Monthly Archives: December 2022

Fraud Detection Technology Helps You Run Bulletproof Loyalty Programs

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A PaymentsJournal article sheds light on some intriguing numbers related to Fraud and Loyalty Programs:

 

  • There are over $140 billion in unspent loyalty points in the United States alone
  • $3.1 billion in redeemed points are fraudulent
  • Direct and indirect losses from loyalty and reward points fraud are an estimated $1 billion

 

These numbers clearly suggest the magnitude of fraud in loyalty programs and why it can be a cause for concern. As a marketer, fraud in loyalty programs may not be a mission-critical element to running successful campaigns but increasingly, it has become an area that cannot be ignored. 

 

What is a Loyalty Fraud?

 

When a customer or a fraudster misuses loyalty points through some tactic or hacks into a system to redeem points, such fraud is termed Loyalty Fraud. There are several ways in which loyalty fraud can happen- sometimes a brand’s employees may be involved, sometimes it can be a hacker who hacks into a system of customer data, and sometimes it can be a group of people colluding to misuse loyalty points. 

What is Loyalty Fraud

To give a simple example, consider a situation where a cashier punches his/her own phone number in place of the customer’s and gets possession of the customer’s loyalty points. Apart from this, there are several online forums dedicated to teaching tricks on how to find loopholes in a brand’s loyalty program and take advantage. 

 

Types of Loyalty Frauds

 

There are functional frauds and there are technical loopholes. Loyalty fraud can be classified in the following:

  1. Plastic Card Fraud: This type of fraud involves the fraudulent use of stolen or counterfeit payment cards to purchase goods or services.
  2. Diversion Fraud: This type of fraud occurs when an employee diverts loyalty points to their own account.
  3. Double-Dipping Fraud: This type of fraud occurs when a customer registers for the same loyalty program multiple times and earns points or rewards from the same purchase.
  4. Point or Reward Hacking: This type of fraud involves the unauthorized use of loyalty points or rewards to purchase goods or services.
  5. Fake Member Fraud: This type of fraud occurs when an unauthorized person creates a loyalty program account and earns rewards.
  6. Fake Redemption Fraud: This type of fraud occurs when an unauthorized person redeems loyalty points or rewards for goods or services.

Types of Loyalty Frauds

Fraud Detection and Fraud Prevention

 

When it comes to reducing the impact of fraud, there are two aspects to look at – detection and prevention.

 

Fraud detection in loyalty programs is the process of identifying, analyzing, and mitigating fraudulent activity within loyalty programs. It is designed to detect, prevent and respond to any attempts to misuse a loyalty program or earn rewards through fraudulent means. This involves analyzing and monitoring data points such as customer profiles, transaction history, redemption trends, and other behavior patterns to identify suspicious activity.

 

Fraud prevention in loyalty programs is the process of protecting customer accounts and data from fraudulent activities. This can include measures such as customer identity verification, monitoring customer accounts for suspicious activity, using customer data to identify potential fraud attempts, and using encryption to secure customer data. Fraud prevention in loyalty programs helps to reduce the risk of customer data being stolen or manipulated and helps to protect customer loyalty and trust.

 

Capillary Technology to Prevent Loyalty Fraud

 

At Capillary, we’ve worked with 250+ enterprise brands across industries which have led us to build several frameworks which can help brands to detect and prevent loyalty fraud. 

Capillary Technology framework loyalty fraud

  1. Redemption Capping: Fraud detection is all about pattern analysis. One of the simplest frameworks is around capping the number of points that can be redeemed in one go or capping the frequency of redemption. The Capillary system can help you make rules for the rate of redemption, the number of transactions per week, etc.   

 

  1. Outlier Tagging: On the basis of business semantics, a brand can define the upper and lower limit of certain data points. For instance, consider a retail brand that has an average ticket size of $25. From historical data, the minimum (say $1) and maximum (say $100) can be set and any transaction which is out of range would be flagged as an outlier and sent for review to the operations team. 

