May 01, 2017 /
Comments Off on The ROI of Mystery Shopping

The ROI of Mystery Shopping

Although a store may spend $10,000 a month on rent, it seems incredulous that a $100 per month spend on mystery shopping (1% of the rent) needs to be justified with ROI. If salaries and running expenses are taken into account (roughly to equal the monthly rent), then $100 per month equates to 0.5% of the operating expense of a site.

However, if ROI needs to be justified, it can be done as follows. Note, the resultant ROI number is so high that it seems unbelievable. There are few (if any) investments that can return a 3,600% ROI.

Imagine a store with:

  • 5,000 people walking through per month
  • 80% of people buy
  • Average price of $60

The store also has the following statistics found from the mystery shops:

  • Greeting customers 68% of the time
  • Commitment to purchase is asked 32% of the time
  • Up-selling 34% of the time

Let’s do the math to calculate the ROI:

5,000 customers x 80% who buy x $60 = $240,000 sales per month.

Here’s what happens if the store increases each of the three mystery shopping categories by 10% and 10% of the customers now buy (e.g., customers who were asked for a commitment to purchase increases 10% from 32% to 42%, and conservatively, only 10% of that 10% who asked to commit to a purchase actually made a purchase).

3 categories x 10% x 10% = 3% increase in sales

Old sales of $240,000 is improved 3%, being $7,200 increase in sales.

If the mystery shop expense was $100 per month ($1,200 for one year) and it took 6 months to get the 10% improvement, then there are 6 months of the $7,200 increase in sales ($43,200), then there is a return of $43,200 for a $1,200 expense, an ROI of 3,600%.

There is perhaps no greater opportunity for an investment with 3,600% return. It’s an investment worthy of the front page of every newspaper, yet it remains hidden in plain view.

January 18, 2016 /
Comments Off on How to get a 2,750% ROI from Mystery Shopping

How to get a 2,750% ROI from Mystery Shopping

Where do you start with Customer Service and Sales initiatives?
(Vintage 2010 video)

If you focus priorities, you can achieve great increases in sales.
Imagine a store with:
  • 5,000 people walking through per month
  • 80% of people buy
  • Average price of $60.
The store also has the following statistics:
  • greeting customers 68% of the time
  • commitment to purchase is asked 32% of the time
  • up-selling 34% of the time
If each of these is improved only 10% (ie from say 68% to 78% in greeting), and then only 10-20% of 10% then make an average purchase, the store will increase revenue by $10,500 per month.  With a 50% margin that is $5,500 profit per month.
If you spent a mere $200.00 per month on Mystery Shopping and Training per store the Return on Investment is 2,750% per month.  It is almost too high to even mention.
Download the excel spreadsheet to calculate for your own business [here].
Key points:
  1. You need to measure first
  2. You need to focus on a few (maximum three) key things
  3. You need to take action for improvement (e.g. training).