Coupon promotions have been a staple for businesses of all sizes. They have proven themselves to attract customers, increase sales and help reach organizational goals. But what may come as a surprise for many is that couponing is not without its rules and regulations. A major issue that continues to plague coupon advertising (even those delivered by SMS) is coupon fraud.
Mobile coupons are digital coupons that are received and redeemed with a mobile device. These coupons are typically redeemed either by a code directly in the text itself or, a QR/bar code on a landing page. Despite their simplistic nature, mobile coupons have been very successful and have had a massive impact for a variety of industries. According to Juniper Research, 45% of mobile users will use mobile coupons this year with mobile coupon’s global usage projected to surpass 1 billion by 2019.
Types of Coupon Fraud
Coupon fraud takes on many different forms. Of course there are instances of consumers intentionally misusing coupons, manipulating offers, and even selling coupons. But one of the most common practices of coupon fraud is posting/sharing, or redeeming, codes on the increasingly popular coupon sharing sites, as well as social media. Coupons that are intended for one person to use are being released and repurposed by many. Even store employees are getting into trouble by using previously redeemed coupons for a customer without one. Often times, people don’t even realize they are committing a crime, but coupon fraud is very serious and a punishable offense.
Reducing Coupon Fraud
How can businesses go about protecting themselves from fraud? To explain this concept, let’s look at a recent example that we had here at True Dialog…
A quick service restaurant wanted to have a targeted coupon promotion for a particular region of their restaurants. However, incorporating a 3rd party coupon into their POS system wasn’t a feasible option. This meant that coupons would have to be entered manually which would increase the chances of both human error and coupon fraud. By using True Dialog’s Coupon Campaign builder, landing pages were automatically created that allowed end-users to both receive coupons by texting in a keyword to a short code. These coupons were then redeemed at participating stores. Since these coupons were single use only and were being redeemed at the register, any chances of customers posting on coupon sharing sites were eliminated which allowed franchises to control market spend.
Here are a few best practices when it comes to managing coupon liability:
- Create Single-Use Codes – For each unique device that is offered a coupon, ensure a different redemption code will be sent and the code will become invalid as soon as it’s redeemed.
- Use Unique URLs – Similar to creating different coupon codes, ensure your platform automatically generates unique URLs that cannot be shared from one user to another (even if copied and pasted).
- Set Expiration Dates – As a best practice, coupon campaigns should always have a start and end date. To ensure old coupon codes aren’t still circulating, have them expire as soon as the campaign ends.
- Use Personalized Messaging – It’s always a good idea to personalize your SMS messaging, but it’s even more so important when presenting coupon offers.
- Avoid Distributing Printed Coupons – Unlike mobile coupons, traditional methods for clearing paper coupons cannot be done instantaneously. Also, paper coupons are more susceptible to redistributing and counterfeiting.