Loyalty Marketing: The Good, The Bad, and The Ugly

Loyalty marketing rewards customers for their repeat purchases or interactions with a brand Itamp8217s big business and increasing in importance for these key reasonsFor brands itamp8217s more critical than ever to have onetoone relationships with customers That provides the ability to collect customer data and insights and market directly to customers and often loyalty members are a brandamp8217s best customersConsumers are increasingly signing up for loyalty programs to find value and fight inflationWhile there is clear amp8220goodamp8221 in loyalty programs there are also amp8220badamp8221 and amp8220uglyamp8221 characteristicsThe Good Loyalty programs offer multiple benefits including increased customer lifetime value the ability to collect data and insights for improving products services and the overall customer experience and serving as a gateway to personalizationThe Bad Despite the benefits challenges persist in loyalty marketing Differentiating a loyalty program from competitors and determining the appropriate frequency of communication with members remain significant obstacles for marketersThe Ugly Fraud poses a major threat to loyalty programs The report identifies common forms of loyalty fraud such as exploitation by professional hackers and customers taking advantage of loopholes or errors in program rules It also found that 33 of respondents are with organizations where the loyalty program has been subject to fraud but almost half of respondents 46 of respondents donamp8217t know if their organizationamp8217s loyalty program has been subject to fraudIt should be important to organizations with loyalty campaigns that all potential forms of loyalty fraud be prevented Preventing fraud means finding the gaps in the system which can be far easier said than done Key steps to take toward protecting loyalty programsReview past campaigns Look for outliers in the performance metrics and follow the full journey from impressions to clicks to downloads to signups to point accumulation and redemptionConsider your benefits Loyalty member benefits and program capabilities can often be tailored to prevent the practicality of program compromise For example if points canamp8217t be transferred or converted to real currency the incentive for fraudsters decreasesConduct a toptotail audit for vulnerabilities Loyalty fraud isnamp8217t one attack Itamp8217s several each of which has different impacts and different entry points A comprehensive indepenamp173dent audit of loyalty program design promotion and execution can uncover where fraudsters may target preventing financial and reputational damage from an attackPartner with a specialist in loyalty fraud Loyalty marketers should have the freedom to focus on loyalty marketing designing new promotions and benefits that distinguish their program from the competition Partnering with an organization specializing in protecting and monitoring loyalty programs and campaigns for fraud can free marketers to spend their time on creative solutions to the various other challenges and opportunities of loyalty marketingBreak down internal silos Loyalty programs include advertising apps and accounts and the teams that protect each of those are often different Ensuring those teams talk to one another about the whole customer journey is crucial to keeping fraudsters out of the programDesign for the possibility of fraud Organizations should consider how to address fraud from the start ie when they are designing their loyalty program andor initiating new rewards or promotional offersWe conducted a number of qualitative interviews to help inform the report This comment stood outamp8220Theyamp8217re not really hackers theyamp8217re fraudsters And they are a major concern These guys are definitely finding ways to get access to customer credentials to go in as the customer and redeem their points and they know itamp8217s an easy target Talking to my colleagues in the industry we are now seeing way more of that across the board because they feel like itamp8217s a soft underbelly or we havenamp8217t protected it enough and itamp8217s easier for them to go after But in the general industry I would imagine most people donamp8217t have fraud controls around loyalty because theyamp8217re not expecting a lot of fraud And thatamp8217s a major opportunity for fraudstersamp8221Loyalty programs are everywhere amp8211 airlines hotels quickservice restaurants and more Marketers amp8211 pay attention to the potential for fraud Access the report at wwwananetloyaltyClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillageorgMyersBizNet

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Loyalty Marketing: The Good, The Bad, and The Ugly

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Bill Duggan

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