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Confessions of a Mystery Shopper

June 3rd, 2011 |

You’d think that a community bank branch manager would take notice when two tellers bring in a prospective customer and introduce her as someone who’s new to town, runs her own business, and is looking for a bank. Not in this case. “I’ve got to run to a chamber lunch,” the manager said importantly, struggling into her coat. “Here, take this,”—this being a brochure she pulled from a rack. “Most of my Tupperware ladies and Mary Kay representatives use this account. It will be wonderful for you. Call me.”

With that the branch manager swept off for her appointment, leaving behind a pair of bemused tellers and the prospective “customer”-–actually Sharon Tercha, one of the so-called mystery shoppers that a growing number of banks are using to monitor how well their employees recognize openings for new business. They sometimes miss them entirely, it seems, however obvious the bait. In this particular mystery shop, for example, Tercha represented a number of opportunities. These included signing her up for new personal and business checking accounts, a business loan, savings and brokerage accounts, IRAs or 401(k)s, credit cards and (since Tercha had volunteered that she was new in town) maybe even a home mortgage and equity source loan.

Companies that provide mystery shoppers most often commission other research, too, such as post-transaction interviews and surveys, usually of their competitors’ banks and customers as well as their own. Some also put together marketing campaigns and employee training programs. All of this is designed to help clients land new customers, and build wallet share among those they already have. In addition, banks that score well in the customer satisfaction surveys conducted independently by J. D. Power & Associates (probably best known for its automotive quality ratings) can use those scores as a way to attract new customers, often citing them in advertisements.

The outfits that provide mystery shopping and other quality-measuring services vary greatly in size. Informa Research Services Inc., which is based in Calabasas, California, can field a network of some 160,000 mystery shoppers, each of them the real-life, genuine article—men and women assigned to visit banks to investigate not only the quality of employee service but look at products that fit their own personal requirements. For example, the company dispatches a group that Chad Watkins, manager of its market intelligence division, calls “the mass affluent,” to see what banks can provide by way of brokers who look like they might be able to swell the shoppers’ already-sizeable investment portfolios. Why would the well-off take the time to go mystery shopping? “It’s something to do, and they can make a little money [up to $100 per shop],” says Watkins. Presumably, the mass affluent collect an additional dividend in the form of smart, free advice.

By comparison Sharon Tercha’s firm, Wordsmith Etc., in Summerfield, North Carolina, has just 15 regular shoppers on the payroll, among them a few middle-aged folk, a Latina (who sometimes affects not to speak English), someone Tercha describes as “a Southern belle,” and a diminutive and particularly feisty senior citizen. All must be able to play different roles, she says, their “characters” determined by the requirements of a particular shop, such as the bank’s location and the products the shoppers want to discuss. Once, when shopping a bank in Boston, Tercha decided to send somebody in to pretend he was returning to Harvard to finish his PhD. “I needed a distinguished shopper to fit the description, a gentleman with a neat gray beard, perhaps, who looked very scholarly.” That reminded her of somebody, let’s think…Got it, her husband, Stephen. He’d accompanied her on other shops as a trailing spouse but this was his first solo. And last one, too. “He did a great job, but he broke my budget,” jokes Tercha. A couple of dinners put him over the $750 a day she pays for an out-of-town trip. Shoppers who don’t have to travel far get $500 a day.

When she’s conducting a mystery shop herself, as she often does, Tercha sometimes takes her 14-year-old son, Benjamin, along. A shopper can’t always take contemporaneous notes of her interviews and all the things she’s meant to look at so Benjamin takes care of some of that, texting into his cell phone stuff people tell his mom about charges she’ll incur if she uses another bank’s ATM, say, or what she has to say about the condition of the lobby.

He might record some of his own observations, too, such as how kid-friendly the staff are. Tercha also uses an 18-year-old Eagle Scout for some of her shops, somebody who can play anything from a college student to a young professional. Tercha cautions banks to be very careful with younger customers. If condescended to or otherwise dissed (OK, disrespected), “they can go viral,” she says.“In seconds they can take to the Internet and tell the world how much they hate that particular bank.” Tercha handpicks each of her small cast of shoppers. Firms using larger groups find them by word of mouth or through print and online advertising.

All kinds of financial institutions hire mystery shoppers, among them the top 100 banks, regional and community institutions, and credit unions. There’s no particular pattern in the quality of service banks provide, though it can often reflect the style and disposition of the branch manager, says Andrew Frisbie, vice president of First Manhattan Consulting Group, a New York-based firm that also conducts a variety of services, including mystery shopping, for its financial services clients. Customers also suffer at some of the larger banks that got that way through acquisition of smaller banks and thrifts. “Legacy issues”—translation: unresolved questions over who handles mortgages at a particular branch, who gets the new business accounts—spell confusion for banks and customers alike.

Employees in small town branches tend to be friendlier and those same places are tougher to mystery shop since a stranger is about as inconspicuous as a tarantula on a slice of angel cake. After all, how many people in suits really to relocate to Dogpatch, U.S.A., and go around the local banks comparing loan rates? Craig Simmers, managing partner of Stellar Strategic Group, an Annapolis, Maryland-based competitor in this busy field, found this out during a visit to rural West Virginia. He drove his Lexus into one small town and discovered the branch he was meant to check for its ability to handle commercial accounts was housed in a double-wide trailer. Hastily, he drove on past, parked behind the feed store, and walked back to the bank. The employees were friendly enough, he says, and nobody called his bluff, at least not to his face. But later in the day his client called and, “just asking”—this said with a chuckle—queried whether Simmers had visited a certain double-wide that same morning. Not surprising, bank employees who do spot a mystery shopper call their colleagues in other branches to tip them off. And why not? You flash your lights at other motorists to warn them that the troopers have set up a speed trap just down the road, don’t you?

