An average shopper, perhaps a 70-something grandmother, enters a store and asks a sales associate for help. A sweet lady, she requests assistance in choosing a gift for her granddaughter. She's friendly, but asks a lot of questions.

Two weeks later, the sales associate discovers the woman was not a real customer but a mystery shopper.

Mystery shoppers, sometimes called secret shoppers, are hired by major retail chains to evaluate customer service. These customers in disguise also provide services to restaurants, hotels, mall managers and even government agencies.

"A client calls us, and they either want us to shop a store, or they want us to shop a particular salesperson," says GayLynn A. Hester, vice president of sales and marketing for Dallas-based Greet America. "Sometimes they just want us to call to evaluate the kind of service they provide over the phone."

Who are mystery shoppers? Greet America is one of numerous companies nationwide that provides mystery shopping services. The companies are hired by retailers to find mystery shoppers near the stores they want shopped. Mystery shopping has become so popular in recent years that there is now an association, the Mystery Shopping Providers Association (MSPA).

"The mystery shoppers are not employees," says Vickie Henry, CEO of Dallas-based Feedback Plus Inc. "They are independent contractors, but some companies do hire them as employees."

Feedback Plus draws from a database of more than 80,000 shoppers in providing mystery shopping services to retailers around the country, Henry says. "We have people lined up saying, 'I want to be a mystery shopper.' The majority of them do it because they want to see customer service improve."

A large database of shoppers benefits not only the mystery shopping company but also the retailer, Henry says. "I believe the most effective mystery shopping occurs when there are many different people doing it. If one person does it all the time, every store begins to look the same and the information becomes diluted."

Like most mystery shopping companies, Greet America and Feedback Plus create forms for people to fill out when they are shopping at a particular store. Retailers may decide to use their own form or let the shopping company develop one for them.

After the shopping is completed and the form has been filled out, the company sends results to the retailer. In some cases, retailers offer incentive programs to employees based on the results of the survey. If the results aren't positive, the retailer may request another assessment.

While the forms may vary, they all contain basic questions about customer service. "Most of the questions are yes or no," Henry says. "The shopper checks: Did the salesperson make eye contact? Did the person smile? Did he or she say thank-you? They almost always do well, but fall short just before the sale."

Cincinnati-based Federated Department Stores Inc. wants even more specific information. All of the company's seven retail divisions - Bloomingdale's, The Bon Marche, Burdines, Macy's East, Macy's West, Rich's/ Lazarus/Goldsmith's and Stern's - are shopped at least twice a month depending on the size of the store, according to Mary Lou Benjamin, manager of selling services.

Federated evaluates four selling priorities with mystery shopping: greet, sell, close and satisfy. "The whole idea is to acknowledge and offer assistance to people," Benjamin says. "The sell is simply suggesting items that go together and giving information about store sales. Closing is just the closing of the sale. Satisfy means the customer would want to come back and shop there again."

Typically, a mystery shopper will shop five to 10 areas within one department store, which is representative of the way many customers shop.

Evaluating five or more departments gives Federated a good idea of how the customer service is in the store as a whole, Benjamin says. When mystery shoppers want to praise a particular salesperson, they can write comments on the form. "When we do well, we recognize and celebrate those successes. Sometimes the store manager may send a letter, or the employee may get a balloon or a coupon for the food court."

Why go undercover? Federated uses mystery shoppers for two reasons, Benjamin says. First, they provide an objective evaluation of customer service. Second, the results allow Federated to assess its training needs.

"We want to find out whether new hires are comfortable on the selling floor," Benjamin says. "We did find some things we could do better in training. Now, we use multimedia-based computer training. It allows employees to experiment before they get to the selling floor."

In addition to mystery shopping, Federated uses a second method to measure customer service. Every so often in a credit card transaction, a customer is randomly chosen to receive a letter and survey in the mail. More and more, companies are using one or both of these service measurements, Benjamin says.

While a store manager's mission is to hire employees with customer service skills, the entire shopping environment, including cleanliness and visual appeal, is important in keeping customers coming back.

"In today's shopping environment, the customer has so many choices," Benjamin says. "The way you're treated helps you decide where to shop. Also, the way you feel when you walk through the store makes a difference. When you walk into a store, you can really tell within the first couple of minutes how you feel about it."

Given the high volume of mystery shopping, retailers may wonder if the benefit is worth the cost. Mystery shopping costs are determined by the type of store, the number of stores and what is required of the shopper. For instance, some companies offer retailers a better price per shop if they operate a greater number of stores.

"The price range (at Greet America) is usually $30 to $50 per shop," Hester says. "But it depends on how much work is involved. We've done rental-car shops that are $75 because the service involves renting the car and returning it."

Still, many retailers are convinced mystery shopping is well worth the cost. "For most of our retailers, it is pretty addictive," Henry says. "The real beauty of mystery shopping is that there is immediate awareness. Often, you can correlate this awareness with how profitable the store is."