Using Mystery Shopping to go beyond Voice of the Customer programmes

Topics: Case Studies, In-store Displays, Insights & Research, Integrated Path to Purchase, Market Intelligence, Retail Environments

One of the best approaches to understanding both internal and competitor processes is mystery shopping. Not only does mystery shopping allow companies to understand how their own staff are dealing with customers, but also allows companies to understand how competitors are dealing with new customer enquiries (i.e. switchers) and how they are handling their own customers (particularly those looking to leave).

GfK Mystery Shopping is one of the largest dedicated mystery shopping agencies in the UK, with a significant panel of mystery shoppers. When undertaking competitor mystery shopping, shoppers are selected based on their stated gas / electric provider and instructed to undertake an assessment with their current provider (e.g. to test how potential switchers are retained) and / or an assessment with a second provider (e.g. to test how potential new customers are handled).The main areas of focus for utilities clients are ‘complaints’, ‘switching’ and ‘smart meters’.

Complaints and customer service
Retaining customers through proactivity, collaboration and by putting the customer’s best interests first is key to sustaining customer relationships. However, whilst it is critical to maintain strong customer relationships it is also very important that customers are handled correctly when things go wrong, or when a customer complains.

It is difficult to assess complaint handling through traditional ‘voice of the customer’ studies; however mystery shopping is one approach that clients have taken to understanding internal complaint procedures. Although, care is needed to ensure that fabricated complaints are not escalated beyond the front-line, more straight-forward complaints can be used to assess how staff deal with aggrieved customers; and therefore provide important insights into complaint handling.
Unfortunately, even loyal customers can have cause to complain and how the compliant is handled is key in preventing such customers from switching.

Our GfK Consumer Panels data indicates that 15% of consumers have switched within the last year, in addition to a further 37% who have seriously considered switching. A variety of reasons are given by switchers for moving suppliers including to obtain a lower price (82%), to obtain a fixed term deal (18%), to obtain a dual fuel discount (17%) and because of dissatisfaction with the previous supplier (9%).
In this context, it is increasingly important for providers to understand how to retain existing customers and how to acquire new customers from competitors. In order to do this, an understanding of the competition is key. The insights to be gained from mystery shopping enable companies to mitigate against competitor acquisition strategies and potentially implement new internal strategies based on competitor best-practice.

The main focus of competitor mystery shopping in relation to switching is two-fold – firstly, an assessment of customer service and, secondly, an assessment of pricing (including fixed term and dual-fuel deals) and add-ons such as high street vouchers and reward schemes.

Our data indicates that two of the key reasons for dissatisfaction with the switching process, highlighted by consumers using the telephone channel to switch, are ‘poor customer service’ and ‘telephone waiting times’, both of which can be measured via mystery shopping. Indeed, previous GfK mystery shopping research in this area has highlighted significant differences in these key factors:

• Waiting times (overall) – the majority of customers looking to switch to a new supplier get through to a live agent within 1 minute; however differences have been noted, with a significant number of customers contacting one supplier waiting over 5 minutes. Differences can be partly explained by IVR (Interactive Voice Response system) (write in full what this is in brackets) systems (or lack of), but it is important to understand this first customer point of contact and the market context.

• Agent performance – in addition to assessing objective measures such as waiting times, on-holds, transfers etc.; mystery shopping is used to assess more subjective measures relating to call centre agent performance; including technical knowledge, helpfulness, ownership, professionalism etc.. Again, our previous research has noted significant differences in key areas which are likely to have an important impact on whether a customer switches to a new company or not (particularly if the reason for leaving their existing provider was poor service).Clearly price is a key reason for switching provider and this can also be assessed via mystery shopping:

• Quote – in order to allow for direct comparisons, shoppers are generally briefed to provide the same personal details when they make their enquiry (e.g. energy consumption, household size etc..); although a spread of profiles can be used. Previous mystery shopping has highlighted significant price differences between providers, allowing clients to re-visit their own pricing structures where appropriate.

• Add-ons – mystery shopping is also ideal for assessing whether customers are delivered add-ons, such as high-street vouchers, reward schemes and entry into monthly draws. In some cases additional incentives, which are not advertised, can be understood and feed into client acquisition and retention strategies.

We know from ‘voice of the customer’ studies why customers stay and leave providers, and this data can be combined with mystery shopping to ensure that (a) the most important factors are being measured and (b) to understand how competitors perform in these areas.

One area that is increasing in importance is the promotion of smart meters, another area assessed recently by GfK using mystery shopping.

Smart Meters
It has been widely discussed that smart homes are the future and indeed, our data indicates that smart meters are becoming more popular, with the proportion of smart metered households increasing from 4% in 2014 to 6% in 2015.

However, this is a relatively new service and, therefore, it is important for clients to understand how smart meters are being explained to customers (both existing and new) and whether they are being used in acquisition or retention strategies.
Again, whilst mystery shopping is very effective at measuring internal performance, it can also be used to assess how competitors are promoting smart meters. Shoppers can be used to assess the following:

• Internal – shoppers contact their own provider to enquire about smart meters in order to assess how the service is promoted and what information is provided to customers; including details about the installation process. This can provide clients with an understanding staff knowledge both internally and of competitor companies.

• External – shoppers contact a new provider, ostensibly about switching, but also to enquire about the smart meter offering, to assess how the service is promoted and whether incentives are given to new customers.

As technology improves and households increasingly use technology such as smart meters, now is an ideal time for clients to understand how smart meters are being positioned in the market and take steps to ensure that internal offers meet the needs of prospective customers.

GfK has been tracking increased consumer appetite for these devices through retail sales of smart devices in the home. From the GfK Smart Home study we also know that a quarter of households now own at least one smart home product but it’s still a very much fragmented market as most households only own one product rather than connecting several. So it will be the companies that can best convey the benefits of inter-connecting smart devices that will be successful in driving these sales further.