Your reward redemption rate is the share of completed cycles whose owners actually claimed the reward. Divide rewards claimed by rewards earned. A low figure is not a saving but a warning: a customer who earned and never claimed is a customer who forgot the programme, and will forget you next.
The number that delights owners and should alarm them
When a merchant discovers only a third of rewards get claimed, the first feeling is relief: two thirds saved. That relief would be justified if the reward were purely a cost, but it is not. The reward is the engine, and a customer who never claimed one is a customer in whom the engine never fired.
The formula is simple: rewards claimed ÷ rewards earned × 100. The denominator is every completed cycle, whether or not anybody asked for it. The gap between the two numbers is the count of customers who reached the finish line and then stopped, and they are the most expensive segment you can lose.
| Rate | Reading | What to do |
|---|---|---|
| Under 40% | The programme is invisible | Review the reminder and the offer at the till |
| 40% to 65% | Working, but leaking | Add a notification the moment a cycle completes |
| 65% to 85% | Healthy | Watch it and change nothing |
| Over 85% | Excellent, or expensive | Check the reward is not more generous than intended |
The last row needs care. A rate near a hundred per cent can mean an outstanding programme, and it can equally mean a reward being earned faster than it should be. Read it alongside your true cost before celebrating it.
Why somebody earns a reward and never takes it
Three reasons, and all three are yours rather than theirs. The first is that they do not know: the cycle completed and nobody told them. The second is that they know but do not remember at the one moment it matters, standing at the till. The third is that they know, remember, and find claiming awkward or complicated.
Raise it with these
- An automatic notification the instant a cycle completes.
- A second reminder three days later if it is still unclaimed.
- Making the reward visible on the face of the card, not buried in its detail.
- Training staff to say it first: "your reward is ready — want it today?"
What lowers it without your noticing
- Unpublished redemption conditions that surface suddenly at the counter.
- A short expiry that voids the reward before their next visit.
- Expecting the customer to raise the programme before being asked.
- A reward that needs a special order or a wait during your busiest hour.
The last item on the right is the most damaging because it appears in no report. A reward that requires standing aside for five minutes during a rush is quietly abandoned by many, nobody complains, and you read the low rate and conclude the problem is the reward itself.
A deferred liability in your books
Every earned but unclaimed reward is a debt that can be called at any moment. That hardly matters while the numbers are small, and starts to matter as the programme grows: two hundred outstanding rewards means all two hundred could be claimed in a single week if you send one reminder campaign.
Which is why the clever way to manage that liability is not shortening the expiry but speeding up redemption. A reward claimed a week after it is earned costs you exactly what it would cost a year later, but it buys you an extra visit today instead of sitting in your books as an open debt.
Three ways to measure it wrong
- Dividing rewards by customers The correct denominator is completed cycles, not people. Somebody who finished three cycles represents three chances to redeem, not one.
- Measuring in month one Nobody has completed a cycle yet, so the rate is either zero or meaningless. Wait until two full cycles have passed before reading it.
- Mixing expired rewards with outstanding ones Separate what lapsed from what is still claimable, or the leak looks either worse or better than it actually is.
Common questions
Does a low rate mean my reward is too weak?
Not necessarily, and it is the first thing to rule out. Usually the fault is in the telling rather than the prize: a customer who does not know they qualified will not ask, however generous the reward. Test the telling first with one notification on completion, then test the reward size if the rate does not move.
Should I put an expiry date on rewards?
Do so if you need an accounting ceiling, make it at least a year, and publish it from day one rather than later. A short window raises your redemption rate on paper because it deletes the people who qualified, which is an improvement in the number bought with a loss of trust.
What if the rate suddenly jumps?
Find the cause before worrying. A single reminder campaign is enough to drain the stock of outstanding rewards all at once, and that is a temporary and healthy effect. If it keeps climbing with no campaign behind it, check whether your cycle is shorter than your customer visit frequency warrants.