You will discover the top 9 recommendations for protecting your loyalty programme from fraud in this article.

Added benefits include:

Examples of the best loyalty programmes and how they combat fraud, like Sephora.
Examples and a definition of loyalty fraud
This post is for you if you want to start a new loyalty programme or enhance the one your company is presently running.

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Running a loyalty programme is an alluring approach to strengthen client ties and increase revenue. Although the majority of consumers that sign up for your loyalty programme participate as you would anticipate, some just sign up to take advantage of the program’s benefits.

What are the different types of loyalty fraud?

Customer abuse of a loyalty program’s procedures or rules in order to obtain financial gain is known as loyalty programme fraud. There are various ways to commit loyalty fraud, such as creating multiple accounts, altering orders, etc.

Fraudsters are customers who engage in fraudulent behaviour. Fraudsters have the potential to jeopardise your entire rewards programme in addition to undermining your desired ROI. Therefore, preventing loyalty fraud must be a component of your marketing plan. Read on to learn how to put anti-fraud measures in place and turn your loyalty programme into a success!

Fraudsters can jeopardise your entire loyalty programme in addition to undermining your desired ROI.

Reconsider your awards

Establish a budget for your rewards programme, analyse your product costs and profit margins, and provide appropriate incentives that add value for both your customers and your company. You will come closer to a loyalty programme free from fraud over time.

Fraudsters are searching for easy pickings. Fraudulent behaviour may swiftly surface if receiving incentives is simple or if they have a high value. No one will participate in your loyalty programme if earning rewards is too difficult or rewards are worth too little.

Establish client segments

Customer segments are particular subsets of customers who are identified by their purchasing habits, geographic location, or previous interactions (e.g., new customers, newsletter subscribers, customers who have already spent $100, customers from the EU or the US, etc.).

Create customer segments (also known as membership levels) for your programme to ensure that only clients from a certain group will use redemptions. Being a top tier customer takes more time, money, and effort. You can give more discounts to seasoned customers who are less prone to commit fraud by employing customer segmentation.

Provide non-cash benefits for loyalty

If you give non-monetary prizes, fraudsters are less likely to use your loyalty programme since they prefer receiving cash. Points, complimentary goods, or charitable gifts are examples of non-monetary rewards.

Creating a pointing system is risk-free, and it will boost your overall loyalty ROI by encouraging bonus purchases that are sparked by discounts and free points. Redeemable points boost customers’ average order values while also motivating them to stick with your business.

Define the maximum discount rate.

The largest amount of a discount that customers can receive when using codes is known as the upper discount value. Setting a cap on the biggest discount your customers can receive is a good idea to prevent fraud and safeguard your ROI and marketing money.

An illustration of a higher discount value is:

Assume you conduct a campaign using 10% off coupons, with a $100 maximum off value. Depending on the value, every order that is $1000 or less will receive a 10% discount. The upper discount value will be used at orders that are worth more than $1000. These orders will get a maximum of $100 discount (which is eventually less than 10%).

Utilize more effective customer loyalty software

A top-notch customer loyalty programme should have built-in tools for preventing fraud. Great customer loyalty software offers a comprehensive set of capabilities, including customer segmentation, rewards customisation, earning criteria, redemption restrictions, email verification, and monitoring tools. If such features aren’t available right out of the box with your loyalty software, it might be time to think about updating your IT stack.