Do you want to start a mystery shopping business? If YES, here is a complete guide to starting a mystery shopping business with NO money and no experience.
Okay, so we have provided you an in-depth sample mystery shopping business plan template. We also took it further by analyzing and drafting a sample mystery shopping marketing plan backed up by actionable guerrilla marketing ideas for mystery shopping businesses. In this article, we will be considering all the requirements for starting a mystery shopping business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- Why Start a Mystery Shopping Business?
- 1. Understand the Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 8. Discuss with an Agent to Know the Best Insurance Policies for You
- 9. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 10. Get the Necessary Professional Certification
- 11. Get the Necessary Legal Documents You Need to Operate
- 12. Raise the Needed Startup Capital
- 13. Choose a Suitable Location for your Business
- 14. Hire Employees for your Technical and Manpower Needs
- 15. Write a Marketing Plan Packed with ideas & Strategies
- 16. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Why Start a Mystery Shopping Business?
Organizations over the years have looked for ways to improve on their services, hence attracting new customers and also retaining old customers. One of the business tools that are used to achieve this is provided by business consulting firms cum marketing research companies that offer mystery shopping services.
Mystery shopping is a very important component of the customer relationship management program of any organization that places service and hospitality as key components of their value proposition. The truth is that, mystery shopping is perhaps one of the most cost-effective and flexible customer relationship management tools available in the business world today. It can be leveraged on quickly and cheaply.
Additionally, it is a program that can be modified and tweaked on the go, giving the client access to very current market research information without expensive set-up costs.
If you have the desire to start a mystery shopping business, it is very needful that you analyze the existing mystery shopping businesses in and outside of your area. Also, you would be required to check the existing competition as well as know their strengths and weaknesses.
Knowing the weaknesses of the existing mystery shopping companies mean that you would be able to learn from their mistakes and in turn come up with a better and more preferred mystery shopping company devoid of the mistakes and weaknesses of others.
So, if you have done the required feasibility studies and market research, then you might want to venture into this business. If you have been tinkering with starting your own mystery shopping company but do not know how to go about it, then you should consider going through this article; it will surely give you the needed direction and information.
Starting a Mystery Shopping Business – A Complete Guide
1. Understand the Industry
Mystery shopping is a tool that is basically used externally by market research companies, watchdog organizations, or internally by companies themselves to measure quality of service or compliance with regulation, or to gather specific information about products and services that will help them position their business for better performance.
Mystery shopping gives room to organizations to quickly gather reliable and quality feedback directly from a customer’s perspective. It is a helpful business tool for organizations that want to evaluate a team’s customer care performance level, training budgets and the delivery of the company’s mission statement to its core consumer sector.
Mystery shopping is used mostly in the review of customer brand perceptions, analysis of competitors, review of internal procedures and processes, evaluating staff performance, and evaluating point-of-purchase materials and the retail store.
The Marketing Research Industry cum mystery shopping line of business is indeed a very large industry and pretty much thrives in all parts of the world especially in developed countries such as united states of America, Canada, United Kingdom, Germany, Australia, Italy et al. There are several mystery shopping firms in the United States of America with several thousands of employees and the industry rakes in several million dollars annually.
Statistics has it that the mystery shopping industry had an estimated value of nearly $600 million in the United States in 2004, according to a 2005 report published by the Mystery Shopping Providers Association (MSPA). Companies that participated in the report experienced an average growth of 11.1 percent from 2003 to 2004, compared to an average growth of 12.2 percent.
The report estimates that more than 8.1 million mystery shops were established in 2004. The report represents the first industry association attempt to quantify the size of the mystery shopping industry. The Independent Mystery Shoppers’ Coalition shows that there are 1.5 million mystery shoppers in the United States alone. Similar surveys are available for European regions where mystery shopping is becoming more entrenched into organization’s business procedures.
The Marketing Research Industry cum mystery shopping line of business will continue to blossom because more and more organizations are beginning to realize that somehow, they would need the services of mystery shopping firms cum marketing research companies to help them improve on their services, penetrate their target market and create the required brand awareness that will facilitate business growth and expansion. From all available statistics, it is safer to say that the industry is growing steadily despite the competitive nature of the industry.
Some of the factors that encourage entrepreneurs to start their own mystery shopping businesses could be that the business is easy to set up and the start-up capital is indeed affordable; you can actually start your own mystery shopping business from the comfort of your house.
