You’ve done the hard part—your loyalty program is up and running. Customers are earning points. But here’s the problem: they’re not using them. What good is a loyalty program if your customers don’t redeem their points? On average, only around 49.8% of loyalty rewards are actually redeemed—which means many restaurants and retailers are leaving a huge chunk of customer engagement untapped.
But here’s the good news: you can turn those dusty loyalty points into powerful tools for customer retention.
In this guide, we’ll walk you through effective strategies to encourage customers to redeem points and get them excited to do so. Let’s discover how to turn engagement into lasting loyalty.
Why Customers Aren’t Redeeming Points (And How to Change That)
Understanding why customers aren’t redeeming their points in the first place should be the first thing to think about. Most times, the problem lies in the barriers standing between your customers and the rewards they’ve earned.
Here’s what could be holding them back:
Common Reasons Why Customers Aren’t Redeeming Points
1. It’s Too Hard to Find the Points
If customers have to:
- Go to your website
- Look for the loyalty program section
- Register their account
- Verify their email
- Sign in
- Navigate through menus to finally find their points buried in a corner of the page…
That’s six steps too many.
Your points should be immediately visible—whether it’s on the homepage of your app or in an SMS reminder. Make redemption an obvious part of the customer journey.
Pro tip: One-click redemption can streamline the process by allowing customers to redeem their points instantly.
2. They forget
A report shows that consumers often forget they even have points—let alone use them. A quick monthly reminder like “Hey! You’ve got RM10 in rewards waiting!” can go a long way.
“Why redeem now? Why not later?”
Another factor is lack of urgency. If there’s no compelling reason to redeem now, customers may keep putting it off. This is where expiry dates and limited-time offers can help.
3. There’s No Quick Win
If your program only rewards customers after 10 visits, most of them will never visit. Instead, offer a small reward after their first or second visit. This creates an early win that hooks them into your program.
Find out how to get started fast by checking out this guide.
How to Encourage Customers to Redeem Loyalty Points
Your customers are busy, but a little push can go a long way. Try these tactics to drive redemption rates and re-engage your customers:
Simplify the Redemption Process
Eliminate unnecessary barriers for your customers. Ensure point balances are clearly displayed, streamline the redemption steps, and offer one-click options through your website or app for a smoother experience.
Use Friendly, Visual Reminders
Set up in-app notifications, SMS, or emails that remind customers of their available points. Then, highlight how close they are to their next reward.
Example: “You’ve got a free americano waiting—just 20 points away!”
Gamify the Experience
Add progress bars or levels to make the experience fun and competitive for your customers.
Example: “Reach Gold tier with 3 more redemptions!”
Add Expiry Dates to Points
Adding expiry dates creates urgency. Customers are more likely to act on it when they know their points will disappear soon.
Example: “Your 100 points expire in 3 days—redeem now before they’re gone!”
Transparent Communication
Keep customers fully informed by clearly displaying their point balances, reward progress, and any upcoming expiration dates within your app or web portal. When customers can easily track their status and fully grasp how close they are to earning rewards, they feel more motivated to stay engaged.
Offer Surprise Rewards
Random/limited-time deals get attention and encourage immediate action.
Example: “Redeem 50 points today and get a bonus upsize for any beverage!”
Guide Customers Early
Help customers get the most out of your loyalty program by offering engaging and educational materials. For instance, create short explainer videos, easy-to-follow infographics, or even step-by-step guides to quickly show your customers how to earn, track, and redeem their points.
Investing in a smooth onboarding experience reduces confusion and set the tone for long-term engagement.
Personalize the Nudge
Use customer data to tailor rewards. A customer who usually orders lattes should be given a latte upgrade. The more personal, the more effective.
Example: “Redeem 30 points to get that latte upgraded!”
Marketing Campaign Ideas to Increase Redemption Rates
Creative marketing campaigns can re-engage customers and drive redemptions. If you’ve already nailed your setup, here are ways to keep things exciting for your customers:
Seasonal Double Redemption Days
Pick specific dates (e.g., restaurant’s anniversary or public holidays) and let customers redeem rewards at double the value.
Example: 60 points usually gets a drink, but on Double Redemption Day, they get a full meal.
Cross-Brand Offers
Team up with local businesses to offer a wider range of rewards. Customers enjoy the added value of earning points that can be redeemed across multiple brands.
Birthday Bonuses
Send personalized birthday messages with bonus redemption deals.
Example: “80 bonus points just for celebrating your birthday with us.”
Leave a Google Review to Receive a Reward
Encourage customers to leave a Google review by offering a reward for their feedback. Increasing your restaurant’s visibility online can help build credibility.
How to Measure Redemption Success
To make meaningful progress in your loyalty program’s performance, it’s crucial to monitor the right data. Redemption metrics can give you a clear insight into how engaged your customers are and where adjustments might be needed.
Here’s what you should keep an eye on:
Redemption rate
This tells you the percentage of customers who actually redeem points out of those who earn them.
Example of a common formula used in the industry:
(Number of redemptions ÷ Number of points issued) x 100
A low redemption rate signals friction in the redemption process/unappealing rewards. Your goal is to have a healthy redemption rate that shows customers are motivated enough to claim their rewards, not just hoard points.
How to Improve It:
- Simplify redemption steps
- Highlight rewards more visibly
- Test different types of rewards
Average redemption value
This tracks customer spending habits when they redeem points. Higher average spend indicates that your loyalty program is driving real revenue.
How to Improve It
- Offer rewards that encourage upselling or larger purchases.
- Bundle rewards with minimum spend thresholds.
Redemption frequency
How often are customers redeeming their points over time? If redemption is only happening during one-off promotions, that’s a clear red flag that your program isn’t top-of-mind during regular visits. Consistency here highlights whether redemptions are consistent, seasonal, or tied to specific campaigns.
How to Improve It
- Launch recurring promotions.
- Set reminders before points expire to maintain momentum.
Pro tip: Monitoring all three metrics together gives you a complete view of your loyalty program’s performance. This allows you to fine-tune campaigns, adjust rewards, and boost customer lifetime value.
Conclusion
Driving loyalty point redemptions isn’t just about handing out rewards—it’s about crafting an experience that keeps customers coming back for more. When redemption rates are low, it’s often not because your customers aren’t interested, but because the process feels confusing or inaccessible. Now is the time to change that.
Making intentional shifts like simplifying how rewards are displayed and sending timely reminders can transform your loyalty program into a driver of repeat business. Think of it as more than just a reward system. It’s a channel for engagement and long-term retention.
Struggling with low point redemptions? Explore how SimpleLoyalty can help your business boost point redemptions and build lasting customer relationships without the headache.
