“Gaming” a loyalty program? Believe it or not, it happens. But there are ways to protect yourself. We have a few bulletproof tips to prevent determined fraudsters from working your program’s loopholes to score free stuff.
The #1 way to keep program fraud low is to choose a partner whose loyalty program validates actual purchases, not “visits.” Require customers to check in with their real name at the register in order to receive points or punches based on a purchase they ring up on the spot.
In contrast, “visits-based” programs allow customers to validate themselves independent of any purchase. To game this system, a fraudster can simply “check in” with their device to earn points. Rinse. Repeat. No validation is just begging for fraud.
Of course, tying your loyalty data to purchases makes sense for reasons beyond fraud. By connecting the dots between check-ins and purchases, you’re able to know your customers’ buying habits better, enabling you to make smarter marketing choices for loyal customers.
There are friendly employees. And then there are employees who are overly generous awarding points or punches. To reduce this source of soft fraud, establish a benchmark for how many program participants you have and how often they make purchases. Determine your usual “run rate” in a given week. Then, if you notice deviations from that benchmark, you might be dealing with a less-than-honest cashier who’s rewarding their friends. And it never hurts to let employees know you’re watching how they dole out rewards.
Stay attuned to your loyalty program’s daily stats, too. In the unlikely-but-unfortunate event that you hire a bad apple, you might discover this person has awarded lots of perks to friends on their way out the door. A spike like this won’t show up in weekly benchmark checks, but a quick daily review will reveal the problem immediately.
Again, watching your daily loyalty stats makes sense on multiple levels. You’ll be able to use your program to get a feel for your regulars, their “usual” order, and when they like to stop in. Why not use this info to train your staff, too? Make a point to check-in to your loyalty program as part of your workday. It only takes a few seconds and it can go a long way in reducing fraud.
Imagine your #1 customer drops by for their AM coffee and leaves their phone at home. You’d never deny a great customer points on a technicality, right? Make sure you have enough flexibility in your system to award points or purchases post-purchase, so you can cut a loyal customer some slack if you choose. (You can reserve this feature for management only, too, so those less-than-honest cashiers described above can’t exploit this feature.)
Loyalty marketing is all about establishing strong, lasting customer relationships. Ideally, your loyalty program attunes you and your staff to your best customers as your business and your team grows. Act in a generous, relationship-building spirit, and your customers will respond in kind.
The good news is two-fold: first, loyalty program fraud is easy to control. Second, taking these simple steps will not only help you reduce fraud, it’ll help you maximize the overall value of your program.
Why not cultivate the right habits from the start?
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