The trouble with vouchers…

The voucher industry is often tainted through misuse and malpractice by companies and customers, or misunderstandings at till level, leaving many brands looking for safeguards, says Sarah Rayner

Attempting to redeem a voucher and being told a retailer won’t accept it is irritating, but is unlikely to cause too much consternation. However, travelling miles to participate in a day’s adventure activities and then being told your gift voucher is invalid because the supplier hasn’t been paid is another thing altogether. And that’s exactly what happened to many of the unlucky customers of Red Letter Days when the company hit financial troubles in July. As their once-in-a-lifetime celebrations were abruptly cancelled, dozens of customers were left bitterly disappointed.

Instances of voucher misuse abound; earlier this year the Office of Fair Trading took action against Jackpot Promotions over its misleading advertising of prizes. The company sent unsolicited telephone messages to more than 7 million consumers, informing each they had won a prize. Only after ringing a premium- rate telephone number did almost all of the 15,500 people who responded discover they had won a cruise voucher with stringent terms and conditions attached.

Loyalty for sale

But problems with redemption don’t go just one way. Vouchers are also open to abuse by consumers themselves. One only has to log on to Ebay to see how opportunists are using the auction site to sell vouchers designed to encourage customer loyalty. The Guardian, Somerfield, The Daily Telegraph, Tesco Clubcard – there are hundreds on offer. Not only are the vouchers sold for sums less than they are worth, but this plays havoc with any promotional strategy.

Further disruption can occur at till level. Direct Know How client services director Ursula Benson says: “Although try-me-free and money-off vouchers are great marketing tools for stimulating trial and increasing loyalty within the packaged goods market, they are open to misuse in the retail environment.

“While many retailers are all too happy to accept them, some don’t fully understand the redemption process and deduct the voucher value off the final supermarket bill rather than cut the price of the specific item. This means the manufacturer ends up paying for a promotion that does not uplift their sales or benefit the brand. In some cases it could even uplift a competitor’s brand.”

So just what can be done to ensure a voucher scheme runs smoothly from production to redemption? Benson believes that more policing is needed at till level within major supermarket chains to avoid confusion, but this is by no means the only way to protect against misuse.

Using protection

Marriott Vouchers director of sales and marketing Caroline Meechan says there are several ways to protect against the counterfeiting of printed vouchers. Some suppliers print a silver strip, similar to that on a banknote. Others use serial numbers. “We use a hologram, a watermark and specialist security ink, intaglio, which almost never dries, plus a security pattern of random dots.

“Moreover, because we’re an American company, our vouchers are printed on US bank paper in American Legal sizing, which is bigger than A4. As a result, we have never had a fraudulent use of a voucher in our hotels, after all, it’s hardly the same as going into a retailer, redeeming your voucher and leaving with the goods. You have to be pretty gutsy to risk being caught on an overnight stay, although a member of staff did once call to say a customer has just paid and left, using a voucher that said ‘void’ on it. So we can put a raft of safeguards in place, but when it comes to the ineptitude of staff, there’s little we can do.”

Meechan has other tips to ensure a voucher scheme runs smoothly: “Our customers tend to be agencies, and we pledge that if a shipment goes astray, we will replace it free of charge. This provides assurance that there is no financial risk, so from a customer service point of view, it is a huge thing to offer. Yet we’ve not lost money, as vouchers that have gone astray have never been redeemed.

Calculated risks

“Another calculated risk we take is that we sell at a flat rate, even though our vouchers are accepted at a range of hotels. We take the risk that 50 per cent of customers will go to hotels that are more expensive than the voucher value, and 50 per cent to cheaper ones, so in the end we break even. There is potential for abuse, but we track the redemption, so if this were the case, we simply wouldn’t supply to that customer again. Obviously we can only take this measure after the event, but it does prevent repeat incidents.”