 

  1. RFM Analysis: RFM stands for Recency, Frequency, and Monetary. Recency is the time elapsed since the last purchase, frequency is the number of transactions in a particular time period, and monetary measures the value of purchases by a customer. The Capillary platform uses this methodology to detect fraud and help brands runs secured loyalty programs. 

 

  1. ML Algorithms: Machine learning algorithms can be used to detect fraudulent loyalty program activity. These algorithms can identify patterns in customer data that are indicative of fraudulent behavior.

 

  1. Data Mining: Data mining techniques can be employed to uncover fraudulent loyalty program activity. The Capillary platform can help uncover hidden relationships between customer data and fraudulent behavior, enabling brands to better identify and take action against potential fraudsters.

 

  1. Behavioral Analysis: This can provide insight into customer behavior, allowing companies to identify and address potential fraud. Capillary Nudges loyalty marketers to recognize frauds through these techniques and improve loyalty program efficiency. 

 

  1. ID Verification: ID verification technologies can be used to authenticate customer identities, ensuring that customers are who they say they are. This can help prevent fraudulent loyalty program activity and protect customer data.

 

  1. Transaction Monitoring: Companies can use transaction monitoring technologies to detect suspicious transactions. Transaction monitoring can help identify fraudulent transactions, allowing companies to take action to prevent further losses.

 

A trusted platform for running bulletproof loyalty programs

 

Our loyalty experts work with brands across the globe to ensure they achieve the maximum from our loyalty software. Fraud detection is becoming increasingly important in discussions and stringent measures need to be in place to ensure you get the most from your programs. 

 

 

Contact Capillary

 

Designing an Effective Mobile Loyalty Program

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Unleashing the full potential of mobile 

With smartphones accounting for 84% of the 2019 holiday season shopping, mobile loyalty programs present a clear and present opportunity for American retailers to increase sales, conversions, and overall customer experience.

Unfortunately, except for a handful of brands like Sephora, Nike & Walgreens that have employed sophisticated data gathering and analytics to personalize offers to customers’ tastes while providing experiential perks, the vast majority of US retailers have struggled to unleash the full potential of their mobile loyalty program.

This has resulted in a large number of mobile loyalty offerings that are generic, and deliver disjointed and ill-conceived approaches to loyalty

Loyalty programs with native mobile integration with omnichannel features such as messaging, location technology, beacons, real-time offers, card-linked offers, and exclusive member benefits will be the ones to garner real attention and adoption moving forward.

This article analyzes how retailers can leverage dynamic in-app loyalty programs to introduce a more responsive and meaningful approach to rewards, personalization, and customer engagement and thus creating an effective mobile loyalty program.

How mobile has changed the loyalty game

Loyalty is not merely about earning and burning points anymore.

In the world of loyalty marketing, smartphones double up as payment enablers, face recognition devices, coupon redeemers, loyalty dashboards, location identifiers, and more. These digitally powered, advanced brand-to-consumer interactions were unthinkable in card-only loyalty set-ups.

Mobile devices have drastically broadened the scope for brands and consumers to connect and engage in creative ways. They have enhanced the user experience and made loyalty benefits more real-time, personalized, and experiential. They have also made it easy for brands to measure, track, and deliver the impact of loyalty programs.

Below are some of the key trends we see in the mobile-first loyalty strategy.

Key trends in the mobile loyalty experience

  • Hyperpersonalization

Smartphones have redefined personalization by expanding its scope and impact. Offers and rewards can be shared with customers based not merely on age, sex, past purchase data but also live location, social media interactions, and in-app activity. Having a mobile-first loyalty strategy leads the way for integrated, cross-channel data collection about every customer. This data further help retailers to craft hyperpersonalized loyalty offers in an omnichannel environment.

