How to Improve Your Loyalty Program Redemption Rate: 6 Fixes That Work

You've launched a loyalty programme. Customers are signing up. Stamps or points are accumulating. Everything looks healthy on paper — until you notice that a significant portion of your members never actually redeem a reward.

They sign up, earn a few stamps, and then... nothing. The card sits unused in their phone wallet. The points balance grows but never gets spent. The free coffee goes unclaimed. The programme is technically functioning, but it's not doing the one thing it exists to do: bring customers back.

This is a redemption rate problem — and it's one of the most common issues in loyalty programme management. The good news: it's almost always fixable. The causes are specific, identifiable, and within your control. This guide covers the practical reasons redemption rates stall and exactly what to do about each one.

What Your Redemption Rate Actually Tells You

Your redemption rate is the percentage of earned rewards that customers actually claim. If your programme has issued 500 stamps toward free items and customers have redeemed 150 of those free items, your redemption rate is 30%.

But the number itself matters less than what it reveals about your programme's health:

A high redemption rate (above 40%) means customers are engaged, the reward is compelling, and the threshold feels achievable. A strong redemption rate is just one piece of the puzzle — businesses that combine it with other proven ways to improve customer loyalty build the kind of resilience that survives economic downturns rather than just weathering them. Your programme is actively driving repeat visits. This is where you want to be.

A moderate redemption rate (20–40%) suggests the programme is working for some customers but losing others along the way. There's likely a friction point — the threshold is slightly too high, the communication isn't frequent enough, or some customers forget they're enrolled.

A low redemption rate (below 20%) signals a structural problem. Either the reward isn't worth the effort, the threshold is too far away, or customers aren't being reminded of their progress. A programme with a low redemption rate is spending your money on rewards infrastructure without generating the return visits that make it worthwhile. Redemption rate is just one of several metrics worth tracking — businesses that measure customer loyalty rates across multiple dimensions get a far clearer picture of where their programme is succeeding and where it's leaking value.

For small businesses running a stamp-based programme, the calculation is even simpler. How many customers who start a stamp card actually complete it? If fewer than one in four complete the card, something needs attention.

Problem 1: The Reward Threshold Is Too High

This is the most common cause of low redemption rates — and the easiest to fix.

If a customer needs 15 stamps to earn a reward, and they visit your business once a week, that's nearly four months before they see any payback. Most customers lose momentum well before that. The reward might be genuinely good, but it's so far away that it doesn't influence today's decision about where to go for coffee, lunch, or a haircut.

The fix

Lower your threshold to 8–10 stamps. This is the sweet spot for most small businesses. At once-a-week visits, a customer reaches their reward in two months — close enough to feel tangible from the start, far enough to generate meaningful revenue per cycle.

Run the maths to confirm it works. If your average transaction is £8 and you offer a free item worth £3 after 8 stamps, you've generated £64 in revenue before giving away £3. That's a reward cost of under 5% — affordable for virtually any business and more than justified by the incremental visits the programme generates. If you want to see the full revenue-versus-cost picture — including platform fees, reward costs, and break-even timelines — a detailed loyalty programme cost breakdown for cafés makes the maths easy to run before you commit.

With Perkstar, you can adjust your stamp threshold at any time. If you launched at 12 stamps and redemptions are low, drop it to 8 and monitor the impact. The change takes effect immediately for all members.

Problem 2: Customers Forget They're Enrolled

A customer signs up, earns their first stamp, leaves your business — and never thinks about the programme again. Not because the experience was bad. Not because the reward isn't appealing. Simply because nothing reminded them.

This is the silent killer of redemption rates. A stamp card that lives passively in a phone wallet, never sending a message or surfacing a reminder, is essentially invisible. The customer has to remember it exists, remember to open it, and remember to present it at their next visit. This problem is exponentially worse with paper cards, which can't send reminders at all — it's one of the key reasons digital punch cards outperform paper in virtually every retention metric. That's three conscious decisions you're relying on — and most people don't make them without a prompt.

