Loyalty glossary · Currency and economics
Redemption
Redemption is the act of a member exchanging accumulated points or status for a reward, and the point at which a programme's promise is actually delivered.
Everything before redemption is a promise. Redemption is the only moment a loyalty programme delivers anything, and it is the moment members use to decide whether the whole thing was worth participating in.
Redemption rate is routinely reported as though it were an engagement metric. It is not the same thing. A member who redeems has taken value out of the programme, which is a cost event, and this is why the metric attracts pressure from directions that have nothing to do with member experience.
The first redemption matters more than any subsequent one. A member who has never redeemed has no evidence the currency is real, and the gap between earning enough and actually claiming something is where most programmes quietly lose people. Threshold placement is therefore not a pricing decision dressed as a design one, it is a design decision with pricing consequences.
The uncomfortable read is that a high redemption rate is usually a feature. It means the catalogue is wanted, the thresholds are reachable, and the promise is credible. A programme with a low redemption rate and a healthy breakage assumption is not efficient, it is a programme whose members have stopped believing it.
Thresholds decide who ever sees the promise delivered. Take a 500 point threshold on a 1 point per dollar earn rate: the member must spend 500 dollars before anything is claimable. Raise the threshold to 2,000 points and the same member needs 2,000 dollars of spend, which for a low-frequency category can mean 3 years to a first reward.