Is your redemption rate healthy?

Redemption rate is the most useful number in a loyalty programme and the one most often compared against the wrong thing.

Why published benchmarks are close to useless

A redemption rate is a function of your threshold, your visit frequency and how long the programme has been running. Two venues with identical customers and different thresholds will report very different rates, and neither is doing better.

Any figure quoted without those three inputs is a number without a denominator.

What to measure instead

Your own rate over time. Did it move when you changed the threshold? That is a real experiment with a real answer.

Completion by cohort. Of the customers who joined in March, what share reached a reward? Then April, then May. A blended figure hides a leaking bucket behind new signups.

Time to first reward. How long does it actually take a real customer? If it is materially longer than you assumed when you set the threshold, that is your answer.

Reading a low rate

Almost never “nobody wanted the reward”. Usually one of:

The number needed is too high for how fast people actually collect. Work out how many stamps a regular gets in a week. If finishing takes more than about six weeks, most will stop counting.

Nobody remembers they have a card. This is more common than owners expect and is the cheapest to fix.

The reward is not worth the effort. Rare, but real if the reward is an afterthought.

Reading a high rate

Usually good. Worth checking that you are not simply giving away margin to people who were coming anyway, which shows up as a high rate with flat visit frequency.

The number to pair it with

Redemption rate on its own can be gamed by making the reward trivially easy. Watch it alongside visit frequency. Both rising is a programme working. The first rising while the second is flat is a discount.