The fix

Use push notifications to keep the programme visible. A well-timed push notification is the single most effective tool for improving redemption rates. It puts your programme — and your business — on the customer's lock screen at a moment when they might otherwise go elsewhere.

Three types of notifications directly improve redemption:

Progress reminders. "You're 3 stamps away from your free [reward]. Could this be the week?" This creates urgency and reminds the customer that their effort so far has value — they're close, and abandoning now means losing that progress.

Reward-ready alerts. "Your reward is ready! Come claim your free [item] whenever you like." When a customer reaches the threshold, tell them immediately. An unclaimed reward is a missed visit. A prompted redemption is an additional transaction (because customers almost always buy something alongside their free item).

Lapsed-member re-engagement. "We haven't seen you in a while — your 5 stamps are still waiting. Pop in and get closer to your reward." For customers who've drifted, this message reactivates both the relationship and the stamp card simultaneously.

With Perkstar, push notifications are unlimited on every plan. You can send them to all members, to members near a reward, or to members who haven't visited recently — whatever serves your redemption goal.

Problem 3: The Reward Isn't Compelling Enough

A 10% discount after 10 visits doesn't excite anyone. A free item of low perceived value doesn't motivate return visits. If the reward feels like an afterthought, customers will treat the entire programme as an afterthought.

The test is simple: would you be excited to earn this reward yourself? Would you tell a friend about it? Would it make you visit one more time this month to get it? If the answer is "not really" to any of those, your customers feel the same.

The fix

Offer a reward that customers would normally pay for and genuinely appreciate. A free coffee, a complimentary haircut service, a meaningful discount on a popular item. The reward should feel generous — not because it costs you a fortune, but because the customer perceives real value.

Make the reward specific, not vague. "Free coffee" is more compelling than "10% off." "Free blow-dry" is more compelling than "£5 off your next visit." Specificity creates a mental image of the reward that customers can look forward to. Vagueness creates nothing.

Match the reward to your highest-margin items. A free coffee costs you approximately 30–50p in ingredients. If you're struggling to land on the right offer, a collection of innovative loyalty reward ideas can help you find options that feel generous to customers without eating into your margins. A free basic service costs you staff time but no materials. Rewarding with high-margin items means the reward feels generous to the customer while costing you relatively little.

Problem 4: The Sign-Up Reward Creates False Engagement

Some businesses see strong initial sign-up numbers but poor long-term engagement. Often, this happens when a sign-up incentive attracts people who take the initial reward and never return.

This doesn't mean sign-up rewards are bad — they're one of the most effective tools for building a membership base. But if your sign-up reward is too generous relative to the ongoing programme, you'll attract one-time collectors rather than future loyal customers. The goal is to get customers to join your loyalty programme in a way that sets up long-term engagement, not just a one-time transaction that inflates your sign-up numbers without improving retention.

The fix

Use a sign-up reward that starts progress, not one that gives away value. A free first stamp (head start on the card) is more effective at driving long-term engagement than a standalone discount. The customer leaves with visible progress — they're already one stamp in, which creates the endowed progress effect. They feel invested from day one, which motivates them to continue rather than cash out and disappear.

With Perkstar, you can configure a sign-up reward that automatically issues a stamp, bonus points, or a small perk when a customer joins. The head-start approach consistently produces better redemption rates than standalone discounts because it ties the initial value to the ongoing programme.

Problem 5: Staff Aren't Reinforcing the Programme

Your loyalty programme lives or dies at the counter. If staff forget to ask customers to scan their card, skip the scan when they're busy, or don't mention the programme to new customers, your redemption rate will suffer regardless of how well the programme is designed.

Every missed scan is a missing stamp. Every missing stamp makes the reward threshold feel further away. Every further-away threshold reduces motivation. The compound effect is devastating — and invisible, because the customer doesn't complain. They just silently disengage.

The fix

Make scanning part of the transaction, not an add-on. The stamp scan should be as automatic as processing the payment. It happens every time, with every customer, during every shift. Not "when we remember" or "when it's not too busy."

Train staff to mention progress. "You're getting close to your reward!" takes two seconds and creates a moment of positive reinforcement that motivates the customer to keep going. When Perkstar's scanner app shows the customer's progress, staff can see exactly where they are and mention it naturally.

