Specificities of Mystery Shopping in Retail Financial Services*

The term mystery shopping was coined in 1940s by the WilMark Company which was the first one to offer mystery shopping services (Michelson, n.d.). Even thought financial institutions have been conducting mystery shopping since then (Newhouse, 2004) it was not until 1970s when the major employment of mystery shopping started in banking. It evolved from a tool intended to monitor and enhance performance, and develop sales culture, into a predictor of customer satisfaction, after the introduction of innovative concept of service quality in 1980s (Leeds, 1995). Today mystery shopping is an industry worth $1.5 billion USD globally (Michelson, n.d.) and a part of everyday business practice of small and large companies. Mystery shopping in general has been a subject of a numerous publications about customer service, service, quality and so forth (Limbrick 1997; Newhouse, 2004; Stucker, 2005). When it comes to mystery shopping implementation in financial services – primarily in banking – majority of previous scholarship dates back from mid 1990s (Dorman, 1994; Hoffman, 1993; Holliday 1994; Hotchkiss, 1995; Leeds 1992, 1995; Morral, 1994; Stoval, 1993; Tepper 1994). Even though mystery shopping in financial services was the subject of extensive scientific exploration, further research is needed in order to extend present knowledge base is with exploration of specificities of mystery shopping in retail financial services. Also, further research is needed especially having in mind (a) the advancements in research methodology which have occurred since 1990s, (b) revised and updated international standards and code of conduct in mystery shopping, and (c) new challenges which have emerged in research management. Therefore, primary objective of this methodological article is to investigate methodological specificities of mystery shopping in retail financial services, and expose methodological recommendations that can enhance the overall quality of mystery shopping. These methodological recommendations refer to the mystery shopping’s: (a) purpose and objective, (b) geographic and observational embracement, (c) frequency, (d) samABSTRACT: The purpose of this article is to investigate methodological specificities of mystery shopping in retail financial services, as well as a set new non-methodology related challenges in management of mystery shopping studies, introduced with recent innovations in mystery shopping. The article also reveals methodological recommendations on how to enhance the overall quality of mystery shopping studies in light of current international standards and code of conduct in mystery shopping. Exposed recommendations indicate that quality of mystery shopping in retail financial services can be enhanced by: (a) conducting mystery shopping on continual basis, (b) mystery shopping in entire network of branch offices, (c) integrating all components of service delivery into research subject, and (d) continuous application of quality control instruments prior, throughout, and afterwards the study. Findings are mainly applicable in mystery shopping in retail financial services, as well as to an extent, in mystery shopping in other retail and corporate services.


introdUction
The term mystery shopping was coined in 1940s by the WilMark Company which was the first one to offer mystery shopping services (Michelson, n.d.).Even thought financial institutions have been conducting mystery shopping since then (Newhouse, 2004) it was not until 1970s when the major employment of mystery shopping started in banking.It evolved from a tool intended to monitor and enhance performance, and develop sales culture, into a predictor of customer satisfaction, after the introduction of innovative concept of service quality in 1980s (Leeds, 1995).Today mystery shopping is an industry worth $1.5 billion USD globally (Michelson, n.d.) and a part of everyday business practice of small and large companies.
Even though mystery shopping in financial services was the subject of extensive scientific exploration, further research is needed in order to extend present knowledge base is with exploration of specificities of mystery shopping in retail financial services.Also, further research is needed especially having in mind (a) the advancements in research methodology which have occurred since 1990s, (b) revised and updated international standards and code of conduct in mystery shopping, and (c) new challenges which have emerged in research management.
Therefore, primary objective of this methodological article is to investigate methodological specificities of mystery shopping in retail financial services, and expose methodological recommendations that can enhance the overall quality of mystery shopping.These methodological recommendations refer to the mystery shopping's: (a) purpose and objective, (b) geographic and observational embracement, (c) frequency, (d) sam-ABSTRACT: The purpose of this article is to investigate methodological specificities of mystery shopping in retail financial services, as well as a set new non-methodology related challenges in management of mystery shopping studies, introduced with recent innovations in mystery shopping.The article also reveals methodological recommendations on how to enhance the overall quality of mystery shopping studies in light of current international standards and code of conduct in mystery shopping.Exposed recommendations indicate that quality of mystery shopping in retail financial services can be enhanced by: (a) conducting mystery shopping on continual basis, (b) mystery shopping in entire network of branch offices, (c) integrating all components of service delivery into research subject, and (d) continuous application of quality control instruments prior, throughout, and afterwards the study.Findings are mainly applicable in mystery shopping in retail financial services, as well as to an extent, in mystery shopping in other retail and corporate services.
pling, (e) research embracement, (e) shop scenario and inscription, and (f) data acquisition and quality control.Methodological recommendations are revealed in light of current international standards and code of conduct for mystery shopping, and aggregate existing theoretical knowledge, with author's professional experience in managing mystery shopping studies for retail financial service providers.The article also examines a set of new non-methodological challenges which have emerged in mystery shopping management, as well as some fundamental issues of mystery shopping methodology.
Even though the article addresses the issues of conducting mystery shopping in retail financial services, majority of the recommendations can be employed to an extent, when conducting mystery shopping in other retail services, and in corporate (i.e., business to business -B2B) services.However, it is important to note that mystery shopping in retail and corporate services do not share the same methodological framework, and therefore conducting mystery shopping research in corporate services is not feasible solely relying on methodological recommendations presented in this article.
Practical implications of the article may be particularly interesting to marketing professionals (marketing managers and research consultants), because it provides recommendations on how to deal with challenges that emerge on everyday basis when conducting mystery shopping research in retail financial services.Theoretical implications may be interesting to academics and scientists who study the field of marketing research or marketing in financial services.

