What is redemption rate?

Redemption rate is a common metric for any loyalty program that measures the percentage of issued or earned rewards that customers actually redeem. Redemption rate measures how many loyalty members who receive or earn a reward – whether through a promotion, earned points, or game-linked offer – actually use that reward to make a purchase or claim a benefit.

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How to calculate redemption rate

The formula to calculate a loyalty program redemption rate is simple, as you just divide the number of rewards redeemed by the total number of rewards issues. 

(Number of rewards redeemed / Total number of rewards issued) × 100 = Redemption rate %

A high redemption rate signals that your rewards are compelling and motivating real customer behavior. A low redemption rate suggests that customers aren't finding your offers valuable enough to act on, and you might be spending on your rewards and loyalty ecosystem without getting deeper loyalty in return. 

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What's a good redemption rate?

Redemption rates vary by vertical, offer type, and reward mechanism. Here are some simple benchmarks to help determine the value of your loyalty program rewards: 

• 10-20%: Below average, suggesting that your loyalty program rewards have little relevance or there’s friction in redemption process.
• 25-35%: Healthy, and typical for standard loyalty promotions and discounts.
• 35-50%: Strong, indicating that your program includes compelling offers and engaged customer base.
• 50%+: Exceptional, especially when tied to earned, non-transactional rewards.

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