Track and celebrate sign-up numbers. If your team knows that the target is 20 new sign-ups this week, and they can see progress toward it, the programme becomes something staff take ownership of rather than something they tolerate.

Problem 6: No Milestone Reward for Longer Programmes

If your programme requires 10 or more stamps, the middle section is where most customers drop off. They've passed the excitement of starting and they can't yet see the finish line. Milestone rewards are one of several design decisions that separate programmes customers actually complete from ones they quietly abandon — understanding what makes a great loyalty programme helps you get all of them right from the start. This mid-programme slump is predictable and preventable.

The fix

Add a milestone reward at the halfway point. A small bonus — a complimentary add-on, a bonus stamp, a minor perk — at the 5-stamp mark of a 10-stamp programme breaks the journey into two manageable halves. The customer achieves something tangible midway through, which reignites their momentum for the second half.

Perkstar supports milestone rewards that trigger automatically when a customer reaches a defined stamp count. Configure it once and every member receives the boost at exactly the right moment.

Real-World Example: A Café's Redemption Rate Turnaround

An independent café launched a loyalty programme with a 12-stamp card and a free coffee reward. After three months, sign-ups were healthy (180 members) but the redemption rate was disappointing — only 15% of members who started a card completed it.

Diagnosis: The 12-stamp threshold was too high for a café where most customers visited once or twice a week. Three months to earn a free coffee felt like an eternity. Additionally, no push notifications were being sent — members were signing up and then receiving zero communication until they happened to visit and remember to scan.

Changes made:

The threshold was dropped from 12 stamps to 8. This immediately reduced the time-to-reward from roughly three months to two months for weekly visitors.

A milestone reward was added at stamp 4: a free biscuit with their next coffee. Small cost, significant motivational impact at the halfway point.

Three push notification types were activated: a weekly progress reminder every Tuesday ("Start the week strong — you're X stamps from your free coffee"), an automatic reward-ready alert, and a lapsed-member message after 14 days of no activity.

Results after 60 days:

The redemption rate jumped from 15% to 38%. More than one in three members were now completing the card — a transformation driven almost entirely by a lower threshold, a milestone reward, and consistent communication. The original 15% redemption rate wasn't unusual — it reflected the same structural issues that cause customers to abandon loyalty programmes across every industry, from unclear progress to rewards that feel too far away.

Visit frequency among active members increased by approximately 20%, driven by the progress reminders creating a "might as well pop in" effect on quiet days.

Lapsed-member notifications recovered 22 customers who had drifted away, restarting their engagement with the programme.

The café changed no other aspect of its business — same product, same staff, same prices. The difference was entirely structural: a better-designed programme with active communication.

Modern Take: Why Redemption Rates Matter More During a Cost of Living Crisis

When customers are watching every pound, a loyalty reward that feels distant or uncertain gets mentally categorised as "not worth the effort." The customer might still visit your business, but they stop engaging with the programme — which means you lose the incremental visits that the programme was supposed to generate.

Conversely, a programme with a clear, achievable reward and regular reminders becomes more appealing during a cost of living crisis, not less. "Three more visits and my next coffee is free" is a genuinely motivating proposition when money is tight. The customer actively chooses your business over alternatives because the reward represents real monetary value — and they can see exactly how close they are to claiming it.

High redemption rates during an economic downturn aren't just good programme management. They're competitive survival. The businesses whose loyalty members actively engage, redeem, and re-engage are the ones that maintain visit frequency while competitors see theirs decline.

Getting Started

If your redemption rate is below where you'd like it, the fix is almost always structural: lower the threshold, add a milestone, send reminders, and make the reward genuinely compelling. These aren't complex changes — they're configuration adjustments that produce measurable results within weeks.

Perkstar gives you full control over every element that drives redemption: adjustable stamp thresholds, milestone rewards, unlimited push notifications, automated reward-ready alerts, lapsed-member reminders, and analytics that show you exactly where customers are in their journey. Plans start at £15 per month with a free 14-day trial and no credit card required.

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