methodological foUndations of mystery shoPPing
Mystery shopping as marketing research has had a bit of a rough start.Contrarily to the other types of marketing research -which were firstly developed in theory, and then enhanced through practical exercise -mystery shopping emerged on the basis of practical needs without ever reaching such high level of theoretical development.
Premature employment of mystery shopping created a discrepancy between its practical implementation and theoretical development.On one hand, the theoretical basis of mystery shopping was insufficient to provide high quality research, but on the other hand, mystery shopping could not be enhanced in practice without further development of its theoretical foundation.
Because of this, providers of mystery shopping services invested a significant amount of effort in order to compensate for the missing knowledge, and fill the void between inadequately developed theoretical foundations and growing employment of mystery shopping in practice.These efforts resulted in introduction of internationally recognized standards and guidelines for conducting mystery shopping, which today make the methodological foundation of mystery shopping.Therefore, today there certainly is no discrepancy between theory and practice of mystery shopping.
Even though the initial objective of international standards was to codify existing knowledge, and experiential learning about mystery shopping-thus providing a firm basis for further theoretical development-standardization surpassed initial objectives and led to creation of strict code of conduct for mystery shopping.International standards of mystery shopping are developed and enforced by associations such as Mystery Shopping Providers Association (MSPA), European Society for Opinion and Market Research (ESOMAR), and British Market Research Society (MRS).Member companies of these associations are obliged to conduct mystery shopping in compliance with the international standards and code of conduct, because declination from these regulations can result in sanctions.
Despite strict standards and code of conduct there still are some methodological issues regarding mystery shopping which need to be addressed before engaging in further discussion.

Marketing Research or Not?
One of the issues trailing mystery shopping since the day of its conception is whether the mystery shopping actually is a marketing research?This is an important issue because it determines overall approach towards mystery shopping, both in science and practice.
According to MSPA Europe (2003) "mystery shopping is not traditional market research but is a business information tool" (p.3).It is important to recognize previous statement, because it represents an opinion of the most influential industrial association of companies specialized in providing only mystery shopping services.The state of fact is that these companies are not genuine marketing research companies, and from their perspective, it might be justified to observe mystery shopping as a business information tool, rather than as a marketing research.
On the other hand ESOMAR (2005) provides very strict definition of mystery shopping in relation to its belonging to the diverse spectrum of marketing research.
"In cases where any personal data collected are to be treated as fully confidential and are not to be used for any purpose other than scientific research the study falls under the definition of market research and can be described as mystery shopping research.If the personal data collected are not to be treated as fully confidential and may also be used for purposes other than scientific research-for example in connection with the staff training, reinforcement of sales efforts or the operation of bonus system-then the study does not fall exclusively under the definition of market research and must not be described as the mystery shopping research but as the mystery shopping project." (p.4) According to ESOMAR's definition key qualifiers that determine when mystery shopping abandons boundaries of marketing research are (a) confidentiality of personal data and (b) purpose of mystery shopping.How does this apply to the business practice?
Well, it is hard to find a mystery shopping study that would be exclusively used for scientific purposes outside scientific or academic institutions.In business practice mystery shopping is used in customer relationship management (CRM), quality management (QM), personnel training, business intelligence, and so forth.However, this type of deployment does not necessarily lead to disclosure of personal data.Therefore, until there is no disclosure of personal data mystery shopping in business environment still can be categorized as marketing research.On occasions when it is necessary to disclose personal data it should be considered as a mystery shopping project.
The distinction introduced by ESOMAR is very valuable both in scientific discussion, as well as in practical employment.It clearly defines boundaries, which should be kept in mind when engaging in mystery shopping.This article predominantly examines methodology of mystery shopping research.However, the majority of recommendations can be successfully applied to the mystery shopping projects as well.

Mystery Shopping as Observational Research
In primary marketing research original data can be acquired trough (a) observation, (b) survey, (c) experiment, and (d) qualitative methods (Easwaran & Singh, 2006, p. 95).Since data in mystery shopping is acquired through observation and not through survey -which is a more common method of data acquisition -it is important to recognize that mystery shopping is an observational research.This type of research allows direct observation of phenomenon in its natural setting.To be more specific, mystery shopping is a form of covert observational research.Furthermore, ESOMAR (2005) emphasizes that "key characteristic of a mystery shopping studies is that the data subjects are normally not aware at the time they are participating in a study" (p.2).
One of the ways to classify observational research is as (a) structured or (b) unstructured (Brink, Van der Valt, & Van Rensburg, 1996/2006, p. 143).While the data acquired through unstructured observational research tends to deliver descriptive information primarily used in qualitative analysis, structured observational research tends to acquire quantitative data.
"Structured observations entail specifying in advance precisely the behaviors or events that are to be observed and how they will be recorded, and preparing forms for record-keeping such as checklists, categorization systems and rating scales.Structured observation is the method most commonly used in quantitative studies, where the researcher or trained observer simply observes and records certain aspects of the subject's behavior." (Brink et al., 1996(Brink et al., /2006, p. 143) , p. 143) In practice of retail financial services it is much more common to conduct mystery shopping as structured observational research.Qualitative data is of no value for research orderers because it does not deliver findings which can be deployed in CRM, QM, personnel training, and so forth.Marketing research industry is very responsive to this requirement and research providers are constantly innovating mystery shopping methodology towards making it more robust, reliable, and quantitative, thus drifting away from its qualitative counterpart.
However, it is important to have in mind that even when conducting mystery shopping as structured observational research it still is not typical quantitative research.Observational research requires different methodological platform especially in terms of sam-pling method, data analysis, data interpretation, and so forth.Friedrichs and Ludtke (as cited by Wilson, 1998b) indicate potential advantages which observational research offers over survey research.
1. Reported behavior can differ from real behavior.
Statements gathered through interviewing can be different than the factual behavior of the interviewed person.2. Sometimes, facts can be brought to light only by examining them in their natural setting, because these facts emerge only when interviewee is not aware of the interview.
Therefore findings and data gained only through survey research may not be sufficient, and can be very well complemented with findings from observational research.That is exactly what mystery shopping provides because "participant observation helps to develop richer knowledge of the experiential nature of services" (Wilson, 1998b, p. 149).

Definition of Mystery Shopping
ESOMAR, MSPA Europe, and MRS define mystery shopping in quite similar manner without essential differences.Examination of ESOMAR's definition is sufficient for the purposes of this article.
"Mystery shopping studies involve the use of mystery shoppers who are trained and/or briefed to observe, experience and measure any customer service process by acting as a prospective customer and undertaking a series of pre-determined tasks to assess performance against specific criteria reporting back on their experiences in a comparable and consistent way.

research methodology
Methodology of mystery shopping studies relies heavily on international standards and strict code of conduct.While from the outside it resembles other marketing research methodologies, closer review will reveal some crucial differences between mystery shopping and other types of marketing research.

