To kick off our new section on how to run your company, Lauren MacGillivray enters the secret world of the mystery shopper – and we have a go at it ourselves
Insurers and brokers all like to claim they have the best customer service, but the boast is difficult to prove – unless you use a mystery shopper.
Consumer Intelligence, based in Bristol, is one of the research firms that provides this service for the industry; the FSA also uses mystery shopping to investigate financial services providers. To find out how the secretive research works – and how insurance companies can do better in it – we asked both for their advice.
We also went under cover to do our own mini mystery shop, asking three household-name insurers for quotes on home contents cover.
For research firms, consistency is one of the main factors when judging customer experience. It’s possible that a customer service representative can simply be caught on a bad day. But even one bad experience can put off a customer for good, so it pays to take care.
Since the research has to be consistent too, in Consumer Intelligence’s monthly mystery shops on car insurance, each company being tested is telephoned more than 40 times (see box, below). The calls are made by real people who are in the market for cover. The research firm assesses the feedback and listens to recordings of every phone call.
The transcripts from Consumer Intelligence’s latest car insurance mystery shop demonstrate that the smallest turn of phrase can put off a potential client – or reel them in.
During one call, the insurance representative sounded like an interrogator: “Is the insurance in your name? And who will be the main driver of the vehicle? Can I take your surname please?
And your first name? And your date of birth? And the postcode of your property? House number please? And the first line of your address for me please? Have you got a telephone number I can take from you please? Is that a daytime telephone number? Thank you. Is it a renewal you have today?”
Instead of asking a barrage of questions, call-centre operators should acknowledge the caller’s responses with phrases such as “OK ... Uh huh ... That’s great,” and so on.
Friendliness helps. Another call-centre operator had the right idea: “What’s your date of birth please ... It’s your birthday on Thursday then, happy birthday ... Have a glass of lemonade on me!”
Callers also expect to get through to an agent quickly. More than 7% of callers for the Consumer Intelligence motor test had to make more than one call before getting a quote, and this excludes those who called outside call-centre hours. The reasons for having to call again were connection problems (“When I gave him my postcode he put me on hold and cut me off”); problems with computer systems and long wait times (“I was waiting on the telephone for 11 minutes, 23 seconds with only an automated voice for company, then I hung up”).
It’s also important for the call-centre operator to remember who he or she is talking to – usually non-insurance types who don’t understand technical speak and might find it off-putting. When agents offer protection for no claims discount, for example, they should clarify what this protection actually is. This is important because different insurers offer different benefits.
Here are two real scenarios from the recent motor test:
Agent: “Would you like to protect your no claims bonus?”
Caller: “Yes please.”
In that case, no further information was given on the protection.
This is the preferred version:
Agent: “Would you like to have your no claims discount protected? ... That allows you to have two fault claims in a five-year period without affecting your bonus. So you’ve got the peace of mind that if you do get involved in an accident, you’re not going to lose the no claims that you’ve worked really hard to build up.”
Monitoring real-life calls in this way can help insurance companies perform better. For the
FSA, mystery shopping is a vital tool in its investigations (see its tips for shoppers, below). The FSA usually uses external firms to carry out its mystery shopping. Last year, it published the results of a mystery shopping exercise carried out by GfK NOP on the sale of payment protection insurance (PPI). The research company used trained mystery shoppers to carry out 160 shops for PPI at a sample of large lenders of unsecured personal loans.
The shoppers, selected from the panel of GfK NOP assessors, were given a detailed outline of the project, but were not aware that the FSA had commissioned the project. They behaved like real customers and did not follow a prepared script.
The shoppers contacted the lenders via off-the-street face-to-face visits, made appointments for a loan application interview and attended the meetings, which they secretly recorded. All had good credit. They were instructed to take the sale up to the point of signing the credit agreement, but not to complete the transaction.
In its annual report for 2007/08, published in June, the regulator updated its crackdown on PPI. It noted improvements across the board, saying most firms were making it clear to customers that PPI was optional and most were also offering cancellation refunds on single premium policies.
But the FSA’s mystery shoppers did find room for improvement. “Many firms are still not giving customers clear information about the product and what it will cost; they are not explaining the extent to which customers are eligible for PPI cover and the cover the policy provides; and they are not explaining how, where advice is given, the recommended PPI policy meets the customer’s demands and needs,” said the report.
Following the visits and subsequent FSA intervention, 11 firms either stopped selling PPI permanently or agreed to halt sales until they met FSA requirements. Three firms cancelled their FSA permission to sell PPI and four firms said they were reviewing past PPI sales to ensure they were appropriate.
