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Uncovering Promo Fraud: A Marketer’s Worst and Most Unknown Problem

Security, Offer Management Platform, Promotion Fraud

by Nick DeStefano September 2, 2020

Ensuring ROI and long-term safety.

During COVID-19, marketing budgets are tighter than ever, meaning brick-and-mortar retailers are relying even more on ecommerce strategies to carry the load. Constant uncertainty, extended lockdowns, and consistent economic crises mean promotions across digital channels are the key to driving sales. But if a brand puts an offer into the market, the fraudsters will follow. That’s just the reality of how bad actors will try to take advantage of retailers and more at any point.

The total value of digital coupons reached a staggering $47 billion just three years ago, and that number continues to climb. These promos aren’t just for the extreme bargain hunters anymore. Instead, they’re a key tool in a marketer’s arsenal to drive sales and build customer loyalty — two metrics that are at a premium now more than ever.

This ingrained aspect of consumer shopping behaviors also poses unique challenges to marketers. For however beneficial they are, they could be equally devastating if rife with promo fraud. 

The risk to the brand lies in the fact that non-secure coupons and promotional codes can end up across second or third party channels, leaving the brand itself unable to control the reach and integrity of those promos.

This type of fraud also carries a customer loyalty risk. The efficacy of the promo fraud could dilute new-member acquisition rates and existing customer responsiveness, especially if coupons are overly available and non-personalized. 

Lastly, and most importantly for marketers as well as the brand overall, is the financial risk. Big discount coupons that are targeted toward new and loyal customers that are circulated across fraud channels to the general population makes it impossible to correctly manage budgets and ROI against those promotions. 

Pre-COVID, stubborn brands learned the hard way. During COVID, brands will have to be proactive regardless of whether they thought their strategy worked in the first place. Promo fraud can have serious — and now potentially catastrophic —  repercussions across an entire company.

Any business that incorporates promotions into their marketing strategy is susceptible to attack. A robust business plan with a marketing rollout meant to increase growth and revenue is all for nought if there is pervasive fraud. Now, it’s not the marketing team’s job to weed out fraudsters, but the reality is that regardless of the painstaking creative work put into a promo or offers, means that fraud may worsen the cost of these promotions in the long run.

All fraud must be so factored into marketing budgets to glean both total ROI and long-term safety. Losses can range from strict fraud, and lost revenue from loyal consumers. The problem persists because of obsolete tech solutions, or no programs in place at all, while others simply can’t properly track campaigns through to end-sale. Marketers that understand the challenges of promotions beyond the campaigns themselves can better protect the business from the potential fraud risks while reaping the benefits altogether.

We've helped hundreds of brands over the past decade enhance their discounting and promotional strategies. If you'd like to learn how RevTrax can help track campaigns through to end-sale and protect your offers in the process, contact us to speak to a specialist.


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