Meechan sees vouchers as fulfilling a specific business need; they are about incremental business and brand awareness, not only about sales. She appreciates sometimes they have to turn customers down in order to maintain the integrity of each sale, and to safeguard the Marriott brand still further she also asks to see any marketing material that is being used to promote consumer or incentive schemes running with the vouchers.

House of Fraser head of business incentives Andrea Born recommends choosing a well-known, reliable and relevant voucher supplier which provides extra services such as help with design and copywriting, loan of transparencies and guidance on promotional concepts.

She says: “If possible, opt for a company that will organise the whole scheme for you, not just supply the reward.” She agrees it’s important to consider security. “If vouchers are ordered directly from us, they come straight from the printers and are the genuine article, so no fraud can take place in this situation. We also operate a 24-hour delivery system so there’s less time for error. We use Royal Mail Special Delivery so orders are insured and receipts must be signed for. This means that if something does go missing, we are able to track it.”

Despite this, if vouchers are stolen once they are in the public domain, they are treated as cash and little can be done. “As with any currency with monetary value, vouchers are at risk of theft and misuse,” says Argos Business Solutions managing director John Davis. He says that electronic vouchers with a magnetic strip, like the Argos Reward Card, are more effective at discouraging fraud than traditional paper vouchers.

Anti-theft devices

Davis adds: “Reward Cards are worthless until their latent value is remotely activated. The recipient calls a telephone line to confirm it is in the correct hands and activate its value. If intercepted beforehand, the card is worth nothing. This not only reduces crime, it also saves the cost of secure postage per voucher as they can be sent out via normal post. Because all Reward Card information is held remotely, if a card is stolen, it can be easily cancelled so it will not be accepted. A new one is then sent out with the same number of employee reward points allocated.”

With these safeguards, Davis believes vouchers remain a good substitute for cash when given as a gift or reward. “Giving a voucher shows more thought, as all too often cash gets swallowed up in sundries or household shopping. Moreover, whether paper or plastic, a voucher is a concrete way of saying thank you and is more satisfying or motivational than a bank transfer or reward points allocation.”

Even more sophisticated security solutions come via mobile technology – businesses can now communicate with and reward employees or consumers directly via SMS text messages. Argos Business Solutions has been breaking ground here too. Davis adds: “We can have an entire transactional conversation with the recipient, so if they choose to redeem their points or voucher, they will enter into a text conversation with a central Web-based reward hub, which will send SMS prompts to guide them through a transaction. Because we hold the name and address of the recipient, when the go-ahead for rewarded goods to be despatched is given, they will automatically receive confirmation to a pre-agreed address and be notified of the delivery lead-time.”

The good text guide

Also ground-breaking is the latest offering from mobile marketing company i-movo, whose clients include All Bar One, Cuervo and Nectar. I-movo’s mobile marketing platform issues a mobile “voucher”, containing an individual identification number that is delivered to a consumer’s mobile phone using text messages. Each number is checked at point of purchase using the retailers’ existing EPOS or payment terminal devices, and the electronic nature of the transaction ensures that the voucher cannot be used more times than is permitted by the issuer, and is limited to participating retailers within the duration of the promotion.

As the system is paperless, the retailer is refunded with the cost of the goods or promotion very quickly, and administration time and cost are greatly reduced. Marketing professionals also benefit, as detailed reports and analysis are available in real time and results can be tracked as they happen.

Picking up the pace

According to i-movo managing director David Tymm, previous attempts to offer secure mobile marketing have been slow to be adopted as they have not been able to operate with existing equipment at the point of purchase and have required high levels of capital investment. He says: “I-movo mobile vouchers can be accepted in any retail establishment that operates electronic payments. Our solutions are built on industry standard platforms and are easily transportable to other areas of the world using the same principles.”

While this modern approach has been welcomed by many, some have found it intrusive. However, in the war against voucher misuse, direct communication to mobiles may be the most effective solution. After all, it does help ensure communication with – and use by – the intended recipient. In the end,

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