The Use of Mystery Shopping – Predicting Sales Performance or Achieving Compliance?
The Use of Mystery Shopping – Predicting Sales Performance or Achieving Compliance?
Mystery shopping (MS) is a popular organizational practice in service industries. However, the previous literature on MS has struggled to provide evidence that would justify this popularity. In particular, MS scores are reported to have low reliability, and they do not correlate with sales performance. We replicate the most important results of the previous literature in the context of two European retail chains. However, utilizing a variety of information and data from both firms, we provide a literature-backed and evidence-based explanation of why MS continues to be a highly popular tool. In contrast to prior literature, we argue that granularly measuring service quality to predict sales performance is not the major reason for many firms to implement MS. Instead, we argue that a major reason for many firms to implement MS is to achieve compliance with minimum service standards. In particular, compliance with minimum service standards may help avoid negative reputational spillovers between units of a firm, which may arise from selfish behavior of units that are strongly incentivized to increase their own sales. This view of MS facilitates a reinterpretation of many empirical findings on MS such that they can be reconciled with MS’ continued popularity.
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More information on Sidney Block can be found here.