Purpose and Objective
The generic purpose of mystery shopping research is to provide positive contribution in decision making processes related to the issues of CRM, QM, sales, and personnel training.The objective of mystery shopping research is to acquire objective and unbiased data in reference with factual performance of a service delivery unit2 at a particular moment in time, in accordance with the pre-defined protocols and specifications, so that acquired data can later be used to evaluate the enforcement of corporate standards in service delivery.
Various authors provide more elaborate viewpoints that relate purpose and objective of mystery shopping to its specific deployment in practice.Leeds (1995, p. 3) indicates that mystery shopping provides feedback on how branch office personnel treats customers, and whether branch office personnel is competent and courteous.Wilson (1998b, p. 153) establishes a concatenation between expectations of managers and customers -which are expressed through corporate standards in service delivery -and mystery shopping -which collects facts rather than perceptions, and that way objectively measures performance in service delivery relative to these standards.Same author denotes that mystery shopping provides the possibility for managers to look behind the aggregate data acquired through customer satisfaction surveys and detect decline in service delivery at specific time and specific service delivery units (Wilson, 1998b, p. 157).These findings would remain inaccessible without mystery shopping.Leeds (1995) emphasizes the role of mystery shopping in rising corporate income because it (a) helps build customer satisfaction, (c) strengthens the ability to retain customers, and (c) enhances product usage.
According to the Wilson (1998a, p. 419) mystery shopping studies have employment potential to • identify weak points in service delivery, • enhance personnel's motivation by further training and bonuses, and • in case of competitive mystery shopping, to assess the company's competitiveness in service delivery.

Geographic and Observational Embracement
Embracement of mystery shopping research is determined by its (a) geographical and (b) observational reach.Research embracement matrix in Figure 1 displays four possibilities to design mystery shopping research.These possibilities are obtained by intersecting geographic and observational reach of mystery shopping research.
Initially mystery shopping was designed to evaluate and monitor enforcement of standards in service delivery of the company which ordered the research.This type of autogenous 3 mystery shopping is the basic way to design mystery shopping.It gives an opportunity to thoroughly examine the entire process of service delivery, and discover its strong and weak points.Its findings can be utilized in CRM, QM, sales, and personnel training.
Observational reach of mystery shopping can be extended to competitors branch offices as well.This gives another deployment potential to the mystery shopping and turns autogenous mystery shopping into competitive mystery shopping.The emphasis of competitive mystery shopping is to evaluate performance in service delivery of own company relative to the performance of direct competitors, rather than to evaluate and monitor enforcement of own corporate standards in service delivery.Also, it can be utilized for business intelligence (BI) purposes.Leeds (1995) suggests that competitive mystery shopping provides 3 Autogenous is a medical term used to describe phenomenon which is self generated, or self produced.Note.Mystery shopping studies can expand its geographical reach by conducting mystery shopping on multiple national markets, or expand its observational reach by including competitor's service delivery units into study.
the opportunity to identify competitor's best and worst practices and present the opportunities to improve your own service delivery.International standards and code of conduct (ESO-MAR, 2005; MRS, 2008; MSPA Europe, 2003) are very strict when it comes to the competitive mystery shopping, especially having in mind its BI employment potential.Therefore, standards prescribe that when conducting competitive mystery shopping it is especially important to avoid any unnecessary losses or damages to the competitors.Data must be collected carefully without waste of the competitor's resources (e.g., money, time, etc.).This is very important in order to prevent any kind of misuse of mystery shopping.
Driven by the need to have more efficient asset management the industry of financial services underwent transformation throughout internationalization of its business operations.In order to ensure international growth, financial service providers had to introduce specific instruments of international development in all areas of business administration.In marketing, one of these innovative instruments was multinational marketing research.The purpose of multinational marketing research is to explore and monitor performance of subsidiaries operating at different national markets (countries) by using unified methodology, which provides comparability of findings and data.
This led to expansion of geographic reach of mystery shopping and introduction of multinational mystery shopping.Multinational mystery shopping is similar to the autogenous mystery shopping, except it is conducted simultaneously or in proximity, on more than one national market.The objective of multinational mystery shopping is to evaluate and monitor enforcement of international corporate standards in service delivery within subsidiaries.Its emphasis is to investigate compliance with international corporate standards in general.
Multinational mystery shopping requires cooperation and synchronization of a large number of parties, usually dispersed over a large geographical area.Furthermore cultural, social, and lingual issues -unknown in national marketing research -emerge in multinational marketing research.This means that methodological framework must be developed in such manner that it assures comparability of data without neglecting national specificities.(Further details in reference with multinational mystery shopping will be discussed later.)

Frequency
Research frequency should be determined in such manner that it provides greatest employment potential, for a given amount of financial resources intended to be invested in mystery shopping.How does this apply to the particular types of mystery shopping in retail financial services, and what would be the appropriate methodological recommendations regarding its frequency?
In order to be effective and reach limits of its employment potential mystery shopping must be conducted on continual bases.According to Leeds (1995, p. 3) "measurements should be taken quarterly to provide timely feedback on missed opportunities (for example not asking the customer to come back or forgetting to offer an application)".Previous recommendation should be considered optimal, because it provides balance between employment potential and research cost.Conducting mystery shopping more often would insignificantly increase its employment potential, regarding the amount of additional funds it requires.Furthermore, conducting mystery shopping too often will cause research to lose its impact, and saturate decision makers with information, which is just the opposite of what the research is intended to achieve.Also, it is important to recognize, that it takes some time for financial service providers to analyze data and findings gained through mystery shopping, make decisions, and subsequently take action.Therefore, mystery shopping studies should be evenly spaced during the entire business year, with enough time in between, so each study can be utilized in decision making process.
However, if it is not feasible to conduct mystery shopping quarterly, mystery shopping should be conducted no less than once a year.Otherwise, employment potential of the research would significantly deteriorate.Even when conducting mystery shopping only once a year its employment potential is diminished, because it cannot be utilized in personnel training, QM, CRM, and so forth.It can be used only to evaluate performance in service delivery at certain moment in time.Even though it is better to conduct mystery shopping once annually, than not to conduct it at all, it is recommended to make it more often, because only than it yields its true benefits for decision makers.
When it comes to the competitive mystery shopping, there is no need to conduct it more often than once annually.Competitive mystery shopping aims to acquire data that would later be used to compare per-formance in service delivery of own company against its direct competitors.Having in mind that this type of research is far more demanding to conduct, more expensive, and that it delivers more complex findings, there is no need to conduct it more often.It especially applies in case of multinational competitive mystery shopping.

