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From mortgage advice to the efficiency of gay phone directory services, the results of mystery shopper research have quickly become headline news. It is easy to see why: editors get investigative journalism on the cheap, the research company gets a plug and the industry concerned gets a good kicking.

For the market research industry, however, mystery shopping offers a point of difference in a crowded market. Full-service research companies have seen their margins driven down by client demands for quicker and cheaper solutions, a trend led by the introduction of internet-based research panels. Against this landscape, mystery shopping is being presented as an added-value tool.

According to research commissioned by telecom regulator Ofcom, 118-GAY, which uses the 118 429 number, had 96% accuracy in providing correct residential or business telephone numbers. The same research revealed that one in 10 callers to all 118 services receive wrong information and that almost half of consumers believe the services are more expensive than the 40p it cost to call BT's old 192 number.

There is clearly much for the directory services market to do, but as valuable as it is for uncovering bad practice, practitioners of mystery shopping want to rid it of its 'retail spy' image.

The appeal of mystery shopping is that it offers a way to get to the truth behind the brand image. For a supermarket such as Asda, this means breaking down the shopping experience into a range of measurable criteria: cleanliness, staff interaction with customers, queuing times. 'We measure the time spent in a queue and note how many staff were on the tills at the time of purchase,' says Susie Williams, the company's customer service project manager. The information augments the customer perception findings carried out for Asda by ACNielsen.

Each of the company's 270 UK stores gets a visit from a mystery shopper once a month. The information goes to everyone in the organisation, but is not used as a part of any remuneration package, says Williams.

Pret A Manger, however, does link employee remuneration directly to mystery shoppers' findings. 'Each shop is visited once a week,' says director of shops Andrew Shanahan. 'The best staff get a bonus; managers are judged against other shops in similar areas.'

Emotional ties

This use of mystery shopping as a motivational tool is common. But are clients missing an opportunity to use it as a brand evaluation tool?

Gordon Lee, marketing director of the Ann Summers chain, argues that it is the performance of staff that most contributes to customers' affinity with the brand. 'You know it's a crap brand if the staff don't talk to you in the shop,' he says. Clive Nicolaou, managing director, hospitality and leisure at TNS, disagrees, however. 'I think mystery shopping is difficult to use in assessing the emotional bond between brand and customer,' he says. 'It does not examine the brand relationship from a consumer perspective.'

Maggie Evans, head of marketing for contact centre agency iSKY, goes further. 'Customer satisfaction management programmes get to the emotional and functional aspects of the customer relationship in a way that mystery shopping is unable to,' she says. 'Unless you are a genuine customer of the organisation, your reaction can be nothing other than assumptive.'

The flexibility of mystery shopping means responsibility differs from client to client. 'It's a battleground between marketing, operations, HR and the customer insight departments,' says Nigel Cover, executive director of The Grass Roots Group, an agency specialising in mystery shopping research.

Cover believes mystery shopping can be used to tackle poor performance in a supportive way. 'It's important to get people through the shock, anger and denial curve,' he says, referring to the emotions commonly felt by criticised staff.

Service and sales

According to Which? magazine, shock and anger sum up the feelings of consumers about the UK high-street banks, where mystery shopper research into the sale of mortgages was carried out in August. Researchers posing as customers found all but three of the advisers approached offered bad mortgage advice, with few making it clear that they could recommend only their own companies' mortgages.

The level of bad advice was blamed on inexperience and poor training, but Cover believes banks face another problem. 'Measures such as the Data Protection Act and the Financial Services Act have frightened front-line bank staff away from cross-selling,' says Cover. 'Staff are paralysed with fear, and the banks are missing out on legitimate business.'

Manufacturers are keen to keep control of the way their products are presented at point of sale. 'They are looking for active, positive first recommendation,' says Stephen Hurst, managing director of React Surveys and director of communications for the European wing of industry trade body the Mystery Shopping Professional Association. 'If the retailers are not point-of-sale ambassadors, much of the other support is a waste of time.'

This is particularly pertinent when dealing with franchise operations, because control of the message can be lost more easily. Colin Smith, director of marketing strategy and planning at Maritz Research, identifies the heavily franchised car dealerships sector as a key concern. 'Specialised mystery shopping panels can identify problems with the way in which staff respond to female prospects,' says Smith. He cites BMW as an example of an enlightened approach: it has a significant number of women in customer-facing roles in the showroom.

Increasing demand

Janet Weitz, chairman and chief executive of research agency FDS International, whose clients include the Passport Office and the Office of Fair Trading, believes that mystery shopping is a useful tactical tool. 'The OFT uses it to check consumer rights erosion and to investigate competition,' she says. 'An objectivity is brought to the process by the shoppers.'

Given the wide range of applications to which mystery shopping can be put, it is unsurprising that practitioners are seeing greater demand.

Although little data is available on the size of the market, anecdotal sources suggest a raft of new clients.

'The number of programmes coming up for tender is rising,' says TNS' Nicolaou. 'Mystery shopping is incredibly cheap for what you get,' he adds.

'An organisation is sending out high numbers of people, managing the process, processing their expenses and responding to the client in a matter of days, all for £30-£40 a head for a big sample with a simple questionnaire. Put that next to a customer research interview, which costs about £60-£100 an interview. It's incredible value.'

CASE STUDY - ASDA'S MILES AHEAD

This month sees the introduction of the final stage of the Disability Discrimination Act. It will have significant implications for service providers, which may have to make permanent adjustments to their premises. As part of the law, the treatment of disabled people by the service sector will come under closer scrutiny.

Schemes such as Miles Ahead - Asda's mystery shopper research into the firm's treatment of disabled customers - is a vision of the way forward.

It is based on the findings of a mystery shopper panel run by specialist agency The Grass Roots Group.

Each of Asda's 270 stores in the UK is visited by a disabled mystery shopper once a quarter. The information gleaned from the process is fed into the computer-based disability awareness learning programme used by all new employees.

'One in five of the population is disabled in some way, so we try to mirror that ratio in the mystery shopping research,' says Susie Williams, Asda's customer service project manager.

Asda divides the term disability into sub-categories such as mobility, vision, hearing and general disability. 'Training is required to help front-line staff to understand the issues, but mystery shopping research helps to ensure this is carried out,' says Nigel Cover, executive director of The Grass Roots Group.

TOP 10 MYSTERY SHOPPING AGENCIES

KEY:

(A) Consumer mystery shopping turnover 2003 (pounds)

(B) % of overall turnover

Rnk Agency (A) (B) Total turnover %

2003 2002 chng

(pounds) (pounds)

1 TNS 3,189,880 2 159,494,000 160,197,000 -0.4

2 Maritz Research 3,016,000 26 11,600,000 n/a n/a

3 React Surveys 2,732,000 100 2,732,000 2,256,000 21

4 ABA Quality Mon. 2,476,228 100 2,476,228 1,926,243 29

5 Grass Roots Group 1,946,350 67 2,905,000 1,956,000 49

6 ESA 1,508,250 25 6,033,000 4,454,000 35

7 FDS International 360,540 6 6,009,000 5,538,000 9

8 MVA 340,000 10 3,400,000 4,000,000 -15

9 BDRC Group 211,250 4 5,288,000 4,811,000 10

10 2cv:research 175,850 5 3,517,000 2,627,000 34

Source: Marketing League Tables, 2004