COLUMN ONE : Spies With an Eye to Service : ‘Mystery shoppers’ go undercover to ferret out rude clerks, dishonest cashiers. They thrive in hard times as more companies try to please the customer.

Daniel Leisy begins complaining the moment he arrives at the restaurant. He complains about the cigarette butts on the grass outside the door. He complains about the overflowing trash basket in the restroom. He complains about the service when no one greets him at the counter.

He impatiently taps a finger against his thigh until a surly teen-ager asks him for his order. Leisy inquires how the lemon and herb chicken is prepared.

“With lemon and herbs,” she says in a bored monotone, refusing to elaborate even after Leisy presses her for more information.

Leisy does more than just gripe. He surreptitiously takes notes and, when he returns to his office, fills out a detailed report that will be forwarded to the regional managers of the restaurant chain.

Leisy is a “mystery shopper,” an undercover agent who--for a fee--exposes recalcitrant restaurant workers, lazy department store clerks, thieving convenience store cashiers and unscrupulous auto mechanics. If a business has dirty windows, Leisy will spot them. If a store closes early, Leisy will report it. If a restaurant has chipped coffee mugs, Leisy will take note.

Battered by economic hard times, many businesses already have cut prices to the minimum. And with so many similar products on the market, improving service often is the only way to attract new customers and keep old ones, said Richard Chase, a professor at the USC School of Business.

As a result, mystery shopping firms are thriving. Undercover agents at National Shopping Service, where Leisy works, visit about 6,000 businesses a month, compared to about 1,500 three years ago. The number of firms in the country--about 200--has tripled in the last five years, according to management experts.

“After years of neglect, businesses have rediscovered the customer,” Chase said. “Customer service is no longer a luxury today. Businesses have to improve service to survive.”

Most businesses only hear from customers when they are “very pleased or very angry,” Chase said, so mystery shoppers often are the only way to evaluate the average customer’s reaction.

Burger King uses an Atlanta firm, Shop’n Chek, to evaluate all 5,846 of its restaurants each month, said company spokesman Michael Evans. Most employees do not object to the program because, he said, “when people are doing a good job we stroke them” and sometimes bonuses are awarded for excellent service.

But every mystery shopping firm has an unofficial hall of shame filled with horror stories of egregiously bad service. Leisy recalls a co-worker’s visit to a Los Angeles convenience store. The undercover shopper was in line when the cashier asked a customer to put out his cigarette. When the man ignored the request, a security guard walked up, whipped out a pistol and pointed it at the smoker’s temple until he complied.

“That’s not exactly what we mean by good customer relations,” Leisy said, rolling his eyes.

Another shopper was checking out a Hollywood coffee shop. He waited at his table, Leisy said, but could not find anyone to take his order. Finally he discovered two waiters, on either side of a nearby booth, shooting spit wads at each other.

At a New Jersey electronics store, an undercover agent for Shop’n Chek once waited nine minutes for service. There were no sales clerks on the floor, the mystery shopper discovered, because they were all in the back room attending a meeting. A meeting on how to improve customer service.

*

After the cigarette butts, the messy bathroom and the surly teen-ager behind the counter, Leisy is exasperated. Can’t this place do anything right? Just when he is about to lose all faith, he orders the chicken and a salad and approaches the cashier at this cafeteria-style restaurant.

The cashier, a teen-age boy, smiles broadly, hands him back his credit card slip and says cheerfully: “Would you please sign here, sir?” Leisy begins rhapsodizing about the cashier as soon as he is seated.

“He said ‘sir.’ He said ‘please.’ He smiled.” Leisy pauses and shakes his head in wonderment at the rare display of outstanding service. “He was a shining star. Get me 20 more of him and I’ll make every customer in this restaurant happy.”

Leisy’s ebullient mood quickly changes. The waiter should stop by his table within three minutes to see what else he needs, according to National Shopping Service’s calculations for good service. It takes the waiter 11 minutes. His meal should be delivered within 16 minutes. It takes the waiter 19. The dirty table next to him should be cleared within two minutes. It takes the busboy four.

Midway through the meal, Leisy orders a carafe of wine. He wants to see if the waiter rings it up on his bill, or just pockets the money. The waiter passes the test. But a minute later, as Leisy returns to the salad bar, a busboy, assuming he has left, clears the remnants of Leisy’s dinner, including the half-full carafe of wine.

The waiter, and later the manager, apologize profusely. They bring him more wine. Leisy is momentarily appeased, but before long he resumes griping. There was too much water in the salad bowl. His plate was stained. No one brought him after-dinner mints.

Although all these gaffes might be viewed as venial sins, Leisy spots something in the corner of the restaurant that he considers a mortal offense. A busboy has left a mop beside the dessert tray for four minutes.

“That’s awful,” he says, throwing up his hands in despair. “That’s not much of an incentive to order dessert.”