Sampling Without a Sampling Frame
Sampling in mystery shopping is quite different than sampling in survey research.In survey research, sample is obtained by deriving a certain number of elements from a target population by using some of the sampling methods (e.g., random sampling, quota sampling, etc.).Sample frame provides the information on how to access particular sampling units, and consequently sampling elements.In survey research relations between target population, sampling frame, sampling unit, and sampling elements are strong and direct.
How different is the sampling in mystery shopping in retail financial services?
Well just to start with, the relations between sampling frame, sampling unit, and sampling elements are not that rigid.This is due to the fact that in mystery shopping service encounters carry the role of sampling elements, and sampling frame for service encounters is impossible to obtain.While the list of branch offices might be the closest thing to the sampling frame, it is not an actual sampling frame.The list of branch offices does not resemble the population of service encounters, and thus prevents the formation of such rigid relations between sampling frame and sampling elements.To be exact, in mystery shopping service encounters are being induced rather than being sampled.But, from the branch office personnel point of view, these covert service encounters appear like all others, and effectively are being sampled from the infinite population of service encounters which take place in branch offices.
Then, what would be the appropriate sampling method to use in mystery shopping?
The inherent properties of mystery shopping as an observational research now come in to play, and direct the application of sampling methods which are widely used in observational research: (a) time sampling or (b) event sampling.Having in mind that event sampling requires observation of an entire event, time sampling is the only applicable method.According to Brink et al. (1996Brink et al. ( /2006) "time sampling involves ob-servations of events4 during certain specified times" (p.144).
There are two options to time individual shops in time sampling: • Random timing, when the timing of each individual shop is determined only by the will of the mystery shopper without any external interference.The sampling plan is not required because the mystery shoppers independently decide when to visit branch offices.• Systematic timing, when all shops are conducted within those key hours when it is suspected that the quality of service delivery may decline.Usually, these timings are: (a) in the morning just upon the opening of branch offices, (b) the rush hour when it is expected that branch offices will be flooded with customers, or (c) just before the end of the business hours.Systematic timing requires development of precise sampling plan, which needs to be strictly fallowed during the fieldwork.
The decision which timing option to apply is specific to each mystery shopping study, and depends on the assumption which timing would be most beneficial to the representatives and objectivity of the study.While, the random timing may make the study more unbiased, it might deliver less useful findings and data than systematic shopping.The decision which timing to choose is usually made by the research orderer.
Finally there are two important recommendations in reference with time sampling in mystery shopping in retail financial services.
Firstly, it is especially important to emphasize that the findings and data acquired through mystery shopping are representative only for branch offices where the mystery shopping took place.It is impossible to conduct mystery shopping in a number of branch offices and then assume that acquired data is representative for the entire network of branch offices (i.e., entire financial service provider).Therefore, mystery shopping should be conducted in all branch offices.Only branch offices which should be excluded from the sample are the ones where there is only one employee, because it would lead to the identification of the employee, or according to the ESOMAR (2005) "the results must be given in a form only which does not lead to the identification of an individual person" (p. 6).Under certain circumstances-such as the requirement of the research orderer-it is justified to conduct partial mystery shopping covering only a portion of the entire branch office network.Yet again, acquired data is representative only for the portion covered by the mystery shopping, and not the entire network of branch offices.
Secondly, it is very important to shop at each branch office at least twice during the same mystery shopping study.This is an important methodological requirement because it gives an opportunity to reduce the risk of observer bias.According to Goodwin (2010) observer bias emerges in observational research because observers have some preconceived ideas about the object of observation and may unconsciously allow their preconceived ideas to color their observations.Conducting at least two shops to the same branch office provides interobserver reliability.The reduction of the observer bias is the focus of training, and with these measures it is reduced to a minimum.

Three Components of Research Subject
As mentioned earlier, findings and data acquired through survey research do not provide all neces-sary information for decision makers.They need to be complemented with findings and data acquired through observational research, primarily mystery shopping.This especially applies to researches that investigate the issues of service delivery, such as customer satisfaction surveys (CSS).Therefore, when designing mystery shopping or CSS it is important to align research subject of one another, in order to make them as complementary as possible, and create more synergy between these two different types of researches.It is recommended to engage the same research provider to design CSS and mystery shopping, and conduct them the same time.This approach enriches informational surrounding, and makes both researches more productive.Relations between the research subject of mystery shopping and customer satisfaction surveys are depicted in Figure 2.
Having this in mind, let us now investigate the research subject of mystery shopping in retail financial services.
The most natural approach to define the research subject of mystery shopping is to start from service marketing mix.Service marketing mix contains ad- Note.It is especially important to make both researches complementary as possible, especially having in mind that both of them explore the issue of service delivery but from different angles.ditional 3 Ps which stand for: people, processes, and physical environment.Furthermore, in retail finance majority of services are delivered in branch offices through numerous interactions of customers, branch office personnel, and physical environment.Therefore, the generic mystery shopping research subject must cover three fundamental research components: (a) people, (b) processes, and (c) physical environment.
However, having in mind the diversity among retail financial service providers, and their efforts to design and deliver service in a unique way, it is usually necessary to enrich generic framework of mystery shopping research subject.The generic framework is enriched by integration of individual specificities of service delivery into research components.Careful examination of corporate standards in service delivery is required in order to discover specificities and integrate them into shop scenarios and inscriptions.This can be done only in close cooperation between research provider and research orderer.It can be a time consuming process, especially in case of multinational mystery shopping studies.
Another factor that may influence the embracement of research subject may be the requirement for specific information.According to judgment of the research orderer, some components of service delivery may require more attention and others may require less.However, accurate and impartial findings can be acquired only by gaining insights in all components of service delivery, without neglecting some, and prioritizing others.Reclining on partial findings increases the risk of drawing wrong or misleading conclusions.

