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Friday, August 01, 2008

The Mystery About Mystery Shopping

The Mystery About Mystery Shopping - By: Marc Kramer , The Bulletin

Peter Thorwarth runs a business with thousands of employees nationwide out of his home in Phoenixville. He is the founder and president of BMA Mystery Shopping, a nationwide service that he founded in 1991. His clients include American Express, Circuit City, Corning, Mazda, Reebok, Sherwin-Williams, Skechers and Slim-Fast. Peter was born on Andrews Air Force Base in 1954 and raised outside of Philadelphia. He attended Wesleyan University in Middletown, Conn.

Mr. Thorwarth teaches about mystery shopping for Temple University. The following is an interview with Mr. Thorwarth on what led him to become a leader in a business that few people know much about, but many want to be a part of because of the perks.

Kramer: What jobs did you have as a kid?

Thorwarth: Camp counselor, rock band.

Kramer: What did you go to college for?

Thorwarth: Psychology.

Kramer: What jobs did you have prior to starting your own business?

Thorwarth: I sold hardware, furniture and then radio advertising for KISS-100 and WFLN.

Kramer: Was your father or mother a business owner?

Thorwarth: Father was a radiologist at Chestnut Hill Hospital; Mother was homemaker.

Kramer: What was your first entrepreneurial venture?

Thorwarth: Mail order service for songwriters.

Kramer: Why did you start a mystery shopping business?

Thorwarth: Because it benefits all parties so well - customers get better service and businesses improve their bottom line because customers are coming back and spreading positive word-of-mouth. It also brings "fresh eyes" to view a business that often no longer sees its weaknesses, thereby giving the client a way to correct problems which may be turning customers off. According to the University of Rochester, a customer who has a good experience will tell four people; a customer who has a bad experience will tell 11.

Kramer: How much money did it take to start your business?

Thorwarth: $3,000

Kramer: Did you require outside investors?

Thorwarth: No.

Kramer: What are the common misunderstandings about mystery shopping?

Thorwarth: 1) Doing it infrequently has little value. It should be done at least quarterly. Businesses should make it a standard part of their budget; it will always pay for itself. Remember, it costs four times as much to get a new customer ... .

2) Results from a subset of locations cannot be extrapolated; it is necessary to do them all. What happens at one store has no bearing on what happens at another store in the same chain, even one that is nearby.

3) Clients must take the second step, i.e. do things that will improve areas that were found lacking. Now that BMA has identified the shortcomings, train, communicate and reward in order to improve those aspects.

4) Shoppers are not trying to make anyone look bad; they are just objectively reporting what does and does not happen.

5) Shoppers rarely buy and keep things. They either buy and return or come close to buying and then say "Let me think it over." It is mystery shopping, not mystery buying.

6) Mystery shopping is very rarely a part-time job and almost never a full-time job for the shoppers themselves. It is occasion, but interesting work. Shoppers are paid as independent contractors and can work for as many companies as they choose.

7) Important - Any advertising for mystery shoppers, whether online, in print or on the radio, should not be trusted. Instead of paying you to mystery shop, they want to sell you a list of mystery shoppers or inform about mystery shopping. You can get both for free online at Web sites like, and BMA's own Web site

Kramer: How many shoppers do you have?

Thorwarth: Over 400,000 total. Over 70,000 with recently-confirmed e-mail addresses.

Kramer: What do you like most?

Thorwarth: The variety. What we do for each client is unique. The insight into corporate strategy. Clients shows us what their concerns are and sometimes what their plans for the future are.

Kramer: Why do companies use mystery shoppers?

Thorwarth: Retailers, banks, restaurants, manufacturers. The applications are literally too many reasons to list. However, most often it is to objectively and with great detail measure customer service compared with corporate expectations. Other popular applications include price, signage and/or compliance audits and incentive shops (salespeople are rewarded for doing what our client hopes).

Kramer: What does it take to be a good mystery shopper?

Thorwarth: The best ones are dependable, think on their feet and read the forms and guidelines carefully.

Kramer: What is the most difficult part of the business?

Thorwarth: Clients who haven't given sufficient thought to what their goals are and what is realistic. Example: Talbots wanted us to have our mystery shoppers spend $300 in each of their 100-plus stores so they could see if they were offered the Talbots charge card application. When I asked, "Where is this money going to come from?" they clearly hadn't given it a thought. Reebok gave us a list of stores that included stores that hadn't been built yet and Macy's (which no longer carried their shoes).

Kramer: How difficult is it to run a virtual business?

Thorwarth: Not at all difficult for me. It is very well suited to this industry.

Kramer: What does it take to be a success in business?

Thorwarth: Dedication to understanding and then meeting and exceeding clients' needs.

Kramer: Why do people fail outside of under-capitalization?

Thorwarth: A lack of experience. There is a very significant learning curve, because there are so many types of mystery shopping and so many ways that projects can go wrong.

Kramer: How important is it to have a competitive advantage?

Thorwarth: It's significant, but it's more important to be dedicated and innovative.

Kramer: How did you deal with the fear of going out on your own?

Thorwarth: I enjoyed it and have other entrepreneurial concepts to explore.

Kramer: Have you ever gone through a down cycle where nothing seems to be working and, if so, how did you get yourself out of it?

Thorwarth: This is a feast-or-famine business. But I've learned time and again that new businesses (and returning customers) will come to us, because BMA has developed an excellent reputation nationwide over these last 15-plus years.

Kramer: What business magazines do you read?

Thorwarth: I get most news from the Internet and most business news from NPR's Marketplace programs.

Kramer: What business books would you recommend reading?

Thorwarth: Guerilla Marketing by Jay Levinson.

Kramer: If there is one piece of advice you would give an entrepreneur, what would it be?

Thorwarth: Avoid fixed expenses and structure your business around variable expenses.

Marc Kramer, who is the author of five books and project faculty at the Wharton School of Business at the University of Pennsylvania, is a serial entrepreneur.
The Mystery About Mystery Shopping

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