By Doriel Abrahams, Head of U.S. Analytics, Forter
There are excellent reasons for companies to use coupons and other forms of promotion (referral bonuses, birthday discounts, etc.) to entice new customers to try their site or service.
Not only does it encourage loyalty among existing customers, but it can also entice customers to spend more with your company. According to a survey by the American Marketing Association, 68% of consumers believe that digital coupons generate loyalty, and online shoppers who used a coupon spent an average of 24% more than those who did not use coupons.
Coupon & Promo Trends
In 2022, digital coupon redemption is expected to surpass $90 billion — compared to $47 billion just five years earlier. Forter has observed that during the 2022 holiday season so far, coupons are used about 11% more often than in previous years.
Although this seemingly represents a business opportunity, some of this growth represents abuse by customers not using the promotions in their intended ways. With this sort of scale in play, it’s vital to ensure your business isn’t losing more money than your promotions are worth.
And your fraud team should pay attention, too. While dealing with coupon and promotion abuse isn’t generally the job of a fraud prevention team, in many cases, they have the infrastructure and knowledge to prevent it.
For some companies, the loss from promotion abuse can far outweigh the loss from fraud. The data shows that if you don’t take steps to prevent it, promotion abuse is the kind of problem that grows rapidly.
Promo Abuse Has Gone Pro
Companies have traditionally been willing to factor in a bit of coupon or promotion abuse as part of the cost of the marketing campaign — well worth the gain in increased customer base and order value.
After all, customers who use coupons and promotions are often the most enthusiastic fans, looking to get even more of the brand they love. It’s often worth letting good customers get more than they should to keep them engaged and loyal.
However, 81% of coupon abuse attempts are from serial abusers — people who try to take advantage of any offer you’ve got and will exploit it as much as possible. The loss here can be significant and a real risk for the business.
Generally speaking, serial abusers don’t want goods and services for themselves. Instead, they have their eyes on reselling for a profit. And the more they can use coupons and other promotions to drive down the price they’re paying, the greater the profit.
These fraudsters often become highly efficient at combining promotions and stacking and reusing coupons to maximise the discount. Over time, they become increasingly sophisticated, putting more effort into setting up new email addresses, finding alternative payment methods, and essentially creating shallow new identities.
This might sound familiar from a fraud perspective, but it’s essential to differentiate a professional fraudster from a serial coupon abuser.
Professional fraudsters only use coupons when they’re trying to use them as cover to make them look more legitimate. They don’t need discounts because they use stolen funds to pay for the items. Only 5-10% of promotion abuse attempts are from fraudsters trying to look legit. The overwhelming bulk is from serial abusers.
What Do They Target?
Answering the question of what type of coupon or promotion abusers target feels familiar to me as a fraud analyst. As it always is with fraud, the answer is to “follow the money.”
Cheating to reuse coupons, stack discounts, boost up first-time benefits and collect free samples doesn’t require deep investment in the way successful professional fraud does — but it does take some work. You’d be setting up multiple email accounts, perhaps using basic tricks like VPNs to come from different IPs, and so on. You might need to find additional funding sources; your profit would need to justify your level of investment.
- Signup bonus. Serial abusers love anything with a signup bonus. Using a new or slightly altered email address means the abuser can collect that bonus again … and again … and again. Cash for signup is always the most popular because it’s free money.
- See your incentives at scale. While you might imagine a $5 incentive or a free sampler you can sell for $3 isn’t enough to be worth the effort of setting up a new email address, a fraudster can easily set up hundreds in no time — and adding enough small items can bear a hefty reward.
The nature of the deal, how attractive it is, and how easily it can be monetised is more important to serial fraudsters than the type of goods or the industry. When serial abusers spot an offer they can exploit, they attack.
Protect Your Business from Promotion Abuse
Promotion abuse is no longer a reasonable cost of doing business; it’s a drain on a business’s profitability. The shift from occasional, casual cheating by passionate customers to serial abuse by professional cheaters has industrialised the problem, and it’s no longer something you can ignore.
Companies need to invest in their systems to differentiate between legitimate promotion use, occasional cheaters who are worth turning a blind eye to from time to time, and serial abusers who operate at scale.