People
In marketing mix of retail financial services people indicate the entire branch office personnel, with emphasis on employees who provide services to customers.This is the most important research component of mystery shopping in retail financial services.This component of research subject covers investigation of branch office personnel's • readiness and capability to provide services to customers; • competence; and • general appearance and tidiness.
Exploration of people component of research subject relies heavily on corporate standards in customer service, and usually is unique to every financial service provider.These standards cover all areas of customer service, starting with kindness and forwardness, right to the specific protocols on how to handle complaints and unsatisfied customers.Sometimes they are so strict that they prescribe exactly what branch office personnel should or should not say in case clients express dissatisfaction.Prior to their unsupervised work in branch offices, branch personnel are trained until they achieve certain level of readiness and capability to handle every customer.This is especially important having in mind fierce competition among providers of retail financial services, and the value of each customer.Specific mystery shopping scenarios, which drive branch office personnel through various situations with customers, are designed to test their readiness and capability to service customers.
Competence of the branch personnel is evaluated as well.It is done by designing specific shop scenarios which mimic the inquiry regular customers about certain financial products or services.Branch office personnel needs to have in depth knowledge of various products and services their company has to offer.Therefore, when being asked about some of them, they should give elaborate and accurate product or service descriptions, and move forward with sales activities.Mystery shoppers already know the answers to these questions, and they can evaluate the competence of the branch office employees.On occasions branch office personnel may even be asked about product their company does not offer, and tested whether they will act in compliance with prescribed protocol.
Finally, mystery shoppers can observe general appearance and tidiness of branch office personnel.This refers to whether branch office personnel wears or does not wear name tags, whether their workspace is clean and tidy, whether they are dressed properly, and so forth.In modern financial services these criteria are usually met and retail financial service providers report excellent performance in that department.

Physical environment
Second component of the mystery shopping research subject is physical environment where the service delivery takes place.Practically all physical objects engaged in service delivery should be observed and evaluated.Yet again, corporate standards in retail financial services are very strict when it comes to the physical environment.They prescribe which items and machines are to be used in servicing customers, their placement, and so forth.In retail financial services the evaluation of physical environment refers to • cleanliness and tidiness of service delivery environment, • placement (existence) of objects, and • operational status of these objects.
In practice this means that mystery shoppers usually observe external and internal appearance of the branch offices and evaluate their cleanliness.Mystery shoppers especially pay attention on proper location of certain objects (e.g., information desks, automated teller machines, etc.), and whether these objects are operational or out of order.Specific open ended questions are added to the shop inscriptions, so mystery shoppers can provide more elaborate explanations of particular observations.This component of service delivery is particularly easy for observation, and delivers very reliable findings.

Processes
The last component of mystery shopping research subject are the processes involved in the service delivery itself.In practice this is related to the evaluation of their • flow; and • duration.
Corporate standards in service delivery prescribe the length of each process (e.g., opening of the current account should not take longer than ten minutes) and their expected flow and outcome (e.g., customer should receive brochure about additional services).Therefore, mystery shoppers measure the time it took to get them serviced, and observe have all the steps in the service delivery process been fallowed through.Also, mystery shoppers may engage in testing of specific services, such as currency exchange.These and similar activities leave physical evidences such as bank statements, product brochures, and so forth.Apart from providing physical evidence that the process has been fallowed through, this is a good quality control instrument.

Shop Scenario and Inscription
Questionnaires are among the main instruments used in survey research.Field force uses questionnaires to survey elements of target population, and acquire data by asking questions and noting answers.Questionnaires are designed in such manner that they provide simultaneous acquisition and entering of data.Unless mystery shoppers are making an actual audio recording of the shop, data acquisition and data noting are not conducted simultaneously.Therefore, mystery shopping requires specific instruments to facilitate and aid data acquisition.
In mystery shopping field force uses shop inscription 5 because there is no surveying and it is not possible to note and acquire data simultaneously.While the questionnaire in standard survey research is designed to allow field force to enter data by following certain order of questions, shop inscription is designed to aid mystery shopper to accurately recollect all of the information he or she previously collected through observation.That would be the key difference between questionnaire and shop inscription in terms of overall design.Therefore, MRS (2008) suggests that mystery shopping studies should be limited in length and complexity in order to increase recollection ability of the field force operators.
There are other, more particular differences as well.While questions in the questionnaire can be rather complex, and contain various scales, the questions in shop inscription must be as simple as possible, and directly related to the specificities of service encounter.Preferably questions should be designed in such manner that they can be answered in a form of yes and no answers.Each question must be accompanied with detailed directions for the mystery shoppers so they would exactly know what to observe.This is especially important because mystery shoppers need to recollect all of the observations acquired during their shops and then write them down in shop inscription.Therefore, making questions to complex or ambiguous can lead to difficulties in interpreting data.Also, the shop inscription should provide some room for mystery shoppers to describe special circumstances they might encounter while conducting mystery shopping.This is done by adding a limited number of open ended questions.
Another instrument specifically developed for the purposes of mystery shopping is a shop scenario.It is a written document which consist • description of the setting in which mystery shopping is going to take place, • protocol which mystery shoppers should fallow in order to be serviced, • description of the expected outcome of the service encounter, and • instructions on how to behave in case of unforeseen events.
After reading the scenarios mystery shoppers should be almost able to visualize the environment they are going to be in, and know what exactly to expect.Scenarios should tell mystery shoppers what to wear, what actions to take, which service to ask for, and what to do in case of unforeseen events.Successful development of realistic scenario is possible only with close cooperation of research orderer and research provider.It is not uncommon that research orderers develop the shop scenarios, because they are the ones who are most familiar with the service they provide.
Shop scenarios play an important role in training of mystery shoppers, and they should be exercised in training prior to the deployment in real setting.A common practice is to develop more than one scenario for each mystery shopping study.This brings more diversity to the assumed roles of mystery shoppers.Unlike with mystery shopping subject, there is no generic framework for the shop scenario.Each shop scenario is developed according to the requirements of the particular mystery shopping study.
MRS (2008, p. 5) outlined three key features of good shop scenario design.
• Straightforward.The scenario should be straightforward and easy for field force to comprehend, but with enough depth to the role.• Credible.In order to make mystery shoppers convincible, scenario should aim to reproduce consumer behavior in natural setting as close to reality as possible.• Safe.Scenario must not entice mystery shoppers to do anything illegal or put them under any kind of risk or danger.

