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Published byMadilyn Pott Modified over 10 years ago
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SurfMerchants Jeremy Bolton Manka Johnson Santeri Leijola David Spivey
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Overview Mystery Shopping Industry Sassie – Survey Database Application SurfMerchant’s Opportunity & Strategy Lock-in Options and Comparisons Conclusions
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Mystery Shopping Mystery Shopping is a booming, $200 million/yr industry Mystery shoppers are dispersed to multiple locations of a retail or service chain Posing as customers, these shoppers fill out detailed surveys to assess the location's level of service The Mystery Shopping company must then collect and process mountains of data and generate statistical reports for the retail chain Source: surfmerchants.com
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Mystery Shopping Once done by faxes, manual entries and spreadsheets, Internet-based technologies are greatly improving efficiencies Several aspects of Mystery Shopping have made larger software companies avoid the industry: –every survey must be laboriously customized –no pre-made solutions exist –the user interfaces are dauntingly complex –reports statistics are intricate and often must be customized for each client Source: surfmerchants.com
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The Mystery Shopping Industry
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Source: surfmerchants.com
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SASSIE - Features Survey engine 100% customized and optimized for mystery shopping applications High speed SQL relational database platform (not Lotus Notes or Manta-based) Generates complex, up-to-the-second reports on the fly All surveys and reports and scoring can be customized to the client's specifications Handles shopper accounts and client accounts with password security Can import surveys from other systems easily Schedules shoppers based on location, past shopper performance, and shopper demographics Completely web based - no servers or high speed internet connection needed Source: surfmerchants.com
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SurfMerchant’s Opportunity Target and acquire clients –Mid-sized clients who do 500-1500 shops per month –Can charge a healthy $5 per-shop fee (clients make average $42 per-shop) –These clients need software but don’t do enough business to justify self-development costs ($50,000+) and maintenance –Dominate this segment (75%+ market share)
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Strategic Issues
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Strategic Conclusion Create lock-in to keep lucrative clients if/when competitive landscape changes
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Lock-in Key Formulas Total Switching Costs = Costs borne by customers + costs born by new supplier Profit from current customer = total switching costs + quality/ cost advantage If no quality/ cost advantage, profit from current customer = Costs borne by customers + costs born by new supplier Strategy: Increase switching costs or quality/cost advantage
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Lock-in Options Use of Contracts Increase perceived switching costs Create technological barriers Be a Low Cost Provider Product Superiority Value-Added Solutions by Expanding Features and Uses
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Use of Contracts Value is limited with current pricing structure Clients wary There are limited resources for enforcement
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Increase perceived switching costs Convince customers (mom-and-pop agencies) about the difficulty of switching (after Sassie is implemented) Convince customers that competitors are not as good as they claim to be (the cable strategy)
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Create technological barriers Use proprietary database or data transfer formats Advantage short-lived, since competitors can circumvent with new technology
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Be a Low Cost Provider Could start price war Causes SurfMerchants to forgo profit opportunities from high margins
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Product Superiority Although SurfMerchant’s product is currently the market leader, a relatively low capital investment could yield a superior product Product Specific Dependency through customizations = better lock-in
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Value-Added Solutions by Expanding Features and Uses Emphasizes expertise Build relationships with lucrative clients Entrenches SurfMerchants in customers’ businesses Costly to implement
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Conclusions
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Source: surfmerchants.com
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