Tools | by Karon Warren
Also, as with any new addition to an existing framework, there is some training involved with implementing a technology-based rewards program, although the consensus is that most systems are easy to learn in a short amount of time. “With any technology introduced into a quick-serve, more training means a smoother deployment,” Lipp says. “While the average 17-year-old clerk will likely pick up how to ring in a few new transaction types in about five minutes, we prefer to see our clients use our training guides to hold a formal training session with their staff. The more your employees know about the program, the better they can sell its benefits to your customers.”
Fraudulent use of loyalty cards often goes undetected. This account was activated five times in one day but was not discovered because it never reached the limit of seven swipes at once.
Because technology-based rewards programs are, relatively speaking, still in the infancy stage, there is not enough history to track the effects of such programs on fraudulent activity. However, Lipp does have some tangible evidence that these programs do seem to be working for his clients.
“Chockstone typically replaces an existing paper-based program, so we’re in a position to see the decrease in food costs once an electronic program is up and running,” he says. “Across our clients, we’ve seen an average decrease of 5 percent to 8 percent in net food costs. It becomes obvious to our operators how much free food they were giving away due to fraudulent redemptions in their previous program.”
While Wenkoff’s franchisees constantly revise the fraud protection factors within their rewards programs to incorporate new promotions, overall he says they are pleased with the progress they are seeing in the rollout of their Subway card in general.
“I’m very comfortable that we’re managing the fraud levels,” he says. “Ninety-five percent of card freezes are, in fact, fraudulent. Five percent are legit. That’s the balancing act we have to work on. Our customers actually say they’re happy to know we’re watching out for them.”
Of course, implementing technology-based rewards programs doesn’t mean the end of all fraud, but they do seem to be on track to help reduce it. “Just having a technology-based rewards program doesn’t mean that you can detect and eliminate fraud,” Lipp says. “When implementing a program, make sure your vendor has a real-time fraud engine that will be able to detect fraudulent transaction trends and freeze cards immediately so stolen points (typically by employees) cannot be redeemed. This is the most cost efficient way to minimize fraud.”