Data Acquisition and Quality Control
Quality control in mystery shopping requires engagement of both research provider and research orderer.
The duty of research provider is to ensure highest quality of data acquisition, while the duty of research orderer is to ensure compliance of its employees.The engagement of research orderer is very important for overall success of the mystery shopping and it should be encouraged.There are secondary benefits of close cooperation between research orderer and research provider such as: (a) strengthening of relations between two parties, (b) incrising of morale of mystery shoppers, and (c) better chances for success of the entire study.Therefore, there are a lot of obligations for both sides prior, throughout, and afterwards the study in order to maintain its methodological integrity and enhance overall quality.

Control in Mystery Shopping
Note.Quality control in mystery shopping is a continuous process lasting before, throughout, and after the study has ended.

It requires joint efforts and close cooperation between research orderers and research providers.
When it comes to the research provider quality control is mainly related to the preparation, organization, and supervision of the data acquisition stage.Regardless of operational capabilities of research provider data acquisition in survey research remains a challenging task, and data acquisition in mystery shopping is twice as challenging.In mystery shopping the risks of data falsification are much greater, and quality control is harder to achieve.Therefore, it is necessary to apply different quality control instruments than the ones used in survey research.
What can be done to ensure and enhance the quality of data acquisition in mystery shopping in retail financial services?
Firstly, careful selection of field force is crucial.According to the Wilson (1998b) "the shoppers must match a customer profile that is appropriate for the scenario that they are being asked to enact" (p.154).This is especially important because branch office personnel has a large experience in servicing customers.Therefore, mystery shoppers must look convincing, and resemble customers that branch office personnel meets on everyday basis.They must mimic regular customers according to their: (a) age, (b) appearance, and (c) social background.It would be wise for research providers to maintain a steady base of mystery shoppers that can be selected according to the requirements of a particular study, rather than engaging new mystery shoppers over and over.Even though it requires more funding, this is a much better policy in long term, because it provides insight in the field performance of each shopper, and possibility to enhance their capabilities through training.
Secondly • to make mystery shoppers adopt scenarios and inscriptions as their second nature, and • reduce the influence of observer bias of each mystery shopper, thus making them observe the factual circumstances they detect in branch offices in neutral way.
MRS (2008, p. 5) suggests that "the primary aim is to document precisely what happened at the point of contact, rather than how the mystery shopper feels" and that is exactly what such specific training provides.
The actual data acquisition must take place under continuous supervision.This is particularly hard to achieve because it is impractical to validate each shop mystery shoppers make.However, there are few quality control instruments that can be deployed in order to prevent and detect wrongdoing.
• Service usage.Usage of some service (i.e., automated teller machine, foreign currency exchange, etc.) conducted as a part of the mystery shopping scenario, without unnecessary loss of time or money, and submission of physical evidence about the usage of service (i.e., confirmation, bill, bank statement, etc), provides some proof that mystery shopping actually took place.Documents issued by banks usually contain date and time, which may be useful to assure that the sampling plan was fallowed.• False branch offices.False (i.e., non-existing branch offices) may be deliberately added to the sampling plan.If some mystery shoppers report back that they have conducted mystery shopping in these false non-existing branch offices, it is an obvious sign of data falsification.• False questions.False questions referring to nonexisting elements of service delivery may be added to the shop inscription.If the financial provider does not have a queueing system in its branch offices, and some mystery shoppers report otherwise it may indicate data falsification.• Time limit.Mystery shoppers must be time limited to submit shop inscriptions within the same day the shop took place.Stalling with the submission of the completed inscriptions should not be allowed.This ensures fallowing of the sampling plan.• Debriefing.Mystery shoppers should be randomly debriefed after they complete mystery shopping.
Debriefing may reveal if some of mystery shoppers falsified data, did not fallow sampling plan exactly, and so forth.Also, it may clarify some obscurities in noted observations.Although primarily it is a quality control instrument, it is also provides feedback on practical employment of scenarios and inscriptions, and field performance of mystery shoppers.Close and sometimes informal relations with field force can only do well, and enhance the chances of success of mystery shopping study.
Even though each of the previously mentioned quality control instruments may fail, deploying all of them simultaneously significantly decreases the risk of data falsification.However, the most effective instrument of quality control in mystery shopping is the strong base of loyal mystery shoppers.Loyal field force is less likely to commit any kind of falsifying because they do not want to compromise relations with research provider.Furthermore, their fieldwork performance is constantly evaluated and enhanced through regular practice.Also, it is important that mystery shoppers who have successfully completed the fieldwork receive adequate honorarium.
Quality control does not end with the completion of the data acquisition.Research provider is obliged to maintain methodological integrity of the mystery shopping in later stages of the study.This is particularly related to the anonymity of shopped employees when reporting to the research orderer.MRS (2008) states that "the anonymity of respondent s must be preserved unless they have given their informed consent for their details to be revealed or for attributable comments to be passed on" (p.3).It is especially important to pay attention to details such as the actual time that the shop took place, because such information may indirectly reveal identity of the employees present at the branch office.According to ESOMAR (2005) "there must be adequate security arrangements in place both at the client and at the research company level to ensure that any personal data are secure and not accessible by unatorised parties" (p.3).
As stated earlier, engagement of research orderer is also important to ensure quality control and overall success of the project.
It is very important that research orderer properly and timely informs branch office personnel and management about the mystery shopping.According to the MSPA Europe guidelines (2003) "all staff must be informed that their organisation is subject to, or intends to undertake, mystery shopping" (p.5).Ac-tual time of the mystery shopping does not need to be revealed.If both the personnel and management understands what is mystery shopping, why it is done, and how may they benefit from it, the chances that the study will succeed are much greater.Regular and timely communication ensures compliance, and has further benefits when it comes to the implementation of findings gained through mystery shopping.Also, it is important to clarify the objectives and intended uses of the findings, especially in case of mystery shopping projects which may be related to bonus operations.
Consistent behavior after the study is also important.Research orderer must not abuse mystery shopping.MSPA Europe (2003) states that "disciplinary action must not be taken only on the basis of the mystery shopping program results.The aim of mystery shopping should be to increase customer service levels and develop staff through training and motivation" (p.5).
The research orderer is also responsible to ensure that branch office personnel does not make attempts to identify mystery shoppers, as well as not to harass them.Also, MSPA Europe ( 2003) suggests that attempts to identify mystery shoppers may lead to annoying genuine customers, and that is very important to acquaint branch office personnel with the benefits of mystery shopping so they become less interested in making attempts to identify mystery shoppers.
Therefore, by claiming that there will be no disciplinary action against employees, prior to the mystery shopping, research orderers ensure compliance of their personnel.It is especially important to act consistently after the study, and use findings and data gained through mystery shopping to improve the performance of employees with training, and subsequently improve the quality of service delivery.Any other course of action by research orderer may create more harm than good.