All you need to do is to create an office somewhere in your house. People usually pay you for the result you can help them achieve as it relates to their customer services, customer retention, marketing and publicity concerns.
Over and above, mystery shopping business has become an important tool for businesses as it relates to products and services all over the world, not only to sell to customers but also to engage them. It is now easier for organizations to expand their market from local level to national and even international markets with minimum capital investment.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographics composition of those who require the services of mystery shopping companies are not restricted to corporate organizations that are into sale of products and services, but also government agencies that offer services and products to the general public.
As a matter of fact, there are some instances where market research companies are hired to provide mystery shoppers to evaluate housing services, churches, as well as government-run organizations such as law enforcement facilities, park services, hospitals et al.
So, if you are looking towards defining the demographics for your mystery shopping business, then you should make it all-encompassing. It should include corporate organizations, political parties cum politicians, government agencies, schools, NGOs and even religious organizations et al.
If you are looking for a business that requires less stress and perhaps minimal start-up capital to start, you can consider starting a mystery shopping business. The cost of running a mystery shopping company when compared to the turnover you get can be poles apart (this is applicable when you have been able to establish your feet in the industry).
People that venture into the mystery shopping business can as a matter of fact start the business from their home and still make headway in the business. One thing is certain when it comes to mystery shopping cum consulting related businesses, you are sure of making profits when you successfully produce reliable data and results that are measurable for an organization.
As a matter of fact, the cost of running the mystery shopping business process from start to finish could be restricted to the cost of making phone calls, transportation and internet subscriptions and in some cases materials such as digital cameras and mics et al. With that, it is easier to place a projection on the profits you are likely going to make if you are able to successfully seal a mystery shopping deal from an organization.
You will be expected to hire experts that will help you with comprehensive economic analysis and the profitability of the businesses within the location that you intend launching the business. If you get your economic and cost analysis right before launching the business, you may not have to stay the long before you break even.
3. Decide Which Niche to Concentrate On
Most mystery shopping companies tend to provide a wide range of services as it relates to the mystery shopping industry cum marketing research line of business. That is why it seem that there are no niche areas in the industry. But on the other hand, some mystery shopping companies may decide to major in some key or niche areas such as;
- Going out to conduct mystery marketing (visiting stores and business premises)
- Leveraging on telephones and the internet
The Level of Competition in the Industry
Surviving in the business world as a mystery marketing company requires more than your expertise and knowing how to conduct your business but also how to network with key people that matters, decision makers that can decide who will get a contract or a business deal.
The level of competition in the mystery shopping industry depends largely on the location of the business and of course the capacity of your business.
When it comes to mystery shopping business, distance is never a barrier when competing for clients – especially if you are expected to conduct your mystery shopping via telephone and the internet. What most clients want is result, hence they are ready to hire mystery shopping companies no matter the part of the world they operate from as long as they have a good track record and can deliver excellent results.
But over and above, there are several high-profile mystery marketing companies scattered all around the United States and in the cyber space. So, if you choose to start your own mystery shopping company in the United States, you will definitely meet stiffer competitions not only amongst mystery shopping companies in the United States, but also all over the globe.
Besides, there are larger high-profile mystery shopping companies that determine the trends in the industry and you should be ready to compete with them for clients.
4. Know Your Major Competitors in the Industry
In every industry, there are always brands that perform better or are better regarded by customers and the general public than the others. Some of these brands are those that have been in the industry for a long while and so are known for that, while others are best known for how they treat their clients.
These are some of the leading mystery shopping companies/brands in the United States of America and also in the globe;
- Ann Michaels & Associates Ltd.
- Anonymous Insights Inc.
- AQ Services International
- Canadian Viewpoint, Inc.
- Confero, Inc.
- DSG Associates
- Just the Facts, Inc.
- Market Analytics International, Inc.
- Premier Service, Inc.
- Second to None, Inc.
- Secret Shopper
- SeeLevel HX
- Sentry Marketing Group
- Service Evaluation Concepts, Inc. (SEC)
- Shoppers’ View
- SIS International Research, Inc.
5. Decide Whether to Buy a Franchise or Start from Scratch
There is no hard and fast rule when it comes to choosing how you intend starting a business. Basically, you should be guided by your overall business vision and mission statement.
If you are looking towards starting a mystery shopping business, you would have to start from the very scratch simply because you can hardly get a franchise of a mystery shopping business to buy. It is a business that is open to all and sundry.