How FS organisations can utilise data to boost customer experience
Charles Southwood, Regional VP and GM – Northern Europe and Africa at Denodo
We’ve all heard the age-old adage “the customer is always right”. It insinuates that, in any sector, the needs and desires of those buying a brand’s product or services should be paramount. However, today’s customer has new standards and it is becoming harder than ever for businesses to meet and exceed them.
This is certainly the case in the financial services (FS) sector where getting customer experience right used to be relatively simple. The human touch was traditionally delivered as a bi-product of in-store, transactional interactions. Perhaps, as a result of this, few people ever considered changing their provider and the traditional, established banks ruled the space.
However, with the dawn of online banking and the introduction of new, exciting challenger banks as well as the UK’s unique Current Account Switching Service, the balance of power between the consumer and the bank is changing. Consumers no longer feel locked in. If their needs aren’t being met, they aren’t afraid to look elsewhere and switch their allegiance to other companies. In other words, loyalty is far from guaranteed and customer acquisition is only half the battle.
Retention relies upon delivering strong, unique customer experiences that beat down the competition. In order to achieve this, FS organisations will need to be able to leverage data. Its insights could be the differentiator that enables them to stand out. The positive news is that, in our online world, there is a constant stream of data being produced. However, having access to all this data doesn’t necessarily mean that a brand knows how to effectively analyse and utilise it.
Ensuring data provides insight
The rapid growth in digital technologies and services across the sector has left many FS organisations juggling an unimaginable amount of data. This data is both complex and much of it is lacking in quality. Structured, semi-structured and unstructured, it is stored in many different places – whether that’s in data lakes, on premise or in multi-cloud environments. Before FS organisations can even think about using it to inform customer experience strategies, they need to be able to find it and understand it.
This is where modern technologies – such as data virtualization – can help. Through a single, logical view data virtualization boosts visibility and real-time availability of all data across an organisation. Unlike traditional extract, transform and load (ETL) solutions, it does not move and copy data. Instead it leaves it in the source systems. In other words, instead of just replicating data, data virtualization reveals an integrated view to those trying to find it.
For FS organisations this provides several important benefits. For example, it helps when data sovereignty issues arise and the movement and replication of data outside certain countries is illegal. Data virtualization solutions can also assist in terms of financial reporting by fetching data in real time from underlying source systems – applying the necessary security and obfuscation whilst delivering the performance, the agility and the accuracy needed through the seamless connection of data.
FS organisations that adopt data virtualization, are likely to see an improvement in the overall performance and efficiencies of their business operations. Overheads will be reduced, as will the length of project times. Above all, data virtualization will rapidly strengthen the customer experience by supporting business leaders to think strategically and make decisions based on real-time insights. But don’t just take my word for it.
The proof is in the pudding: How Landsbankinn is delivering on the CX promise
Landsbankinn is just one of the many financial services institutions that has already successfully embraced data virtualization and its benefits. Despite being the largest financial institution in Iceland – with around 40% of the retail and 33% of the corporate banking market share – Landsbankinn used to face several issues when it came to data sharing and analytics.
Over 45 siloed data sources – including Oracle databases, data warehouses and APIs from internal and external sources – made finding and accessing the right data at the right time extremely difficult. Without real-time data to fuel informed decision making, customer experience and operational efficiency were suffering. As a result, Landsbankinn was in need of a data overhaul to streamline and integrate its infrastructure.
To bring together its complex data landscape and collect data in real-time, Landsbankinn implemented the Denodo Platform – a data integration and data management solution built on data virtualization – to build a logical data warehouse. As a result, the team can now aggregate data from multiple data sources, transform that data based on the applied business rules, and then make it available to consuming applications. Ultimately, this means that, throughout the organisation, the data can be utilised by a wealth of employees, even those who are not particularly IT savvy. It also means that the business leaders can use data insights to make well-versed decisions and provide a plethora of services to Landsbankinn customers both quickly and efficiently.
In recent years, customer retention has become the key to successfully growing a business. This cannot happen without an effective customer experience strategy. The ability to convert data into insight is priceless in an economic landscape where the line between a business thriving, surviving and failing is so thin. Those operating in financial services must harness modern technologies – like data virtualization – to stay at the top of their game and ahead of the competition.