Example: Starbucks uses its mobile app to seamlessly blend the physical and digital worlds and offer unique experiences to every individual. Among other things, it thoughtfully notes a customer’s live location to display the music playing in the store they visit. During the 2020 holiday season, the coffee chain giant gave away free air fresheners in a surprise deal for drive-thru customers. The air fresheners come with a QR code generated by a QR code generator that allows customers to access a custom Starbucks holiday playlist.

  • Gamification

The smartphone experience is very intimate and wholly controlled by the user. These factors make it an extremely suitable platform to gamify loyalty. Many brands are tapping this potential. The idea is to use gaming psychology to get their customers hooked to your loyalty programs and make them ‘play’ to win rewards.

Example: Nike’s NikePlus offers an omnichannel loyalty program where mobile plays a vital role. Members get rewards for working out. The more active they are, the more points they earn. 

Similarly, Uber uses visual progress bars, much like gaming interfaces, to motivate their frequent riders toward securing their next reward.

  • Experiential rewards

Since we carry mobile devices wherever we go and are always ‘in touch’ with them, they become a valuable part of delivering experiential rewards – special services, benefits, or member-only privileges. Through smartphones, brands can offer personal shopping assistance via messaging apps, let customers quickly check-in at exclusive events, or unlock in-venue benefits through OTPs.

Kohl’s Yes2You Rewards program is intrinsically linked to a mobile-first loyalty strategy. This program helps Kohl’s engage in a ‘two-way dialogue’ with their customers, send push notifications, and offer unique experiences, such as a VIP trip to the American Music Awards or an opportunity to star in a Kohl’s photoshoot.

  • Social integration

Social media engagement has steadily been increasing, with people accessing their network of friends and family on-the-go from their mobile devices. As of October 2020, 79.9% of active Facebook users accessed the social network ‘Only via a mobile phone.’ Combining mobile loyalty programs with social media behavior is thus a recipe for a winning customer retention strategy.

SheFit regularly runs reward campaigns through their Facebook page. Recently, for the holiday season, they invited their community members to enter a contest for a chance to win a $100 SHEFIT Gift Card. Their post got 100’s of comments and dozens of shares within a couple of days. Instant engagement at such a scale is only viable through mobile.

  • Visual loyalty and contactless checkout

In local stores, even today, the retailer recognizes you by the face and offers benefits like purchase on credit or home delivery. For large brands with a global presence, how do you replicate these experiences? Smartphones are perfect to offer these privileges through facial recognition technology and touchless payment integrations. These can provide everyday conveniences to loyal customers like lesser wait times for checkout, skipping the queues, and priority services.

CaliBurger experimented and launched kiosks powered with facial recognition technology a couple of years back. These kiosks recognize customers as they walk towards it and automatically offer loyalty rewards via their smartphones. It also lets them choose items and pay without pulling out their wallets!

How to design a great mobile loyalty experience

Designing mobile loyalty experience requires a one-to-one loyalty platform accessible via smartphone, such as a loyalty app. It also requires that the user interface is simple to follow and guides the users towards one thing that matters the most to them – rewards and positive experiences. Below, we have listed four mantras of building a winning mobile loyalty experience.

  • Capture first-hand data

Your loyalty program rests on personalization, as we have seen in the previous section. It requires having reliable demographic, psychographic, and behavioral data about your customers. With a mobile loyalty program, you can gradually collect this data using progressive profiling, so it doesn’t irk the customers yet enriches your customer insights and data sets.

NorthFace, an American outdoor recreation product company, collects only the bare minimum customer details when signing up and asks for interests and preferences at a later stage.

  • Simplify the loyalty game

If loyalty is a game, and you want customers to play it, lay out the rules. Customers operate in a noisy environment, and they quickly forget complicated things. Hence your mobile loyalty program requires you to deconstruct the ‘what’s’ and the ‘how-to’s’ of your loyalty straightforwardly. Leave nothing to the customer’s imagination.