*

There was a time, management experts say, when dining out was not such a misadventure. America’s golden age of personal service came in the years after World War II when prices were stable and labor was relatively cheap. Businesses could afford to hire additional personnel so shoppers would feel pampered, and they often treated customers to extras such as free delivery.

Big business “was not so big then,” said Leonard Berry, director of the Center for Retailing Studies at Texas A & M University. Instead of supermarkets there were corner grocery stores. Instead of HMOs there were family doctors.

“These types of businesses lent themselves to more personal service,” Berry said. “But with the fabulous ‘50s and the soaring ‘60s, businesses got bigger and bigger with more bureaucratic layers of management. Service started to change. It became more impersonal.”

A flush economy and the rising population also spawned a sense of complacency. Profit margins were so high that many managers decided they did not need to emphasize service.

During the 1970s, a period of rampant inflation, many customers were willing to sacrifice service in return for lower prices, management experts say. Discount retailers such as K mart and Wal-Mart flourished, and other businesses began cutting payrolls so they could compete.

By the 1980s, a decade of great expansion and hostile takeovers, few seemed to care about the customer. Jay Leno used to tell audiences that when he reminded a supermarket checker that she was supposed to say thank you, she snapped: “It’s printed on your receipt.”

This was the nadir of American customer service--and also the turning point, Berry said. Many service-oriented businesses suffered the same calamitous fate as the nation’s manufacturers, for many of the same reasons--a myopic approach and indifference to quality.

When manufacturing firms began addressing their shortfalls, it prompted service industries to also evaluate and improve their operations, management experts say. The recession added a further incentive.

Because of this renewed emphasis on service, the 1990s have been called the Decade of the Customer by business management gurus. Dozens of books about service have been released this year--including “The Customer Is Boss” and “Sustaining Knock Your Socks Off Service.” And customer service mavens have suddenly found themselves in heavy demand to give speeches at sales seminars.

“Service has gotten better recently--through necessity,” Berry said. “Customers in greater numbers are thumbing their noses at firms that provide poor service. They simply won’t take it anymore.”

*

Sometimes, mystery shoppers uncover more than bad service.

A few months ago one of Leisy’s co-workers discovered a restaurant manager who pretended to close when black patrons stopped by late at night. The regional managers of the chain were notified and changes were made. As a result, the company was spared a public relations disaster and the kind of discrimination lawsuit recently filed against Denny’s restaurants by black customers who alleged they were forced to pay in advance or refused service.

In addition to restaurants, mystery shopping firms investigate gas stations, hotels, airlines and any other business where employees come in contact with customers. Leisy’s firm charges from about $30 for the average restaurant visit to more than $100 plus expenses for an overnight stay in a hotel.

Some shoppers, like Leisy, 31, are full-time employees. Others are paid a fee--which most firms will not disclose--for each report. Before Leisy’s firm gives assignments to prospective shoppers, supervisors put them through a few hours of training, send them out with a veteran, and then give them their own test assignment and scrutinize their report.

Mystery shopping firms have been aided by a number of business studies linking better customer service with higher profit margins. A recent study published in the Harvard Business Review showed that a 5% increase in customer retention can lead to a 25% increase in profitability.

Leisy conducts only internal investigations, but some mystery shoppers are hired by businesses to snoop on competitors.

“We have national clients who want us to order the same meal at their restaurant and then at a competitor’s and evaluate everything--from the food to the service,” said Irving Ehudin, director of Merit Services in Baltimore, a mystery shopping firm. “Competition has gotten so tough, companies are pulling everything out of the hat in order to get an advantage.”

But this push to improve service can take a toll on workers. Nordstrom, the Seattle-based department store chain that built its reputation on customer service, agreed several years ago to pay millions to employees who claimed they were overworked.

“Companies are in a real bind today,” said Carol Scott, associate dean of UCLA’s graduate school of management. “They’re trying to improve service at the same time they’re trying to cut costs, which often means cutting labor. Something’s got to give.”

*

Back at the office, Leisy is preparing to fill out a 34-question report divided into seven categories, including table service, food quality, cleanliness, atmosphere and overall experience.

“At the counter, was the girl’s greeting prompt, sincere and friendly?” he asks, reading from the report. “Hardly. When I asked her to describe the chicken with lemon and herbs her attitude was: ‘What do you think it is, stupid?’ ”

About two weeks after Leisy finishes his report, it is passed down from the regional manager to the restaurant. Employees named in reports can be reprimanded for poor service, suspended for not checking identification when serving alcohol or fired if theft is uncovered.

At times, however, mystery shoppers go too far. One Shop’n Chek agent filed one of the most critical reports in company history after visiting a San Francisco full-service gas station. She awarded the attendant a zero in every category. He was not friendly. He was not prompt. He did not demonstrate competent product knowledge. In fact, he never left the office, the shopper noted.

But at the end of the questionnaire, under the section for comments, the shopper explained that there were extenuating circumstances.

The ground had just stopped shaking from the 1989 Loma Prieta earthquake and the attendant was hiding under a table.