A prescription for continued growth

Editor’s note: Rachael Narsh is a freelance writer based in St. Louis.

With 5,580 company-owned stores in 47 states and a goal of 7,000 stores by 2010, drug store chain Walgreens has grown exponentially since its humble beginnings in Chicago in 1901. Sales for fiscal 2006 reached $47.4 billion. The firm’s 195,000 employees serve 4.7 million customers every day.

There are many factors responsible for the company’s success but in recent years mystery shopping has played an important role in maintaining Charles R. Walgreen Sr.’s commitment to superior customer service that set his store apart from the competition more than a century ago. “Our mission is to provide the best drug store service in America,” says Stacie Hull, consumer research manager for Walgreens. “In order to fulfill our mission, we recognized the importance of measuring, training and rewarding customer service. We were looking for a way to help stores understand their performance in the customers’ eyes. Mystery shopping is a tool that gives them feedback on how well they are delivering what our customers demand. It allows us to measure the delivery of service compared to our expectations.”

For the last year, St. Louis research company Maritz has helped Walgreens facilitate its mystery shopping program. According to Maritz Division Vice President Al Goldsmith, Maritz knows that understanding employee performance is a critical step in any location-level improvement effort, but that measurement alone is not enough.

Successful programs, such as that of Walgreens, use mystery shopping as the foundation for an integrated, closed-loop process of performance improvement. There are three basic components that form the basis for the Maritz process:

  • understanding how frontline employees are delivering on the brand promise, through mystery shopping;
  • enabling them to deliver the brand promise through continuous improvement tools, processes and coaching;
  • motivating frontline employees to embrace change with effective incentives and recognition programs aligned with brand goals.

“Mystery shopping often gets a black eye when people don’t do anything with it,” says Goldsmith. “Those that only do mystery shopping ask ‘Why do we still see a flat line?’ If you don’t do anything with it, you’re going to continue to see a flat line.”

Maritz handles the mystery shopping component while Walgreens handles its own improvement and incentive programs. “To help them reach their vision, they have aligned their measurement, or mystery shopping, with their improvement and incentive programs, so that they are working in concert. With this process in place, they will fulfill their mission,” says Goldsmith.

“In designing the program, we mined all existing information we had about customers, including existing consumer research and feedback from other departments, such as store operations,” says Hull. “We used this information to create an objective and actionable program that would be the best measure of customer service.

“After experimenting with a variety of frequencies, Walgreens decided to conduct shops frequently enough that employees don’t lose interest, but infrequently enough to give them a chance to make improvements. It is also important that we shop often enough that we are able to see some trends over time,” Hull says.

Shops are rotated over specific dayparts because each has a very different type of customer, and it is important for Walgreens to understand how their stores are performing during different time periods. Key areas of the store that are evaluated include the pharmacy, sales floor and cosmetics department.

Easy to access

The tool for reporting the results from Walgreens shops has been integrated with an existing tool that also communicates all other store performance data. Since all data is communicated in the same consistent format, it is easy for store managers to access, interpret and use the information. Following the shop, results are immediately reported to every store and a “tickler” is sent out announcing that the information is ready for review. No more than three days pass between the time of the shop and the reporting of the results, Hull says. At any given time, managers can quickly obtain a comprehensive overview of what is going on in their store. “It’s totally seamless. They can easily see how they compare to other stores, which introduces healthy competition,” she says.

Store managers review the results and share them with their employees, often posting them in the break room. They talk with employees about the results, using them as a coaching tool and as a means of recognition. The shops are objective, but there is one anecdotal section on the scoring sheet where an employee might be singled out and recognized for outstanding customer service. Additionally, managers often reward their employees with incentives at their own discretion. It might be a congratulations to the team or certificates that are awarded to individuals.

The corporate-sponsored incentive program takes the shop results, along with other performance measures, and rewards all employees at top-performing stores. “Our research showed that recognition was highly valued by our employees,” says Hull. “They are motivated by being noticed and appreciated.”

Hull emphasizes that employees are the primary focus of the incentive program, not management. After all, they are the ones interacting with customers. “Store-level employees are at the center of the shops. It revolves around them,” she says.

Knowledgeable shoppers

Walgreens has learned over the last five years of mystery shopping that shoppers need to be knowledgeable of all program details. “Knowledgeable shoppers ensure accuracy - making them absolutely critical to your results,” Hull says.

It is also important that the mystery shopping vendor is accessible and has good relationships with the mystery shoppers.

In addition, open communication is key to the success of a mystery shopping program. “We encourage lots of input and communication from store operations. We keep the lines of communication open and flexible to foster an environment of enthusiasm and give store operations a sense of ownership. We listen and keep track and make adjustments when necessary,” Hull says.

In addition to open lines of communication, Walgreens keeps a positive tone when sharing results. “We use mystery shopping to reward, motivate and coach employees,” Hull says. “We feel that mystery shopping is best used in a positive light, not to ‘beat up on’ employees. When kept positive, employees will stay positive, which helps keep them interested and focused on our goal of providing excellent customer service.

“A positive light surrounding the program also encourages input from store operations and all other internal departments. This allows us to improve the program, making it more actionable,” says Hull.

Receipt survey

Walgreens began its research with the mystery shopping program alone as a starting point to measure service delivery. A receipt survey was later added. “It was a successful progression,” Hull says. “Management bought into it and wanted more.”

Working in conjunction with the mystery shopping program, the receipt survey invites customers to complete a survey about their recent experience at Walgreens. “The receipt survey is a subjective measure from actual customers, while mystery shops are an objective measure of employee behavior. Taken together, they give us a picture of the customer experience,” Hull says.

Steady improvements

Walgreens sees the value of mystery shopping on many levels. “Since beginning mystery shopping, Walgreens has seen steady improvements over time, and we attribute our success to the enthusiasm generated by store operations through incentives, training and management buy-in,” Hull says. In the five years since the chain began a program, shop scores have steadily improved. Hull is very happy with the support the company has received from all levels of the organization. “We also hear anecdotal stories from people all the time about great customer service,” she says.

“Mystery shopping is a great way for a company to get started in developing a performance improvement process,” Hull says. “But mystery shopping cannot stand on its own. It is imperative to align mystery shopping with improvement and incentive programs. By integrating these three components into one process, we are providing our individual locations with the tools they need to truly provide the best drug store service in America.”