Home >industry >advertising >Indian firms warm up to mystery shopping

New Delhi: Shruthy Menon strolls at a shopping mall or tries out the offerings at a mass market food chain when she gets time away from her job at a television production company in Mumbai. Not unusual for a 25-year-old, perhaps, but Menon actually gets paid for her leisure pursuits.

Menon is part of a service industry called mystery shopping that may be finally taking off in India. In the past six months, she has undertaken 10 mystery shopping audits for companies in categories ranging from food and beverages to beauty salons, anonymously evaluating customer service and providing feedback about her experiences.

Small, mid-sized and large companies are warming up to the idea of mystery shopping, which enables them to audit their own performance in terms of customer service and a host of other parameters. Often, companies use mystery shoppers to size up the competition as well.

From small local retailers such as Chunmun, a multi-brand apparel retailer in New Delhi, and caterer Bittoo Tikki Wala to car maker Ford India Pvt. Ltd, Samsung Electronics Co. Ltd and Citibank NA, businesses are using mystery audits across different points of sales to track consumer experience.

According to industry estimates, mystery shopping is a $150 million (around 835 crore) business in India by annual revenue and growing at a yearly clip of 30-40%.

Bare Associates International Inc., a US-based mystery shopping company that entered India in 2006, was hit by the economic downturn that followed two years later when the US financial crisis erupted. Business has since improved and the company has close to 100 clients, said Sonul Verdia, general manager for India, Middle East and Africa. “We are seeing tremendous growth in all areas, specially retail, insurance, hospitality. Most of the businesses and industries are now customer-facing and see potential revenues coming from delivering customer services," said Verdia, who works with clients in the retail, beauty and wellness categories.

A typical mystery shopping audit covers the upkeep of the store, ambience, infrastructure, staff attitude, response time, knowledge, and experiences at the sales counter and point of exit. A survey form covers every aspect of a consumer’s experience with a brand. A sample survey form given by a mystery shopping agency includes specific points such as the tone of a salesperson, store hygiene and the nature of pleasantries exchanged during a mystery shopping trip.

“The awareness for exclusive mystery shopping services has gone up," said Sanjeev Shenoy, managing director of HS Brands International, another US-based company that provides mystery shopping audits. “We saw 20-25% growth in the first two years of our entry into India in 2008, owing to a slow retail scenario, but now we are seeing 40-45% growth." The company claims to have 6,000 registered mystery shoppers.

Pankaj Guglani, who started mystery shopping services provider RedQuanta in Mumbai in 2009, has seen his client base increase from four to 50, spanning brands from the service industry to auto and consumer goods makers. Guglani, who raised a second round of funding earlier this year, is surprised to see small companies such as retailer Chunmun showing interest in the audits. “Smaller companies led by second generation entrepreneurs who want to expand their businesses are taking the plunge," he said.

Evaluating the competition is also a key element for companies that use mystery shoppers.

About “60% of our clients want to check on how competition services customers and then establish benchmarks for themselves," said Shenoy.

For instance, three months ago, global e-commerce company Amazon.com Inc. that is said to be eyeing an entry into India engaged in a mystery audit for an intensive market survey to study the e-commerce market in the country, said Amazon.

Fast-food chain Mad Over Donuts has been using mystery shoppers across its 32 outlets for the last 18 months. “We do this to ensure consistent quality across all our stores," said Tarak Bhattacharya, chief executive at the chain run by Singapore-based Pragati Ventures Pvt. Ltd.

Automobile maker Ford claims to have got tangible results from mystery shopping audits in the last two years. “The audits happen every quarter or every month on parameters such as customer experience, dealership experience or to take a closer look at the sales processes," said Anurag Mehrotra, vice-president (marketing) at Ford India.

What has improved at the auto maker is the speed with which customer queries are addressed. “The amount of time you take to generate a lead and the time taken to get in touch with customer(s) has decreased to about a tenth of the original time," said Mehrotra.

The profile of a mystery shopper depends on the requirement of the client. Bare International, for instance, maintains a large database segmented by income, preferences, age and seniority.

“While we may pick a senior citizen for an insurance company, a person with a net annual income of 25-30 lakh may be engaged for a luxury car audit," said Verdia.

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