Besides, starting a mystery shopping business from the scratch is less stressful when compared to other small scale consulting/marketing research businesses which usually require detailed groundwork before launching the business. With mystery shopping business, you should just try as much as possible to secure a small office that is close to a major business district and then leverage on every marketing tool within your disposal especially the internet when it comes to marketing your services.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own mystery shopping company today, one of the major challenges you are likely to face is the presence of well-established mystery shopping companies, marketing research companies, and other consulting firms who are offering same services that you intend offering. The only way to avoid this challenge is to create your own market.
Some other threats that you are likely going to face as a mystery shopping company operating in the United States are unfavorable government policies, the arrival of a competitor within your location of operation and global economic downturn which usually affects purchasing/spending power. There is hardly anything you can do as regards these threats other than to be optimistic that things will continue to work for your good.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- Best legal entity to use for this type of business
When considering starting a mystery shopping company, the legal entity you choose will go a long way to determine how big the business can grow; some mystery shopping company companies design their business and services for regional/community market, some for national market, while others for international market.
Ordinarily, general partnership should have been the ideal business structure for a small scale mystery shopping company especially if you are just starting out with a moderate start-up capital. But people prefer limited liability Company for obvious reasons.
As a matter of fact, if your intention is to grow the business and have clients both corporate and individual from all across the United States of America and other countries of the world, then choosing general partnership is not an option for you. Limited Liability Company, LLC will cut it for you.
For example, Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
8. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is imperative to create a budget for insurance policy covers and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your mystery shopping company.
Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your own mystery shopping company in the United States of America;
- General insurance
- Risk Insurance
- Credit insurance
- Deposit insurance
- Financial reinsurance
- Health insurance
- Liability insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
9. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own mystery shopping company, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successful run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other business documents (research findings and data) or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.
10. Get the Necessary Professional Certification
Aside from the result you produce when given a mystery shopping contract/marketing research, professional certification is one of the main reasons why some mystery shopping companies stand out. If you want to make impact in the mystery shopping industry, you should work towards acquiring all the needed certifications in your area of specialization.
These are some of the certifications you can work towards achieving if you want to run your own mystery shopping company;
- MSPA-NA – Certification (Mystery Shopping Certification)
- Mystery Shopping Providers Association – MSPA – Shopper Certification
Please note that the higher your qualifications and experience (expertise), the easier it is for you to attract high profile corporate clients.
11. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized especially a business like mystery shopping. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be long before the law catches up with you.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own mystery shopping company in the United States of America;
- Business and liability insurance
- Tax Payer’s ID
- Fire certificate
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Employee’s Handbook
- Operating Agreement for LLCs
- Insurance Policy
- Apostille (for those who intend operating beyond the United States of America)
- Company Bylaws
- Memorandum of Understanding (MoU)
12. Raise the Needed Startup Capital
A mystery shopping company is indeed a cost-effective business hence entrepreneurs willing to start the business most often than not can afford to raise the money on their own.
No doubt when it comes to financing a business, one of the first things and perhaps the major factor that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start-up capital for your mystery shopping company;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
13. Choose a Suitable Location for your Business
Mystery shopping and also other consulting related businesses can be operated from the home; hence it is a business that can be started small from any good location.
Indeed, location has great influence on the success of a mystery shopping company. If you have taken your time to study the mystery shopping industry, you will realize that mystery shopping companies are willing to pay expensive rents in order to stay in a metropolitan city and of course a busy business district; a place where business and financial activities are at its peak.
It cannot be overemphasized that the location you chose to open your mystery shopping company is key to the success of the business; hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people and organization with the required purchasing power and lifestyle.
14. Hire Employees for your Technical and Manpower Needs
On the average, there is no special technology or equipment needed to run this type of business except for cameras, and software applications. But you will definitely need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
When it comes to choosing between renting and leasing an office space, the size of the mystery shopping company you want to build, and your entire budget for the business should influence your choice. If you have enough capital to run a standard mystery shopping company, then you should consider the option of leasing a facility for your office; when you lease, you will be able to work with long term planning, structuring and expansion.
As regards the number of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision. Averagely, you would need a Chief Executive Officer or President (you can occupy this role), an Admin and Human Resource Manager, Clerk, Business Development Executive/Marketing Executive, Mystery Shoppers and Customer Service Officer or Front Desk Officer.
