2%      64.4%       75.5%       88.2%       86.6%         76.6%
   Total Welcome&Wanted            80.4%      63.0%       70.1%       80.4%       81.3%         72.3%


Point system for greeting/approaching customers:; Greeting within 30 secs. (10 pts); within 60 secs. (5
pts), over 60 secs. (2 pts);Approaching within 3 mins. (10 pts); within 5 mins.. (5 pts), over 5 mins. (2 pts)

                                     HPBAC Mystery Shopping
HPBAC Mystery Shopping
Customer Service Performance – Professional Behaviour

  While HPBAC outperformed retail industry norms on „professional
  behaviour‟, this is still an opportunity area. It can be argued that given
  the high value sales in HPBAC outlets that the „consultative sale‟ is all-
  important and professional/selling skills are particularly key:


                               Atlantic   Quebec   Ontario   Prairies   BCNWT    Canada

 Sample (N)                       21        72       55         28        44       220

 Tot. Professional Behaviour    75.9%      58.3%    67.5%     65.6%      67.2%    65.0%




                                  HPBAC Mystery Shopping
HPBAC Mystery Shopping
Customer Service – Professional Behaviour Opportunities

The key areas of shortfall are not involving the customer in a dialogue
(asking for feedback on product sell), fuel options, suggestive selling,
warranty assurance, the value of professional installation and asking
customer for contact information in follow-up:

Sales staff:              Atlantic   Quebec   Ontario   Prairies   BCNWT    Canada

Asked for feedback on      76.2%      37.5%    45.5%     46.4%      47.7%    46.4%
products
Provided range of fuel     95.2%      55.6%    72.7%     57.1%      61.4%    65.0%
options

Suggested related items    42.9%      25.0%    38.2%     50.0%      36.4%    35.5%

Mentioned warranty         47.6%      37.5%    47.3%     39.3%      43.2%    42.3%

Asked for contact info.    19.0%      12.5%    27.3%     14.3%      4.5%     15.5%

Explained installation     66.7%      38.9%    61.8%     60.7%      63.6%    55.0%
                            HPBAC Mystery Shopping
HPBAC Mystery Shopping
Customer Service – Value & Appreciation Opportunities

  Performance in the area of „valuing and appreciating customers‟ was
  strong – the high incidence of shoppers prepared to recommend the stores
  to friends is particularly encouraging:


                           Atlantic   Quebec   Ontario   Prairies   BCNWT    Canada

  Sample (N)                  21        72       55         28        44       220

  Thanked on departure      95.2%      81.9%    85.5%     89.3%      79.5%    84.5%

  Comfort rating*           80.0%      60.1%    69.1%     71.4%      75.5%    68.8%

  Recommend to friends*     90.5%      70.8%    80.0%     75.0%      84.1%    78.2%

  Total Valued & Apprec.    87.2%      68.8%    76.7%     76.4%      79.7%    75.7%




                            HPBAC Mystery Shopping
HPBAC Mystery Shopping
Product Distribution - Stoves
 Gas and wood stoves are about equal in availability (a slight lead for
 wood in Atlantic and for gas in the Prairie provinces).
 Atlantic members offer greater overall variety.
 This practice may be a development opportunity in balance Canada.

                                   Stove Distribution
                           HPBAC Outlets - October 2002 Audit


      100.0%

       80.0%                                                              Wood

       60.0%                                                              Gas
                                                                          Pellet
       40.0%                                                              Oil
       20.0%                                                              Electric

        0.0%
               Atlantic   Quebec    Ontario   Prairies   BCNWT   Canada
                            HPBAC Mystery Shopping
HPBAC Mystery Shopping
Product Distribution - Fireplaces
 In fireplaces, Gas modestly outstrips Wood distribution (due to greater
 Western Canada development). Greater availability of Pellet and Oil in
 Atlantic and Quebec relative to other regions.