What is surprising is that advance warnings do little to shape up poor service—in this case, encourage employees to floor the gas pedal. Having to wait, in a teller’s line or to see a customer representative, is a huge source of discontent in customer surveys and something mystery shoppers run into all the time. Simmers took his seat on a sofa in the reception area once in full view of a bank officer and “just let the clock run while she sat at her desk, did her make-up, and ate her lunch. Thirty-two minutes went by before she paid me any attention.” First Manhattan’s Frisbie has had similar experiences.“Nothing’s more frustrating than a long wait,” he says. He points out that many retail customers view going to the bank as just one of many errands that need to be done as fast as possible during the course of an already overly-busy day. They’re not ready to waste their time. 

Some bank executives find the very concept of a teller line difficult to swallow. Tercha says she was met with a look of total disbelief when she told a bank vice president that she’d milled around the lobby of his own branch, checking out various brochures for 10 minutes, and nobody at all came up to greet her. She finally left. But then the client asked to see the security tape and there she was, a pony-tailed soccer mom (or so she was that day) being totally ignored by his staff. And since much of the time she was right outside his own office, just the other side of a big window, he hadn’t noticed her either.

Experiences like these point to the weakest link in the quality of service banks offer their customers—the greeters or tellers who represent the institution’s frontline, the first point of human contact for customers. Way too many front-liners just aren’t doing a professional job. To be sure, mystery shoppers find most of them to be friendly and welcoming, but that doesn’t count for much when they can’t answer a customer’s questions and don’t move swiftly to get him or her face-to-face with somebody who can. “I sometimes feel sorry for these employees, they can be in a tough position,” says Andrew Frisbie. “They clearly want to help but don’t know how. Some apologize.”

Wrong answers can be worse than none at all. Frisbie says when he asks why he should transfer all his accounts to a particular bank it’s not unusual to be told, “We have the biggest profit margins in the country.” Incompetence isn’t limited to the frontline, either, evidenced by Tercha’s Tupperware lady experience. Frisbie recalls shopping a bank where he was shown into an office where the executive’s desk was covered with a previous customer’s paperwork, with income statements and lists of assets left out in plain view. “That was truly egregious,” he says. “If somebody is that careless with somebody else’s private information, how secure is mine?”

Most mystery shops include visits to competitors, to find out what they might be doing better or worse than the client. Ideally, the banks will mesh that with what their shoppers tell them about their own performance, the results of customer satisfaction surveys, post-transaction interviews, and the like and put together training programs that address the problems and teach employees to do a better job, particularly the tellers.

Some banks invite their mystery shoppers to help in putting training programs together and, sometimes, hire them to take part in the actual training. Tercha found herself speaking to a group that included the same branch manager who had mistaken her for a “Tupperware lady.” The manager was text-book perfect during a session on the do’s and don’ts of handling customers, notably on how she would never judge a book, or prospective customer, by its cover, says Tercha. “I was wearing a suit for the training session instead of jeans and she didn’t recognize me. I didn’t want to embarrass her in front of her co-workers so I told the Tupperware story without identifying the branch. But she recognized me then, alright. Her jaw dropped to her chest.”

Not everything unearthed by mystery shoppers sees the light of day, however, even though mystery shopping doesn’t come cheap. Stellar Strategic, for example, charges up to $7,500 to conduct a two-week executive level mystery shop of 20 branches, reporting on 52 separate evaluation points and delivering an in-depth report that could run 100 pages.

“The real question,” says Andrew Frisbie, “is whether banks are willing to invest in improvement”—in other words, spend money on training. Craig Simmers has a similar concern, and raises it with potential clients before signing them up for a mystery shopping campaign. “I tell them if they’re not going to do anything, if they’re not prepared to change how they do things, then don’t spend the money on a mystery shop.” Simmers notes how training is one of the first things to be cut when banks start looking to manage costs, and seems baffled by their rationale. The Ritz-Carlton hotel chain, he points out, invests heavily in training and as a result consistently ranks at the top for customer loyalty. If that sort of emphasis works for a hotel chain it will work for banks, he says.

A lot of financial institutions continue to provide sterling service, of course. One of Tercha’s best experiences came when she and son Benjamin shopped a bank in rural Pennsylvania. All four tellers gave them a warm welcome and listened to what this potential customer, who was moving into town, was looking for in a bank. One of them escorted them to a private area, so they could discuss the customer’s needs in more detail. “It wasn’t overwhelming,” recalls Tercha of the welcome. “It wasn’t like a Disney picture. But it was very professional. I was offered coffee and asked what I’d liked and hadn’t liked about my previous bank. She obviously had an eye open to all the opportunities I represented.” The teller also tried to engage Tercha’s Benjamin in the conversation, even offering him a cup of hot chocolate. Benjamin, however, was distracted. He demolished the hot chocolate in short order but then picked up his cell phone and returned to whatever it was he was so feverishly texting. |BD|

Bank Director Staff Writer