Over and above, you would need a minimum of 7 key staff to effectively run a mystery shopping business. If you are just starting out you may not have the financial capacity or required business structure to retain all the professionals that are expected to work with you. Hence you are expected to contract out some roles.
The Service Delivery Process of the Business
Basically, when a company hires the services of a mystery shopping company, a survey model will be drawn up and agreed by both parties. It defines what information and improvement factors the company wants to measure and access. These are then drawn up into survey instruments and assignments that are allocated to shoppers registered with the mystery shopping company.
The details and information points mystery shoppers take note of typically are number of employees in the store on entering, how long it takes before the mystery shopper is greeted, names of employees, whether or not the greeting is friendly, the questions asked by the shopper to find a suitable product, the types of products shown, the sales arguments used by the employee, whether or how the employee attempted to close the sale, whether the employee suggested any add-on sales, whether the employee invited the shopper to come back to the store, cleanliness of store and store associates, speed of service, compliance with company standards relating to service, store appearance, and grooming/presentation.
Mystery shoppers are often given instructions or procedures to make the transaction unusual in order to make the test of the employees’ knowledge and service skills more stringent or more specific to a particular service issue (known as scenarios). For instance, mystery shoppers at a restaurant may pretend they are beef-intolerant, or a jewelry store mystery shopper could inquire about gift wrapping services. Not all mystery shopping scenarios include a purchase.
In the process of collecting the required information, mystery shoppers usually blend in as regular shoppers at the store being evaluated. They may be required to take photographs or measurements, return purchases, or count the number of products, seats, people during the visit. A timer or a stopwatch may be required.
Lastly, after the visit, the mystery shopper submits the data collected to the mystery shopping company, which reviews and analyzes the information, completing quantitative or qualitative statistical analysis reported on the data for the client company. This allows for a comparison on how the stores or restaurants are doing against previously defined criteria.
It is important to state that a mystery shopping company may decide to improvise or adopt any business process and structure that will guarantee them good return on investment (ROI), efficiency and flexibility; the above stated business cum services process is not cast on stone.
15. Write a Marketing Plan Packed with ideas & Strategies
- Marketing ideas and strategies
As a mystery shopping company, you would have to prove your worth over and over again before attracting high profile clients. So, if you have plans to start your own mystery shopping company it will pay you to first build a successful career in the mystery shopping/marketing research industry.
People and organizations will hire your services if they know that they are going to get value for their money.
So, when you are drafting your marketing plans and strategies for your mystery shopping company, make sure that you create a compelling personal and company profile. Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to marketing research, mystery shopping and the organizations. This will help boost your chances in the market place when sourcing for clients.
Here are some of the platforms you can utilize to market your mystery shopping company;
- Introduce your business by sending introductory letters alongside your brochure to all the corporate organizations, government agencies, restaurants, stores, call centers and international business community in the United States
- Advertise your business in relevant magazines, radio stations and TV stations (make yourself available for marketing research related talk shows and interactive sessions on TV and Radios)
- List your business in local directories/yellow pages
- Attend international marketing research expos, seminars, business fairs et al
- Create different packages for different category of clients in order to work with their budgets
- Leverage on the internet to promote your business (when you blog regularly on key issues as it relates to your business, people would consider you an expert in the field)
- Join local chambers of commerce and industries around you with the main aim of networking and marketing your services; you are likely going to get referrals from such networks
- Engage the services of marketing executives and business developers to carry out direct marketing
16. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If your intention of starting a mystery shopping company is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.
In promoting your brand and corporate identity, you should leverage on both print and electronic media and also social media (the internet). As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brands, besides it is pretty much effective and far reaching.
Another strategy is to sponsor relevant community based programs, TV and radio programs, advertise your business in relevant magazines and newspapers. Below are the platforms you can leverage on to boost your brand, to promote and advertise your mystery shopping company;
- Place adverts on magazines and related newspapers, radio stations and TV stations
- Encourage the use of word of mouth publicity from your loyal customers
- Leverage on the internet and social media platforms like; YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Badoo, Google+ and other platforms to promote your business.
- Ensure that you position your banners and billboards in strategic positions all around your city
- Contact corporate organizations, government agencies, restaurants, stores, call centers and the international business community in the United States et al by calling them up and informing them of your mystery shopping company and the services you offer
- Advertise your business in your official website and employ strategies that will help you pull traffic to the site
- Brand all your buses and official cars and ensure that all your staff members and management staff wears your branded shirt or cap at regular intervals.
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