Ten Tips for Curtailing Online Coupon Fraud

Mar 08, 2010 11:16 PM  By

With marketing budgets tighter than ever, store-based retailers have been moving from traditional print—newspapers and direct mail—to digital media to drive sales. In particular, many brick-and-mortar marketers are turning to a highly measurable digital media vehicle to drive in-store sales: the printable coupon.

Printable online coupons are hot: Research and consulting firm Borrell Associates expects the total value of online coupons redeemed to almost triple during the next five years, reaching $22 billion in 2014. Online coupons are not just for hard-up bargain hunters, either—they’re becoming ingrained as part of the shopping behavior of consumers from all walks of life.

Still, retailers must be aware of the unique challenges and potential pitfalls associated with online couponing. Consider these three major risks that come with distributing coupons via the Web:

  • Brand risk: Your coupons may end up posted on sites that are inconsistent with your brand, leaving you unable to control your interactions with consumers.
  • Financial risk: High-value coupons intended for customer acquisition or loyal customers might be circulated broadly to the general population, making it hard for you to control budgets associated with predicted redemption rates.
  • Loyalty risk: Your loyalty program could see diminished new member acquisition rates and existing member responsiveness because your special coupons are already widely available on the Internet.

Many merchants are learning the hard way that if not executed correctly, printable coupon campaigns can have serious repercussions across an entire organization, from marketing to customer service.

How can you minimize the risks? Follow these 10 best practices when using online coupons.

  1. Don’t use a PDF. PDFs can be manipulated and they are easy to forward around in an unsecured manner. Plus, any type of robust tracking and analytics can be hard with a PDF.
  2. Never show a full coupon on the consumer’s computer screen. This can lead to manipulation of the coupon with screen capture software. The only time the consumer should see the full coupon is in the print tray.
  3. Watermark your coupon. If you use an intricate watermark on your coupon, it will be harder for a fraudster to manipulate the terms of your coupon–both on the computer as well as post-print.
  4. Put a barcode or promo code on your coupon. Even if your point-of-sale system can’t accept a code to give a deal, you can scare off fraudsters by putting a barcode on your coupon. But we don’t recommend using a static barcode from Google Images. Technologies available can append dynamic tracking barcodes that can capture important data about the online customer and can actually close the loop through the POS.
  5. Personalize. Not only is personalization effective in preventing fraud, it’s also a great way to get consumers excited about and invested in the coupons. Remember that coupons are an extension of your brand and customer service. Printing a consumer’s name or e-mail address on a coupon may seem trivial, but this personal touch can increase conversion rates and provide a better customer experience.
  6. Measure, track, and measure again. Is your printable coupon traffic coming from your e-mail list? Or coupon sites? Or perhaps social media?
    Offers often bleed across digital channels, and keeping the channels separate is crucial to understanding what channels are working and which ones are not. All of these questions are critical to fully understanding how consumers are interacting with your brand online.
  7. Brand consistency is key. Marketers have several options when determining the customer experience for an online coupon campaign, namely the process by which the consumer retrieves the coupon. For ideal response rates and customer experience, never let the customer leave your branded domain to retrieve the coupon. The coupon is an extension of your brand, so ensuring it resides on your domain is critical.
  8. Embrace your e-mail list. Your e-mail list is a prized asset. If you don’t have one, start building one. Work with your e-mail service provider to engage your list with exclusive coupons. You’ll build loyalty and see higher redemption rates.
  9. Use the coupon to get something from the consumer. You’re giving the consumer a special deal. Why not get something in return? Couponing is a great way to build your e-mail list or social media following.
    Many clients will use a variety of digital media to get the consumer to print a coupon and join an e-mail list. Even if it’s not required, most consumers are happy to provide this information knowing they’ll be rewarded now and in the future for doing so.
  10. Don’t make the consumer jump through hoops. It’s one thing to ask a consumer to give a name or e-mail address to build your database. But don’t demand endless amounts of registration data that you won’t use or force the consumer to download software to print the coupon. Simplicity and a clear call to action are keys to keeping customers happy and conversion rates high.

There’s no silver bullet to preventing coupon fraud or executing the perfect campaign to drive in-store sales. But marketers that understand the unique challenges associated with online couponing can better protect their businesses from the risks while reaping the benefits.

Seth Sarelson and Jonathan Treiber are cofounders at RevTrax, a provider of technology systems for tracking the effectiveness of digital media on offline transactions.