Sephora explains its loyalty program structure, tiers, and benefits very clearly to its customers. It says that ‘Beauty Insiders’ – their term for loyal members – earn exactly ‘1’ point for every dollar spent at Sephora stores. It also shows the various membership tiers in a tabular format. 

  • Make it easy to win

According to a 2018 research by CodeBroker, most loyalty program members find it difficult to track and access the benefits. Thus, when designing your loyalty app user interface, it is critical to keep the essential things prominent and easily accessible.

Example: Chick-fil-A One keeps its customers focussed by highlighting the total redeemable points they have and the various ways to earn and redeem them. This no-brainer display makes sure customers can realize the benefits of the program. 

  • Keep the engagement alive

According to a Localytics study, users with push notifications enabled for apps have 53% more monthly sessions than those without them. Push notifications have become an easy and quick way to update users and connect with them on-the-go. You can use this aspect of push notifications to enhance engagement through mobile loyalty apps. Greet customers when they arrive at your stores (through live location capture), alert them about expiring offers, send festive discounts or birthday notes, or ask them to share testimonials socially to earn more rewards.

Cineplicity uses push notifications effectively to attract customers to earn and redeem rewards at the right time. As we see in the image, they have shared a code to watch a free movie early in the day, so there is a lot of time for customers to notice the notification and plan their evening leisure activities. 

Wrap up

Chances are, you are reading this blog on your mobile phone. Or have your smartphone close by. It may even have buzzed a few seconds ago. All around us, mobile has become the connecting thread for all kinds of people-to-people and brand-to-people interactions. We also see object-to-people interactions driven by mobile devices. Just think of the popularity of the Internet of Things (IoT), Augmented Reality (AR), Virtual Reality (VR), etc. These were novelties a few years ago, and today are the norm.

The future is mobile-first, if not mobile-only!

 

We asked ChatGPT and Loyalty Experts- What are the Top Mistakes that Brands Make

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As a part of the Loyalty Masterclass with Capillary, we’ve been shedding light on various elements of Loyalty and consumer engagement. The first two parts talk about the ‘History of loyalty programs” and the “Evolution of loyalty programs”. In this 3rd part, Jim Sturm, Sumit Kumar, and Frank Hamlin, all veterans in the space of Loyalty talk about the “Biggest Mistakes that Brands Make” when it comes to loyalty programs.

 

But before we got there, we thought of asking ChatGPT3 two questions. First:

 

And secondly, what are the biggest mistakes that brands make with loyalty programs?

 

The answers are superb! These are actually the best deduction one can make after reading the top answers on a search engine like Google.

 

But does it match the answers given by loyalty experts? In this case, No! Watch the video below and you’ll notice the nuances that the experience of the experts brings in. Here are two examples of what the experts said and AI missed:

 

  1. The largest mistake brands make is that loyalty isn’t a company-wide initiative. For a loyalty program to succeed, it is critical for it to be a collaborative effort.
  2. It is critical to partner with the CFO because the economics of the program are very important. Not partnering with CFO can lead to a loyalty program stopping abruptly and not achieving the desired results. Dive into the video below for the finer details:

 

 

 

Conclusion:

OpenAI’s ChatGPT3 is incredible and is a huge step into the future! It surely is a radical improvement over present knowledge technologies but the fact remains that the nuances of the real world are still human-dependent. At least till now 🙂

How to Upgrade From Shopify to Capillary’s Anywhere Commerce+

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Companies embarking on their digital commerce journey typically prefer Shopify. However, companies who have scaled up, or are desirous of offering a unique customer experience, eventually upgrade to enterprise-grade Ecommerce platforms. Limitations imposed by Shopify’s standardized web templates, limited extensions, apps, and 3rd party integrations, force this upgrade.

