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How to Improve Your Loyalty Program’s Redemption Rate

Written by 
Brad Davis
October 30, 2021

Not happy with your loyalty program’s redemption rate? Don’t worry – most loyalty marketers rarely are. No matter how well your business’s rewards program is performing, there’s always room for improvement.

As a rule of thumb, the average loyalty program’s redemption rate should be 15% or higher to be keeping up with your competition.

The way to calculate this percentage is to take the total number of loyalty points that customers have redeemed for rewards, and the total number of loyalty points your program has issued. Divide the former by the latter, and voila – you’ll have your loyalty program’s redemption rate.

So… now that we know your loyalty program’s redemption rate, here are a few handy tips for how to improve it.

1. Offer variety in your rewards

screenshot of sephora beauty insider webpage

Image Source: Sephora Beauty Insider

It makes sense that the more variety there is in your rewards offering, the more likely there’ll be something in there for everyone. Try to diversify your rewards offering as much as possible so that it appeals to your entire customer base. This stops people from losing interest, and keeps your redemption rate high.

Consider partnering up with other businesses that share your customer base (i.e. hotels and rental car companies, or your local yoga studio and independent health smoothie shop, for example).

Don’t be afraid to think outside the box when it comes to diversifying your rewards! Cosmetics giant Sephora is extremely good at this; providing its Beauty Insider members with a whole host of ways to take charge of their own brand experience.

2. Give customers as many avenues to earn loyalty points as possible

screenshot of sweetlegs rewards webpage

Image Source: SweetLegs

Don’t just diversify your rewards; diversify the points accumulation process as well! The best loyalty programs reward customers for:

  • Sharing branded content on social media
  • Leaving a review
  • Referring a friend
  • Creating their own content relating to the brand or its products (user-generated content)
  • Special promotions like “Double Points Day” or “Happy Hours”, which can also help you drive more business on slow days or during quiet business hours

As an example, fashionable leggings manufacturer SweetLegs offers customers numerous ways to boost their loyalty point count and earn rewards faster.

3. Keep customers updated on their loyalty status

loyalty program status and progress

Nothing motivates you to keep going to the gym quite like seeing the results of all your hard work on your own body, does it? If we see the positive results of an activity we’re engaged in, we’re far more likely to continue with this activity – loyalty programs are no exception.

Make sure customers can clearly see their own loyalty status, and periodically remind them of how close they are to their next reward. If nothing else, this keeps your brand front of mind at least.

4. Tailor your communications to each individual customers’ unique preferences


This is called personalization, and it involves using the data that your digital rewards platform has accumulated on each individual customer to deliver a more targeted experience that caters for their specific needs and preferences.

According to Bond Brand Loyalty, nearly 90% of US consumers don’t mind having details of their activity tracked and monitored, if it means they’ll receive a more personalized rewards experience.

With personalization, you can:

  • Recommend certain products to certain customers, based on previous purchases
  • Send customers tailored offers at strategic times, based on which time of day they typically make a purchase
  • Remember common previous orders to save them time if they wish to place the same order again (i.e. 2 x Cheeseburgers, 1 x Large Fries, 1 x Large Coca-Cola and 1 x Small Chocolate Sundae).

This brings your loyalty program to a whole new level, and strengthens each customer’s emotional connection to your brand. A stronger connection = a higher redemption rate.

5. Build hype with exclusive competitions to improve redemption rates

kinjo sushi exclusive promotion

Image Source: Kinjo Sushi Bar & Grill

In addition to your loyalty program’s standard rewards structure, why not hold the occasional prize draw competition where the winner is treated to something a little more significant? Perhaps an experiential reward like concert tickets, or (depending on the scope of your business) an all-inclusive holiday package?

Include a clause that states any loyalty program member who has made a transaction in the last three months will be automatically entered into the draw (with everyone else excluded), and watch your redemption rate suddenly soar.

With any luck, the uptick in redemption rates outstrips the cost of the reward and it becomes an investment in higher customer retention rates.

6. Gamify the loyalty program experience

starbucks rewards menu challenge

Anyone who has participated in Starbucks Rewards’ hugely popular Menu Challenges (we’re guessing quite a few people, considering they account for 39% of the coffee chain’s overall global sales) has experienced gamification first-hand.

It involves injecting the fun and thrilling components of games into ordinary processes like completing an online social profile, learning a new language through an app… or earning points and redeeming rewards in a loyalty program.

A recent Forbes study revealed that 40% of millennials agree there should be gamified functions within rewards programs.

Gamification makes your loyalty program more exciting, and this is a sure-fire way to improve redemption rates. There’s a whole host of ways to gamify your loyalty program.

7. Keep your loyalty program simple

chipotle rewards

Image Source: Chipotle Rewards

As with many things, the age-old mantra of “less is more” certainly applies to loyalty programs. Nothing decreases redemption rates faster than an overly-complicated loyalty program with confusing rules and rewards structures.It’s no problem to offer special side-promotions, exclusive prize draws, diverse rewards and a variety of ways to earn points, so long as the core rewards structure remains the same. Do X, Get Y.

Keep terms and conditions as straightforward as possible. Keep exceptions to the rule at a minimum, and convey the instructions as clearly as you can to avoid misunderstandings or ambiguity.

This attitude should also carry over into the aesthetics and UX (user-interface) aspects of your loyalty program. No clutter, no clunky click-throughs or clumsy navigation… just sleek displays and ease of use.

To see for yourself what simplicity in customer loyalty looks like, sign up to Chipotle Rewards – they’ve got the right idea!

8. Make your loyalty program accessible in-store and online

browsing e-shop in clothing store

If your products or services are available in a brick-and-mortar store as well as online, it’s crucial that your customers can earn points and redeem rewards across both of these channels.

Otherwise, you risk alienating customers by only rewarding half of their transactions, and this will be extremely detrimental to your loyalty program’s redemption rates.

There are plenty of SaaS loyalty programs that integrate with e-commerce providers like Shopify these days, so it’s easier than ever to provide customers with a wholesome omnichannel loyalty experience.

The easiest and most affordable way to achieve this is with a digital loyalty app.

How to improve your loyalty program’s redemption rate with a digital loyalty app

Considering that 54% of global internet traffic now takes place on mobile devices, it stands to reason that a digital loyalty app would be the ideal means for engaging your customers and improving redemption rates.

A digital loyalty app allows you to take your customers’ brand loyalty experience to dizzying new heights, by offering far more personalised communications, tailored offers, gamified functions and countless other engaging features.

These functions can be automated, so your loyalty program is constantly working behind the scenes to retain more customers for your business 24/7.

Want to know more about how Stamp Me can help you improve your loyalty program’s redemption rate? Speak to a friendly member of our professional team today.

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