Secret Shopper Pay and Reverse Auctions
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A lot of shoppers lament the decreases in shopper pay that have occurred over the last few years. Many believe that mystery shopping companies are simply pocketing cash they are withholding from shoppers, but that does not take into account the pricing pressures that mystery shopping companies experience.
There is a lot of competition in the industry, and nowhere is this more evident than in the reverse auction. Reverse auctions are used by many large corporations to purchase products and services, including mystery shopping. Here is how they work, and how they affect how much you and I get paid to mystery shop.
You may be most familiar with auctions through online sites such as eBay. Let’s say you find a Brad Pitt bobblehead doll on eBay, and decide you have to have it. You place a bid. Someone else comes along and places a higher bid. You increase your bid, then a third bidder comes along and outbids both of you. This keeps on until two of you decide the price has gotten too high and quit upping your bids, or time runs out for the auction.
Reverse auctions are, as the name implies, the reverse of typical auctions. Bidders are not buying, they are selling. And the winner is the one who bids the least, not the one who bids the most.
Reverse auctions are generally not open to all comers. Bidders must be invited, and they are pre-screened to verify that they are able to meet the client requirements. At the appointed time, the bidding begins. These auctions are typically run through online auction services set up to manage reverse auctions. The first company places their bid, then all of the bidders place lower and lower bids, each undercutting the previous bidder. The action is fast and furious, and the auction may be over in minutes. The company with the lowest bid wins the contract.
Several mystery shopping company representatives have told me about reverse auctions where the fee per shop dropped within minutes from a competitive price to a how-can-they-do-it-for-that-little price. One inevitable result of this type of bidding is that mystery shopping companies look for any way they can cut their costs. That can include looking for ways to reduce costs of doing business such as office expenses, information technology, payroll processing, and staff salaries. They also take a smaller profit percentage than they would like in order to bring their pricing in line with the client’s expectations.
Although there are many companies that do their best to protect the interests of their shoppers (and those companies deserve our loyalty) there are others that look for savings everywhere, including by cutting shopper pay.
So what can we, as secret shoppers, do in this environment? Although we can not control the relationships between mystery shopping companies and their clients, we can decide with which companies (and clients) we will work. Some reduction in shopper pay may be inevitable with the current industry competition. However, if in your opinion a shop is not worth the pay offered, then do not accept it. If the only shoppers willing to take these assignments are those who are inexperienced or unable to get better shops, the clients will get the reports they deserve. Perhaps then we will see a change in the way mystery shopping contracts are awarded and fees for companies, schedulers, editors, and shoppers will reverse the downward trend they have been on.
5 Responses to 'Secret Shopper Pay and Reverse Auctions'
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on February 14th, 2008 at 2:51 am
So, how low is too low ($) to accept shops? How low do companies offer shops and still get shoppers to do them? I so appreciate the companies that pay well and certainly give them my all, sometimes working late into the morning with thesaurus in hand in order to give a report that, hopefully, gives their client their money’s worth. I’m just very suspect about the economy at this point and, therefore, worried about the state of mystery shopping/merchandising jobs and pay rates. It is certainly a very different atmosphere than, say, two years ago. I’m really seeing nothing much of anything out there since the beginning of this year.
on February 14th, 2008 at 7:13 am
bekkiche raises a great question. As the owner of a mystery shopping company, we are always trying to decide what is appropriate compensation for any job. It has become a function of what the job involves, how long we think it wll take the shopper to complete, how popular the job will be (restaurant shops are much more popular than dry cleaners or tanning salons), and how much we are charging the customer.
Sometimes it is pretty straight-forward, sometimes it isn’t. We always try to offer fair compensation but sometimes the realities of a job are different than we anticipated. Since we’re locked into pricing with the client, the only thing we can do is ride it out until the job is over and we can re-negotiate.
A question I have is, is the quality of the shopper’s report dependent on the pay? Or, if we pay more, will we get better results? We have noticed a substantial increase in the number of evaluations we must return to shoppers because they are incomplete, have poor explanations, or just don’t make sense. I think in most cases we pay well, but we can’t seem to figure out why the quality has gone down - other than the influence of text messaging. Any insight?
on February 14th, 2008 at 8:15 am
@bekkiche and @coryj sum up both sides of this very well. Shoppers want more pay and, in many cases, deserve to be paid better than they are. However, mystery shopping companies are dealing with not only being limited by the fees they are able to charge clients, but by the fact that many of the shopper reports they receive are poorly written and barely usable.
It would be nice if mystery shopping companies could give assignments only to the very best shoppers, but the reality is that every shop has to be completed and they may not have excellent shoppers available in every town, or who are willing to do every kind of shop.
There are mystery shopping companies that do not respect their shoppers, but I find that most companies are run by people like @coryj who are doing their best to balance the interests of clients, staff and contractors (shoppers), while also trying to keep their businesses profitable.
on February 14th, 2008 at 9:16 am
[…] post on Reverse Auctions and Secret Shopper Pay drew this comment from the owner of a mystery shopping company: We have noticed a substantial […]
on March 7th, 2008 at 10:35 am
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