challenges in research management
Conducting marketing research has always been a demanding and challenging endeavor, even to an extent that it strongly influences the relations between research orderer and research provider.This brings a whole set of new non-methodology related challenges in research management.What would be the root cause of this?Well, from a research orderer's viewpoint, engaging in marketing research is somewhat like going to a doctor's appointment.You need to share confidential information about your business, to someone with specialized knowledge, in good faith that their advice will be beneficial to your business.This situation is stressful itself.On the one hand, research providers have the responsibility to deliver credible data and findings in order to aid decision making, and on the other hand, research orderers must allow insight to their confidential business operations to an external party, and ultimately act upon marketing research.
If you add financial commitments, constrains, and deadlines in equation it is obvious that a lot of complexity and tension can arise in relations between research orderers and research providers.
However, managing all marketing research does not carry equal sensitivity.In retail financial services sensitivity is especially present in mystery shopping research.What would be the circumstances under which the likelihood of developing such sensitivity is particularly high, and what challenges in research management may arise with it?

Research Cost
Well, just to start with, mystery shopping projects tend to be more expensive than other types of marketing research (Leeds, 1995).Mystery shopping requires specific recruitment and training of field force, additional instruments of quality control, and so forth.All of this adds extra cost to mystery shopping research, whit almost no room to save funds.
Right there, even before the actual start of the research, this strains the relations between research orderer and research provider.It is not only a problem for a research provider-who needs to justify the extra cost-but, for a manager assigned to conduct the mystery shopping as well.Top management and department heads request firm assurance from their subordinates, that there will be no unnecessary expenditures, and that financial resources will be spent wisely.Therefore, during negotiations or tender procurements, managers in charge of mystery shopping insist on getting the most favorable conditions especially in terms of price.
Even though cost reduction requests are justified and acceptable, this kind of pressure can force research provider to make unreasonable cost reductions, just in order to close a deal with research orderer.If such occasion occurs, the duty of marketing research provider is to render all necessary explanations on what exactly makes mystery shopping so expensive, and perhaps offer detailed insight into research budget items.This makes the entire procurement process more transparent, which in return should bring relief to the negotiations.However, if the pressure to cut cost remains, the duty of research provider is to protect integrity of marketing research, and revise the decision to cooperate with research orderer in question.Another solution for the research provider is to go ahead with research, and provide the missing funds from its own resources.
On both occasions the integrity of mystery shopping must be maintained or mystery shopping should not be conducted.This is ultimately in the best interest of research provider and research orderer.

The Nature of Research
The inherent properties of the mystery shopping tend to be a source of sensitivity itself.Mystery shopping is, most of the time, advertised as an objective and reliable tool to evaluate the enforcement of corporate standards in service delivery.Therefore, top management examines mystery shopping reports with scrutiny in order to pinpoint weak performers, and act on improving service quality.
Unlike other types of marketing research which examine opinions of target population, mystery shopping intends to examine factual circumstances and therefore leaves no room for free judgment.For example, if certain branch office reports weak performance in customer satisfaction survey, this can be attributed to more demanding customers that expect higher quality service than an average customer, and therefore evaluate the service with lower grades.Since, the mystery shopping intends to provide objective measurement based on the observation of factual circumstances, the weak performance can only be acknowledged.That is why mystery shopping is so powerful if conducted properly.
Surely this brings a lot of sensitivity to the research, especially in the case when mystery shopping is related to bonuses or promotions.Branch office managers or regional managers tend to be particularly affected by the fact that they might be the ones to acknowledge weak performance and face consequences (e.g., get downgraded).Therefore, intra personal relations among managers can be altered by the findings of mystery shopping.This may not be the case in some occasions, but in others it cannot be avoided.
Intra personal relations at research orderer, can place research providers in an inconvenient position.Depending on a particular study, and particular set of circumstances, more or less obvious attempts can be made to somehow influence the design of mystery shopping, or doubt methodology and research findings.
While it is completely acceptable that research orderer expresses interest for the research, tries to be more involved, any interference on methodology is not acceptable.Research provider must: • remain neutral, • maintain mystery shopping integrity thought entire duration of study, and • enforce international code of conduct and standards for conducting mystery shopping.
As mentioned earlier research orderers can help mystery shopping to succeed.It is especially important to promote mystery shopping among employees as a tool that would be used for common benefit, and that will make them better in providing high quality service.Communication needs to be consistent and motivational.Key to the success of mystery shopping is to secure cooperation and compliance of regional and branch management and branch office personnel.It is important that everyone accepts mystery shopping in good faith, and build its image through consistent action.
Intra personal relations will continue to be a source of sensitivity in mystery shopping.Only with proper communication, neutrality, and objectivity research orderers and research providers can increase the chances of success of mystery shopping.

