How To Select A Mystery Shopping Company
A mystery shopping company recently ceased operations, with very little notice to clients, employees or shoppers. We were contacted by one of their clients in a panic, asking if we could take over their program “immediately”, because they had tied program results to their people’s monthly evaluations and bonuses, and they didn’t know what they’d do without it. What a stressful, unnecessary thing for a client to have to go through. Without knowing specifically what originally led the client to select this company, it reminded us that we are often asked the important question of “How do we know you’re a viable company?” when being interviewed for potential selection by clients. This is the first in a series of posts that we hope can help potential clients select the right partner for them, based on our years of experience of being on the other side of the process.
After 16 years in business, we’ve seen many different ways that potential clients decide how to select a mystery shopping company. Unfortunately, the most common seems to be that they get several proposals and then simply pick the one with the cheapest price. The other end of the spectrum are clients who invest their time and resources to seek a company with whom they can truly develop a long-term relationship. These clients employ a very in-depth, purposeful process that can include multiple phone conversations, a team of people from the client being involved, highly detailed and specific questions, actual reference-checking, and one or more onsite visits by the client team to the mystery shopping company’s offices.
In the case of the company that recently went out of business, performing some simple research on their financial situation may have prevented the traumatic after-effects of having to find a new company so quickly. Consider doing the following to help you determine a company’s financial health:
• Don’t pick a company based on the cheapest price. You really do get what you pay for. Would you select your heart/brain surgeon on the lowest price? Of course we don’t perform life-or-death surgery, but our clients rely on us and our work to determine (if not entirely, at least partially) their managers’ and associates’ performance reviews, incentive plans, bonuses, and so on, so it’s pretty important stuff. Consider the selection of a mystery shopping partner in the same vein as your other professional services partners: your accountants, law firm, advertising agency, social media partner, web programmers, and so on; again, these aren’t life-and-death, but you didn’t select them for their cheap prices. In our business, you simply can’t do great work at the cheapest price, and it will eventually catch up with you.
• The Mystery Shopping Providers Association, www.mysteryshop.org, is the U.S.-based, international trade association for our industry. Search MSPA’s website to see if the company is a member; if not, that could be a red flag. If they are a member, call the association and ask whether they are in good standing, if there have been complaints from clients or mystery shoppers, etc.
• Do they have a line of credit with a bank that can be utilized if they need it? If so, how much is it, and when does it either renew or expire? If they don’t even have one, or a legitimate alternative capital stream, it could indicate they are either very small in size, which is risky if you’re a larger organization, and/or have financial issues that preclude them from qualifying for one.
• Ask the company to provide you with the past 3 years’ financial statements. If they won’t provide it, it could be a red flag.
• Once you receive their financial information, if you’re not well-versed in how to read through it and what to look for, ask someone who is to help.
• Ask for a list of client references, and in addition to asking them about the service capabilities of the company, ask them about financial issues. Do they get hounded the first day after an invoice isn’t paid on time (indicating potential cash shortages and overall weakness)? Do they receive calls directly from mystery shoppers claiming they haven’t been paid by the company? Do they have any other indications they can share of whether they are financially sound or weak?
• Require letters of reference from their accountant (if they even have one), their bank, and their landlord (again, if they have one). Read them carefully to see if they are fully supportive and express confidence in their viability, or are they hedging and wishy-washy in describing their position and relationships?
• Check their BBB rating. Not all viable companies are rated only A or A+. It’s common for shoppers to complain when they haven’t been paid, but usually because they simply didn’t do the required work; no complaints could indicate a very small company that may be financially risky. If they do have complaints, dig deeper into that area to see what they are. If a company just ignores the complaints, or has a rash of recent complaints with no explanation, those could indicators that something is financially amiss.
• Go visit them. Do they even have an actual office? You’d be surprised how many don’t, and how many try to pass off a shared business-suites address and photo of that building as “theirs”. When you get there, what is the impression it gives? Is this a well-funded, professional organization?
Checking out a company’s financial viability doesn’t take much time, and shouldn’t slow down your selection process. However, it will save you considerable time and headache if you make the wrong choice and have to scramble to find a new one in a great rush.
We will provide more tips on selecting a mystery shopping partner in the near future. In the meantime, if we can answer any questions, please call Ron Welty, our Founder & Chief Client Officer, at 419-872-5103.