Loyalty Register glossary
Redemption rate
The share of issued points or rewards that members actually redeem.
Redemption rate is the share of issued points or rewards that members actually redeem. It is one of the clearest signs of whether members value the program: points that are never used are rewards nobody wanted, or could not reach.
Updated · By Loyalty Register Editorial TeamRelated terms
How do you calculate redemption rate?
Divide the points redeemed by the points issued over the same period. In a hypothetical program that issues 100 million points in a year and sees 20 million redeemed, the redemption rate is 20%. If a better catalog lifts redemptions to 25 million points, the rate rises to 25%. Programs that reward with offers rather than points count offers instead: White Castle, for example, said its Craver Nation Rewards members redeemed more than 1.2 million offers in one season.
What is a healthy redemption rate?
It depends on the program. A cash back or instant-discount program should redeem most of what it issues. A hotel or airline program built around larger, aspirational rewards will redeem more slowly and can still be healthy. A rate near zero is not a saving; it means the rewards are not working. The goal is a range that fits the program’s purpose, tracked over time.
How is it related to breakage and burn rate?
Redemption rate and breakage are two sides of the same balance: points are either redeemed or never used. Burn rate usually describes the same thing as a speed, over a period. A program celebrating high engagement and a finance team counting on breakage are pulling against each other, so agree on the target range up front.
How can a program raise a low redemption rate?
Make the first reward reachable. Sephora, for example, lets all Beauty Insider members redeem 500 points for $10 off a purchase of $10 or more, a simple entry-level reward. Then check the catalog against what members actually want, make redemption easy to find in the app and at checkout, and remind members of their balance. If redemptions run too high for the budget, adjust the earn side before cutting reward value.