Well organised and run loyalty scheme It can offer many tangible or intangible benefits. Although such opportunities are tempting, one must not focus on them excessively. Both parties should benefit from this relationship, but neither should do so at the expense of the other. We explain how to set up a loyalty scheme to prevent abuse.

Various difficulties and problems (including, in particular, fraud) occur in B2C programmes, but also in B2B programmes organised for business partners and trading partners.

Abuses arising from vague rules

The phenomenon of abuse can be easily explained using a simple example. Let’s suppose that, as part of a loyalty scheme, participants are rewarded for regular visits and for posting product reviews on the shop’s website. As you might expect, motivated customers will act in such a way as to gain as much as possible. However, some may exploit their privileges excessively. If you wish to guard against such abuse, you should carefully define the rules for participating in the programme. In our example, a good solution would be to set a maximum number of reviews published within a given period (e.g. per week) for which a reward is given. Setting limits on the points awarded or the funds spent It is an exceptionally effective safeguard. Setting additional requirements and thresholds also works very well – a common rule is that the maximum number of points earned for referring a programme cannot exceed the points earned for purchases.

The terms and conditions should also set out the rules returning purchased products after collecting the prize. They must be designed to prevent abuse (e.g. the deliberate bulk purchase of promoted items and their return after the prize has been claimed, in order to recoup the money), whilst allowing for unforeseen circumstances where the participant has no malicious intent.

Misconduct and errors on the part of staff

The programme should also be designed in such a way as to minimise the risk of errors and misconduct on the part of staff. This is particularly important in the case of loyalty programmes in the retail and services sectors. It is best to use a system in which all actions are linked to a specific, separate account. It is also important to implement different levels of authorisation, at the very least distinguishing between an administrator and an employee. Professional IT tools are essential to ensure full control over the programme’s operation and insight into the actions taken by staff.

Risks associated with fraud in B2B programmes

B2B programmes have a smaller target audience than B2C campaigns, which makes it easier to liaise directly with participants. In such situations, the risk of fraud is significantly lower, which is why different measures are taken to prevent it. To explain these methods, it will be most helpful to present and discuss a few examples:

Example 1: a scheme for customers purchasing a company’s products from distributors – the purchase is confirmed by an accounting document, but an additional verification step involves checking the authenticity of the documents provided directly with the distributors.

Example 2: an affiliate programme for staff at shops and wholesalers selling a particular company’s products – the organiser checks periodic reports, which enables them to verify whether the transactions recorded in the programme match actual sales figures.

Example 3: The programme organiser is having problems with contractors who do not settle their payments on time – points are awarded only for purchases paid for on time. The terms and conditions clearly state that a participant will not receive a reward if they are in arrears in this respect.

To sum up – in B2B programmes The risk of fraud is most commonly mitigated by:

• requirements regarding the submission of accounting documents,
• data verification,
• analysis of reports and statistics,
• linking the points-earning and/or reward-redemption system to timely payments.

Abuse is often difficult to detect, and it is even harder to deal with the problems it causes. Participants are in a privileged position, so it is only natural that they might try to take advantage of this. The most important thing is to exercise caution, but also tact, at every stage of the programme’s operation. Overly strict rules or harsh reactions upon discovering abuse may damage the organiser’s reputation, which could have far worse consequences in the long run.