Multinational Mystery Shopping
When it comes to multinational mystery shopping in retail financial services additional challenges in research management emerge, as well as a unique form of sensitivity.
Firstly, some challenges emerge due to the differences in market development.Some markets are more developed with intense rivalry among competitors, and diversified offer of financial products.Other markets are less developed.The competition is not as intense, product offer is basic, and mergers or acquisitions are not yet finalized.Because all of this, financial service providers may be present in a number of national markets, providing different types of financial products and services, with different standards in service delivery.Therefore, it is inevitable that financial service providers will not be able to deliver service exactly the same way in all national markets.This makes the development of unified methodological frame-work for mystery shopping into a very complex and demanding task.
Inscriptions and shopping scenarios need to be developed in such manner that they assure comparability, and at the same time, that they can be applied to all national markets.This requires careful examination of service delivery standards.In one country standards may prescribe that branch office personnel must have name tags.In the other country name tags may not be required, and so forth.
Infinite number of specificities in service delivery, unique to all national markets, prevents development of unified shopping scenarios.Therefore, shopping scenarios are customized according to the local standards in service delivery.Usually there are some basic multinational guidelines.
When it comes to the inscription design, there is a way to go around this problem by using modular inscription.Modular inscription comprises one main module common for all national markets, and it can be expanded through supplemental modules, which are customized according to the specificities of service delivery in effect in each national market.That way important data for comparison of performance among subsidies is collected through main module, while country specific data can be collected through supplemental modules.
Secondly, further efforts are required to design appropriate measuring methodology.Even though, just the basic statistics is required for mystery shopping, making of a unified measuring methodology can be time consuming, especially in case when a large number of national markets are involved in a study.
Therefore, specificity in service delivery of each national market must be taken into account.Measuring methodology should not prefer one national market, or put other national market in disadvantage.It is very important to thoroughly probe measuring methodology before the start of actual research.After the project has started, and the data has already been collected, is not a good time to discover that chosen measuring methodology requires different type of data, or that they methodology needs to be redesigned.In general changes and revisions of the methodology in multinational marketing research should be kept to minimum once the research has started.Keeping up with constant changes in methodology is a challenging task especially in multinational marketing research.Methodology should be carefully developed, thoroughly probed, put in practice, and utilized until it reaches its own analytical limits, or there is requirement from research orderer to change it.
Finally, a unique form of sensitivity may arise in multinational mystery shopping, this time on a level of entire subsidiary.
The engagement in multinational mystery shopping means that findings and data will be disclosed to the top management at the corporate headquarters of the financial institution.Furthermore, performance of each subsidy will be examined.Even though there might not be intense rivalry among subsidies from different countries, it is inevitable that each subsidiary will try to do its best to look as good as possible in multinational mystery shopping.
Sensitivity towards mystery shopping can be particularly visible in those subsidiaries that operate at undeveloped markets, or in these subsidies which have not yet finalized process of synchronization with corporate standards (e.g., after a merger or acquisition).These subsidies may feel that their position puts them in disadvantage, and that subsidiaries from more developed markets, or fully integrated subsidiaries, will perform better in mystery shopping.In general this leads to involuntary compliance and difficulties in implementation of mystery shopping.Since the cooperation of local parties is necessary, it is very important to avoid such situation.Yet again, proper communication and cooperation between corporate headquarters and subsidiaries should stem towards acceptance of multinational mystery shopping to full extent.
Therefore, it is especially important to pay attention that methodological solutions developed at the corporate headquarters of financial institution and multinational research provider maintain their integrity when deployed over a large geographical area.conclUsion Previous argument revealed methodological specificities of mystery shopping in retail financial services, as well as non-methodological issues of mystery shopping research management.The argument reviewed these issues in light of the latest standards and code of conduct in mystery shopping.Here is a summary of key methodological recommendations, which can be particularly useful to overcome practical challenges in mystery shopping, and which can enhance the overall quality of mystery shopping studies.
Prior to the engagement in any kind of mystery shopping study it is very important to separate mystery shopping research, and mystery shopping projects.Mystery shopping research excludes the disclo-sure of personal data, and mystery shopping projects require the disclosure of personal data, because they are sometimes related to bonuses operations.
The main inherent property of mystery shopping is that it is an observational research.It can be unstructured, which intends to deliver qualitative data, or structured, which intends to deliver quantitative data.Regardless of the data which intends to deliver, it provides important insights which would otherwise remain inaccessible such as factual observations of the service delivery, rather than opinions acquired through survey research.
In order to be effective and reach its maximal employment potential mystery shopping must be conducted continually, and it is recommended to conduct it quarterly.More complex studies, such as competitive or multinational mystery shopping can be conducted once annually.
Time sampling is the sampling method of choice in mystery shopping.Timing of individual shops can be random or systematic and is chosen according to the preference of the research management.It is especially important to include all branch offices into mystery shopping, and to shop each branch office twice during the same study.Data acquired through the mystery shopping is representative only for the branch offices included into the research.
Generic research subject of mystery shopping consists of three research components: (a) people, (b) processes, and (c) physical environment.These research components can be enriched with integration of individual features of service delivery, specific to each service provider.It is especially important to align research subject of mystery shopping with research subject of CSS, in order to create more synergy and maximize employment potential of both researches.
Shop scenarios need to be realistic and straightforward.Inscriptions need to contain questions designed in such manner that they can be answered in a form of yes and no answers.A limited number of open ended questions should exist as well, so that mystery shoppers can provide more elaborate answers about special circumstances they might encounter when conducting mystery shopping.
Quality control in mystery shopping requires joint efforts of both research provider and research orderer, prior, throughout, and afterwards the study.Research provider is in charge of quality control of preparation, execution, and supervision of data acquisition.Research orderer's duty is to ensure compliance of branch personnel and managers, promote mystery shopping, and act consistently after the study has been completed.It is especially important not to take disciplinary action on the basis of mystery shopping, and utilize mystery shopping to enhance training and empower branch office personnel.
Data acquisition in mystery shopping remains a challenging task.However it can be enhanced through training which main objective is: (a) to make mystery shoppers adopt scenarios and inscriptions as their second nature, and (b) reduce the influence of observer bias.Quality control during data acquisition is ensured through deployment of various instruments such as: (a) service usage, (b) false branch offices, (c) false questions, (d) time limit, and (e) debriefing.The greatest assurance of quality is a steady base of loyal mystery shoppers.
The research cost, nature of the mystery shopping research, and intra subsidiary relations in multinational mystery shopping will remain key non-meth-odology related challenges in mystery shopping.Even though these challenges are different, the solution for overcoming them is the same.It is utmost important to develop close, transparent, and trustworthy relationship between research orderers and research providers.Research orderers and research providers should turn cooperation into partnership, and that way make achieving their own objectives a joint effort.
Even though mystery shopping may not be the most important marketing research, it certainly become a must have in retail financial services.From its rocky beginnings, almost three quarters of a century ago, it became an objective and reliable tool to measure and monitor performance in service delivery.Its employment potential grew, and it is safe to say that it deserves a lot of credit for the quantum leap in enhancement of service quality we witness in modern retail financial services.

Figure 2 .
Figure 2. Mystery Shopping and Customer Satisfaction Surveys

Figure 3
depicts the roles of research orderers and research providers in quality control in mystery shopping.International standards and code of conduct in mystery shopping especially emphasize quality control and its influence to the success of the mystery shopping study (ESOMAR 2005; MRS, 2008; MSPA Europe, 2003).