Who’s Afraid of the Big, Bad Mystery Shopper?

By Kate Young

Customer A walks into one of your branches, looks around, asks a few questions, then opens an account. Customer B does the same thing, but through your website or mobile app. Customer C is an existing client who dials up your call center looking for help with a particular problem.

Here’s what they all have in common: As soon as they finish their interactions with your bank, they’re going to record what they saw, heard and felt. They might be checking items off a list, ranking various touchpoints on a scale of one to 10 or writing journal-style entries. They’re judging you on topics as varied as the tidiness of your parking lot, the knowledge of your staff, the speed of your online interface—maybe even whether they were offered a lollipop. And though you probably don’t know them, they work for you. They are your mystery shoppers.

Done right, mystery shopping can be an invaluable tool for tightening up your retail operations, product line, brand promise—even your compliance. So why does the thought of it strike fear and loathing in the hearts of so many bank staff? It could be that you’re not taking the right approach. Here are a few of the warning signs and what you can do about them.

Is your front line on the defensive?

A mystery shopping program can focus on any customer-facing aspect of the bank experience. Many, however, are designed specifically to test whether frontline staff are interacting with customers in a way that’s aligned with the brand promise and corporate policy. And hardly anyone loves a pop quiz.

Shelly Loftin, the American Bankers Association’s SVP for retail banking, lending and payments, and a former bank marketing executive, recommends that you communicate with bank staff on what will be happening and why. “You may think you get better results if you’re catching them unawares,” she says, but that approach can have unintended consequences. The risk of alienating employees by making them feel tricked and vulnerable to punishment may undermine the program’s ultimate goals, she says. “They need to know that this is about learning what the customer is experiencing—and how you can build on strengths and enhance training.”

Along those lines, Citizens Bank of Philadelphia, Mississippi, adopted customer service standards, and engaged a professional trainer who specializes in customer service. Each employee was trained and provided a copy of the bank’s service standards. “We engaged mystery shoppers to make in-person and telephone shops using the same standard they received,” says Jackie Hester, VP and marketing officer at Citizens. “If they receive a less-than-stellar shop, there is no excuse.” Citizens Bank conducts shops on a quarterly basis using shoppers they’ve hired in-house. Although the program has revealed some opportunities for coaching and correction, Hester says that the bank is not looking to penalize its staff. “We want our employees to strive for exceptional customer service every day.”

Is your program falling short of its goals?

Customer service should be easy enough—if staff have been adequately trained. And therein lies the rub. While mystery shops can be built around many different goals, training is the central theme.

The ideal program will “convert the research findings to behavior, so that it’s coachable, measurable, and manageable,” says Tom Hershberger, veteran marketing instructor and president and CEO of Cross Financial, a Nebraska-based consulting firm.

Part of the problem is that everyone has a different idea of what makes for great customer service. Erin McCormick, SVP at mBank in Manistique, Michigan, says that one thing he’s learned from retail staff trainings is that the employees “have an innate desire to provide great customer service.” But until they have a true measure for it, he adds, success is always subjective. To provide the optimal customer experience, staff needs to understand what that looks and feels like, McCormick says. At mBank, mystery shops “help us understand more clearly, in a more natural customer interaction, how we’re performing relative to these goals.”

In order to generate actionable data from a mystery shop, Hershberger says, the bank must first identify specific actions that constitute the expected employee behavior at that particular institution. Depending on the bank’s brand identity, that might include calling the customer by name, answering the phone within three rings or saying “thank you” at the end of every interaction. “If the bank can create clarity on those parameters, the employee has every opportunity to adapt to that expectation,” he adds. The mystery shopper can then report on the customer experience by checking off yes or no on a list of items, eliminating most of the potential deviation among evaluators.

Any shortfall in the desired behavior can be then addressed with focused training. Toward that end, Hershberger recommends using mystery shopping as an ongoing management tool rather than a one-time spot check. “The end result for the customer is a consistent branded experience,” he says. “Consistency over time is where the value is.”

Is compliance caught in a catch-22?

Even if compliance is not the focus of a mystery shop, it’s easy for compliance-oriented issues to creep into a customer experience evaluation: While discussing deposit accounts, did the branch manager quote interest rates in terms of APY? During a phone conversation about potential loans, did the lender provide the proper disclosure information? When the shopper mentioned she was new in town and looking to buy a house, was she referred to the bank’s mortgage department?

If the evaluations point toward compliance issues, the program has uncovered a critical need for intervention and training. But it doesn’t stop there—the bank is also required to report any lapses to the appropriate regulators. And some examiners are not as friendly as others when it comes to self-reported compliance issues.

“This is a real risk,” says Heather Vaughan, senior managing director at Bankers Assurance, a compliance consulting company based in Arkansas. She notes, however, that examiners in her area have begun to push for banks to self-identify and correct any compliance issues. “If they can do that, showing the steps they went through, and what they did to fix it,” she says, “it should be okay.”

Vaughan adds that examiners have been closely scrutinizing the fee-based add-ons—such as life insurance and prescription drug benefits—that many banks have been offering with their deposit accounts. Are new account personnel giving customers the help they need to benefit from these products? That’s the type of question that marketing and retail ops would like their mystery shoppers to answer—but it’s also something the regulators would like to know. Vaughan recommends that marketing and compliance work together from the very start, not only in planning the scripts used for the mystery shop, but even earlier, during product development, advertising and staff training.

Is all your mystery shop intel being generated by other banks?

Even if you’re not running a mystery shopping program at your bank, don’t assume you’re not being shopped. When marketing agencies team up with a client bank, it’s common practice for them to shop competitor banks to set a benchmark or perform a gap analysis for their clients. What niche products, what advice—what overall experience does your bank offer that your competitors do not?

Your bank might even be used as a secret training ground for other banks’ employees. Cross Financial’s Hershberger knows of at least one bank that sends its new employees, as part of their orientation, to shop other banks. The theory is that the experience will validate and reinforce the new hires’ training and give them a window into what customers are experiencing as they evaluate service on the bank’s front line.

There’s not much you can do about other banks shopping your institution—just try to avoid being the last to know what your customers are experiencing.

Are you achieving perfect scores?

It’s safe to assume that every retail bank in America would like to claim excellent service and a positive customer experience as its hallmarks. And many banks take on a mystery shopping project with the hope of scoring well and calling it a day.

However, “if your scores are really high, especially right at the beginning, it may mean that your experience isn’t anything special,” warns Joann Marsili, SVP at Fidelity Bank in Scranton, Pennsylvania. If your customer service rates well, she says, you should identify something new or specific to your bank that “you can focus on and improve over time.” When Fidelity rolled out its mobile app, for example, frontline staff were asked to introduce it to new account openers. That interaction became the basis of a new question in Fidelity’s mystery shopping program.

Hershberger agrees—by his reckoning, once you’re scoring well on expected behaviors, it’s time “to raise the bar and add desirable activities to the experience.”

On a separate note, Hershberger adds that in seeking high scores, frontline staff may miss the point entirely. One bank he worked with had managers who would go back and review bank surveillance video to verify whether a mystery shop assessment was accurate. “How much time was wasted on that process?” he wonders. Instead of coaching employees on ways to create a better impression, those managers sought technical perfection in the evaluation. But when it comes to mystery shopping, he says, technical perfection doesn’t matter. “Perception is reality.”