The Evolution of SoftPoS in 2023
By Brad Hyett, CEO of phos
Contactless payments and digital wallets have surged in popularity in recent years. Part of this stems from the digital boom that occurred during COVID-19 but it’s also thanks to the ease of use that contactless offers customers. This has helped accelerate Software Point of Sale or ‘SoftPoS’ adoption amongst SMEs and enterprise retailers, with a total of 6 million merchants taking advantage of the technology in 2022 according to Juniper Research.
SoftPoS or ‘Tap to Pay’ technology – is a software solution that allows vendors to turn their phones or mobile devices into contactless payment points. This has made life for small businesses easier, as they no longer have to fork out large sums of money for traditional Point of Sale (POS) terminals, i.e. card readers, or ‘make do’ with outdated payment software.
In light of Apple’s announcement to allow third-party SoftPoS providers to deploy their technology on iPhone last year, adoption is expected to increase further. By 2027, it’s forecast that there will be up to 34.5 million merchants by 2027 – nearly a 500% increase from today. With more payment giants like Paypal and Venmo announcing they will support contactless transactions through their iOS apps in the months ahead, what else is in store for SoftPoS in 2023?
Apple’s role in market consolidation within SoftPoS
Apple’s move to integrate the technology with iOS devices will expand SoftPoS’ usability across mobile operating systems – significantly boosting the size of the addressable market for vendors. For the first time, Apple users will be able to offer Tap-to-Pay solutions which have traditionally been limited to Android devices only.
This will ultimately bring greater awareness and adoption of SoftPoS as we see increased familiarity with Tap-to-Pay solutions among businesses and consumers alike – as they’re no longer bound by the constraints of the type of phone they use.
While the SoftPoS on iPhone rollout currently only applies to the US market, it’s fair to assume this will expand internationally at some point – aiding the normalisation of ‘Tap to Pay’ solutions en masse in the months and years ahead.
The next wave of solopreneurs
The events of the last year will also continue to have a ripple effect over the next 12 months. For example, we’ve seen the tech industry undergo mass layoffs due to a challenging economic environment and rising global inflation.
With large numbers of highly skilled talent out of work, the phenomenon of solo entrepreneurship is likely to see an uplift – as it did during the pandemic – over the next 12 months. Born in a digital-native environment, individuals from this released workforce can now set up their own businesses and run them on mobile devices, as opposed to legacy infrastructures.
This could prove another sizable opportunity for SoftPoS vendors in the coming year, as we predict to see more small businesses sprout as a result of ongoing redundancies.
The growing importance of SoftPoS orchestration
As the market rapidly develops, so too does the choice and ease of onboarding. Financial institutions and retail technology providers can now use a SoftPoS orchestrator to help them deploy Tap-to-Pay solutions quickly and easily for their merchant customers, instead of having to create their own mobile solutions. This saves them time and money – both crucial resources for any business and especially in a challenging economy.
Partnering with a SoftPoS orchestrator is a cost-effective way of providing mobile payment solutions without having to worry about waiting on new software and security updates. With an orchestrator, this is done automatically – making this a much lighter lift with no requirement for technological know-how.
As SoftPos orchestrators are acquirer agnostic, this means they can help businesses provide a SoftPos solution to their own retail customers, regardless of the existing acquirer that they’re already using.
An additional benefit here is that a wider pool of merchants are able to benefit from the technology – growing the overall size of the SoftPoS market. Orchestrators, then, have the ability to drive wider adoption of the technology globally, reaching a bigger audience of end users and advancing the mobile payments industry in emerging markets across the world.
The increased popularity of digital and contactless payment options has driven exponential growth in the SoftPoS market in recent years. The next 12 months will see the technology enter the mainstream, as Apple starts to allow more third-party SoftPoS providers to deploy their solutions on iPhones.
The timing coincides with several emerging opportunities for the technology, including a potential uptick in the number of solopreneurs and mobile-first businesses. This combination of factors will see more financial institutions and legacy technology players work with SoftPoS orchestrators to bring Tap-to-Pay solutions to market in 2023 if they want to stay ahead of the competition and keep up with ever evolving customer demands.
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