                             Fireplace Distribution
                         HPBAC Outlets - October 2002 Audit


    100.0%

     80.0%                                                             Wood

     60.0%                                                             Gas
                                                                       Pellet
     40.0%
                                                                       Oil
     20.0%                                                             Electric

      0.0%
             Atlantic   Quebec   Ontario   Prairies   BCNWT   Canada

                           HPBAC Mystery Shopping
HPBAC Mystery Shopping
Product Distribution – Fireplace Inserts
Insert distribution is modestly lower than that of fireplaces (except in
Atlantic and B.C.). Distribution by type follows the „fireplace pattern‟
except for Pellet fired inserts which enjoy better distribution in Atlantic
and Prairies than full fireplace counterpart.

                              FP Insert Distribution
                          HPBAC Outlets - October 2002 Audit


     100.0%

      80.0%                                                             Wood
      60.0%                                                             Gas
                                                                        Pellet
      40.0%                                                             Oil
      20.0%                                                             Electric

       0.0%
              Atlantic   Quebec   Ontario   Prairies   BCNWT   Canada
                           HPBAC Mystery Shopping
HPBAC Mystery Shopping
Product Distribution – Barbecues
 Barbecue distribution continued relatively high in October (expected to
 be “off-peak seasonality”). Propane types are in stronger distribution in
 Atlantic and Quebec while tied in the balance of Canada.

                              Barbecue Distribution
                          HPBAC Outlets - October 2002 Audit


     100.0%

      80.0%

      60.0%                                                             Propane
                                                                        Gas
      40.0%
                                                                        Pellet
      20.0%

       0.0%
              Atlantic   Quebec   Ontario   Prairies   BCNWT   Canada

                            HPBAC Mystery Shopping
HPBAC Mystery Shopping
Product Distribution – Patio Sets
As expected, the October timing found very low Patio set distribution.
There was a lot of variation in furniture type although this may not be
representative.

                                Patio Set Distribution
                         HPBAC Outlets - October 2002 Audit


    50.0%

    40.0%
                                                                        Wood
    30.0%                                                               Resin

    20.0%                                                               Alum
                                                                        Cast
    10.0%

     0.0%
            Atlantic   Quebec     Ontario   Prairies   BCNWT   Canada

                          HPBAC Mystery Shopping
HPBAC Mystery Shopping
Conclusions / Next Steps

   HPBAC members generally outperformed „industry
    norms‟ in customer service but this may not be
    sufficient given that the products offered are „high-
    ticket‟ in nature – requiring greater depth of
    relationship management and overall management of
    the sale.
   Training, particularly in selling skills makes a lot of
    sense for HPBAC members.


                     HPBAC Mystery Shopping
HPBAC Audit Summary
Conclusions / Next Steps

   „Environmental store conditions‟ require some fine-tuning
    of the audit as it relates to exterior / interior cleanliness
    and in the use of effective displays.
   A learning opportunity may lie in modifying the
    „environment audit‟ to include better questions on store
    design, signage and organization (currently it is
    „cleanliness focused‟).
   Distribution information could prove to be more valuable
    if there was some analysis done on store revenue and
    profitability relative to product availability.
                      HPBAC Mystery Shopping
HPBAC Mystery Shopping
Distribution of Results

   Individual audit results have been sent to each member
    along with the regional and national results and the
    Executive Summary

   Distributor and manufacturer members received the
    Executive Summary and regional and national results

   Distributors and manufacturers were offered the
    anonymous results for their dealers (all dealer
    information removed)
                     HPBAC Mystery Shopping
HPBAC Mystery Shopping
Program Successes

   12? new members joined during our promotion of the
    Mystery Shopping program

   The Mystery Shopping Program has helped to draw xx
    more new members since December 2002

   x Friedman Sales Training sets have been sold to
    Canadian members since the audits have been
    distributed

                     HPBAC Mystery Shopping
HPBAC Mystery Shopping
Feedback from Membership

   The HPBAC board has sought input from participants to
    gauge the value of the program and determine when and
    if there should be additional programs

   HPBAC members have rated the value of the program x
    out of 10

   HPBAC will conduct a Mystery Shopping program again
    in 2003 and will cover a portion of the cost

                    HPBAC Mystery Shopping