Redemption vs. Breakage: Finding the Sweet Spot in Your Loyalty Program
Too many redemptions = high cost.
Too little redemption = no engagement.
Somewhere in between is the loyalty program sweet spot — but how do you find it?
Let’s explore the balance between redemption rate and breakage, and what your numbers are really telling you.
What Is Redemption Rate?
The % of issued rewards that customers actually use.
• High redemption = strong engagement, higher program costs
• Low redemption = possible friction, low perceived value
What Is Breakage?
The % of rewards that go unused. Often seen as “cost savings,” but…
• High breakage may = poor UX, confusing redemption
• Extreme breakage leads to churn and distrust
What’s a Healthy Redemption Rate?
There’s no universal rule, but general benchmarks:
• 30–60% redemption = healthy engagement
• 70% = excellent, but watch your margins
• <20% = risk of disengagement
How to Improve Redemption (Without Killing Margin)
• Use tiered rewards: smaller rewards often, larger ones for loyalty
• Add reminders (SMS, push, email)
• Make rewards instantly usable at checkout
• Introduce expiry dates to trigger urgency
Using Loyalty Plus to Track and Adjust
With Loyalty Plus, you get:
• Live redemption tracking
• Breakage heatmaps by customer segment
• A/B testing tools for rewards
• Auto-expiring vouchers with reminders
Conclusion
Redemption isn’t just a number — it’s a signal. With the right tools, you can find the balance between delighting your customers and protecting your margins.
📈 Let’s optimize your loyalty program together. Book a strategy session.