 

We have seen many such brands upgrading to Capillary’s Anywhere Commerce+, a fully featured, enterprise-grade and modular ECommerce platform that is Flexible, Inexpensive, Rapid, and Easy (FIRE). Features that would usually require expensive & time-consuming integrations are available out of the box. 150+ third-party systems are seamlessly integrated. Open APIs are available to integrate with any external platform/system. Clients enjoy the complete freedom to use their preferred payment gateways, logistics partners, POS providers, and marketing automation apps.

 

Some key features of Capillary’s Anywhere Commerce+ that entice clients to upgrade from Shopify:

  • Auto scalability : Hosted on AWS, the Anywhere Commerce+ platform offers high performance, scalability to adapt to fluctuating order volumes, and guarantees 99.9% uptime. The platform is ISO27001 certified to ensure the highest levels of security for data. 
  • Out-of-the-box features and functionality that support growth :Features required by large and growing companies including an order management system (OMS), pre-integrated CDN, marketing automation tools, customer service tools, post-sales experience management tools, etc. are available from the get-go.
  • Completely customizable storefront :Through our custom user journeys & storefronts, brands can curate exceptional customer experiences that amplify the core elements of their brand.
  • Mobile-first :Anywhere Commerce+ enables brands to deliver super-fast shopping experiences using PWA/native app capabilities.
  • In-built ‘save-the-sale’ capability: Mitigate loss of sale and enhance conversions with AI-powered, in-built Endless Aisle module. Easy, intuitive, ‘Store app’ to search for products and place orders on behalf of customers for ‘out-of-stock’ SKUs.

Migrating to Anywhere Commerce+ from Shopify

Unlike Shopify, where the implementation is executed by an agency partner/system integrator, Anywhere Commerce+ implementation is managed by the in-house project management team, thereby delivering a shorter time to go live, while eliminating risk. The site is made live with on-brand storefront &  customer journeys, existing PG, and logistics integrations within 4 – 6 weeks from design finalisation. 

 

Our project management team deploys a proven import methodology to transfer clients’ critical data including catalogue, categories, customers, price, and other relevant data. The process will be completed methodically, securely, and accurately.

 

Prior to import of data, our data experts will undertake a data quality check and will carry out some minor clean-up if required. The scope of the data quality check will include product options, images, descriptions, custom fields, and categories.

 

Proven project implementation methodology for an effective transition

 

The typical steps in the migration process is detailed below:

  1. Data migration: This is a key step in the entire process. The snapshot above is a representation of what requires to be done for data migration.
  2. Logistics setup: Anywhere Commerce+ supports ready-to-use logistics setup with 30+ partners globally.
  3. Payments: pre-integrated with over 50 global gateways to support seamless online payments. We also support payment options such as cash on delivery (COD), loyalty points, wallets, etc.
  4. Promotions: The Anywhere Commerce+ platform supports varied types of promotions such as cart promotions, catalog promotions, promotions based on user groups, vertical-specific promotions, external promotions configured on CRM system, channel-specific promotions, etc.
  5. POS and ERP integration: with marquee brands like Microsoft, Oracle, SAP, Tally, Posist,  etc.
  6. Setting up In-house Order Management System to streamline post-purchase journey – allocation, order tracking, returns, RTO, etc.
  7. Integrations with marketplaces: Pre-integrated with prominent marketplaces such as Amazon, Flipkart, Myntra, etc.
  8. Activating ready Integrations with 3rd party tools such as CRM, data tracking, marketing automation, etc.
  9. Go-live & Post Go-live support: Our experienced project management team will be with you all the way to support a seamless go-live and post-go-live. Our proven methodologies such as Hypercare and BAU support ensure that you derive the maximum benefit out of migrating to Anywhere Commerce+.
  10. Our teams also proactively identify enhancements that can be made during subsequent upgrades, making your business future-ready.

With our proven Shopify migration methodology and experienced in-house implementation team, upgrading from Shopify to Anywhere Commerce+ is as simple as it gets! Reach to our Anywhere Commerce + experts now to discuss details.