Like the FSA, many large financial services companies use mystery shopping. As they have found out, such tests help you to keep an eye on your own staff, as well as your rivals.
The best motor performers
The research firm Consumer Intelligence carries out a monthly mystery shop on car insurance.
In the latest report, it asked 160 shoppers â€“
real customers who were in the process of
buying motor policies â€“ to test 23 insurance companies.
Four of the insurers tested â€“ Churchill, CIS, Cornhill Direct and Saga â€“ received a â€œfive-star awardâ€ in the research and were praised by the shoppers. Hereâ€™s what they said:
Churchill: â€œVery efficient service, the person clearly explained the policy with all the important information and offered me extras that I might needâ€
CIS: â€œVery clear and easily understood and
Cornhill Direct: â€œHighly efficient and personal. Felt like I wasnâ€™t just another customerâ€
Saga: â€œService was very good, a fast efficient service by a confident operator.â€
Our home insurance shop We hit the phones to ask for quotes
To get a better idea of how mystery shopping works, we had a go at it ourselves, calling Norwich Union, Direct Line and AXA to ask for home contents insurance quotes. This isn’t a detailed, statistically significant study of the kind carried out by professional research firms – we made only one phone call to each insurer. But it gives an indication of what the typical customer might experience. Here’s what we found:
- Norwich Union
This was the best performer of the three. Insurance Times was on hold and listening to a recorded message for 68 seconds before getting through to an agent. After a friendly greeting and confirmation that home contents insurance was sought, the agent said: “That’s fine, before I go ahead and give you a quote, can I just confirm you’ve heard and understood the content of the recorded message and you’re happy to proceed?”
Agent: “That’s good. Can I have your postcode please?”
After asking for the usual personal and insurance-related data, a sum insured of £55,000 was agreed to. The only slightly tricky question was what year the property had been built. The shopper said they were a tenant and didn’t know. But an estimate proved to be enough. A quote of £274 was given and the shopper was told flatmates were permitted.
We put these observations to Hugh Hessing, director of service operations at Norwich Union, who replied: “Over the past year, we have been designing simpler processes where a customer has the choice to make the transaction themselves online or on an automated telephone system, to avoid any queuing. When a customer needs to speak to someone in person, we make it really clear where they have to go and they speak to a member of our team straight away.”
- Direct Line
Direct Line’s home page provides links for online quotes only. But once you click through to a second page, there’s a contacts menu, where you can find a phone number. It took 89 seconds to get through to an agent from the computer prompt.
After a friendly greeting and confirmation that the policy sought was for a tenant and contents only, the agent asked whether the home was furnished by the landlord as cover for personal possessions was not available if it were. A quote was not available but, on the positive side, it didn’t take long to find this out.
Andrew Lowe, head of home insurance at Direct Line, said: “We offer a discount for policies bought online and encourage customers to take advantage of this. However, we are more than happy to help people over the phone if they prefer, or if they have particular questions or insurance needs which are better addressed by speaking to an adviser directly.”
This was the weakest of the three in terms of telephone service. The telephone number for new business was not obvious from the website. So we rang the household claims line and we were transferred to a different number for quotes. We waited 3 minutes, 7 seconds before a relevant agent came on the line.
Most of the questions were basic, but some proved confusing.
Agent: “How near are you to the river?”
Shopper: “Maybe a mile.”
Agent: “A mile only?”
Shopper: “Maybe two miles?”
“I’m just going to check, bear with me (Waiting time: 93 seconds).
Shopper: “But I haven’t given you my postcode yet. Do you want me to tell you the area?”
Agent: “They normally have the postcode but it’s up to the client to tell us how far it is, whether it suffers from subsidence or flooding itself, so bear with me ... So if it’s a quarter of a mile, let’s have a look – 400 metres of the river bank – are you that? I don’t know how far is 400 metres.”
Shopper: “I’d be further than that.”
Agent: “You’re further than 400 miles – metres.”
Agent: “And you’ve never suffered from any flooding.”
The shopper wasn’t asked their name until about 10 minutes from the first call to the claims line.
In the 13th minute, the shopper explained they had four flatmates and the agent said she had to check with a technical underwriter. Seventy-eight seconds later, the shopper was told a quote was not possible because it was for shared accommodation.
An AXA spokesman said: “We realise customers may like to talk through their quote so we’ve included the number in the quote section, which is just two clicks from the home page.
“Our customer research strongly indicated that rigid scripted conversations can be frustrating. We have given our customer service reps the flexibility to guide the customer through the scripted conversation in the order that works best for the customer. The mystery shopper has provided useful feedback.”