How to Get Customers to Actually Redeem Their Loyalty Rewards

Loyalty programs are great for both customers and businesses. Why? Customers get rewarded for supporting businesses and businesses keep their loyal customers engaged. 

But not all loyalty programs are created equal and if customers aren’t redeeming their rewards, maybe it’s a sign to make some changes to it (don’t worry, we’ve got some tips for you to do just that.)

First, a quick refresher on why you want your loyalty members to redeem their points. 

Why you should encourage loyalty members to redeem their rewards: 

• Unredeemed rewards = lost engagement: Sure, fewer redeemed rewards means a lower cost to your business — in the short run. In the long run, this likely means customers aren’t finding value in your loyalty perks and might find more value elsewhere.
  
  
• Redemption drives repeat purchases: Customers tend to spend more when they redeem rewards. The act of redeeming rewards often coincide with making a purchase, potentially increasing the order value. 
  
  
• Cultivate positive experiences and emotional connections: The rewards and perks your brand offers to customers lets them experience the value of your brand firsthand. When rewards are earned and enjoyed, it creates a positive emotion, deepening brand loyalty. 

Here are 6 strategies to encourage points redemption: 

1. Simplify Your Rewards 

A major reason customers don’t redeem rewards is confusion. Complicated rules with walls of text, buried redemption portals, or unclear expiration dates can lead to frustration or purchase abandonment.

A few things to keep in mind:

• Simplify the program structure (e.g. “Earn 1 point per $1 spent”)
• Use plain language—avoid jargon
• Make redemption possible in just a few clicks, whether online or in-store
• Display reward balances prominently in emails, apps, and receipts

2. Automate Reminders

Customers lead busy lives, and sometimes forget that they have unused rewards. So, remind them that you actually want them to use their hard-earned points! A gentle, well-timed reminder can be all it takes to trigger a redemption. Bonus points (pun intended), for sending out reminders to redeem points during holidays so that customers can maximize value.

Some ways to get reminders out to your customers:

• Send email or SMS reminders when points are about to expire or when they hit new point milestones
• Highlight available rewards at checkout
• Use push notifications in your app to prompt redemptions and encourage return visits

Here’s a neat fact: Customers who redeem points are more likely to spend more. Why? There’s actually a psychological explanation for it. Redeeming points is associated with the feeling of saving money, which can be referred to as a “pain of paying” reduction—using points reduces the friction of spending, making customers feel more comfortable adding extra items to their cart. Additionally, the mental accounting theory suggests that people categorize money into different accounts (i.e. cash, credit, or points) and spending from a “points” account may feel less significant than spending from a “cash” account, thus reducing that “pain of paying” effect. 

3. Create a Sense of Urgency

This is a highly effective tactic to use to encourage customers to use their rewards and find value in your loyalty program. Let customers know of limited time offers that they don’t want to miss out on. When used tactfully, the FOMO (fear of missing out) will run its course. For example, Sephora’s Beauty Insiders Points Multiplier event allows members to earn two to four times extra points per dollar spent. If you are going to stock up on your skincare necessities, you might as well get a better deal out of spending money, right?

Tips to encourage customers to cash in some points ASAP:

• Run limited-time offers (e.g. “Earn double points, only this weekend!”)
• Use countdown timers in your app or emails
• Send app push notification reminders to encourage last minute purchases

4. Offer Meaningful and Personalized Rewards

With every loyalty reward that your business offers, it’s crucial to think about its benefits from the perspective of the customer. After all, they are the recipients of the reward. So if the reward doesn't feel valuable, customers won’t go out of their way to redeem it. 

The value of a reward looks different in every industry, so there isn’t a one-size-fits-all approach to creating rewards. What you can do is make sure you analyze your customer segments to understand what value means to them. Or better yet, make those rewards personalized. 

Now, how would you do it?

• Create rewards and offers related to customer purchasing history (e.g. Provide a free sample of a product from the same category that the customer purchases frequently) 
• Schedule rewards and offers based on the customer’s purchasing habits (e.g. Send a member exclusive offer just before a customer’s typical order window)
• Let customers choose their own rewards on their birthday - Give the gift of choice! (e.g. A birthday gift, bonus loyalty points, discount code for an order) 

5. Start at the Front Line

If you run a physical business, your employees are the front line in encouraging redemptions (and joining your loyalty program!). A POS loyalty program is a perfect example of how you can encourage the adoption of a loyalty program from the customer’s first purchase, or remind existing customers of unused rewards. 

Tips to help your team:

• Encourage staff to promote loyalty program sign-ups before the transaction is made
• Train staff to mention rewards at checkout (e.g. “we can see you have $10 in rewards, do you want to redeem them today?”)
• Equip team members to help customers redeem on the spot
• Offer internal incentives for staff who promote loyalty programs and redemptions

6. Track, Test, and Tweak

When it comes to managing a loyalty program, data is king. So it’s a good idea to make sure you have a solid system in place to provide you with that information. 

The customer data collected can be used to identify bottlenecks and optimize the customer experience. For example, how frequently do customers (broken down by segments, channels, and geographic locations) redeem rewards? What percentage of rewards go unredeemed? Where in the customer journey do users disengage? All of these questions help identify potential issues in the loyalty program. 

When you have reviewed the data, consider some of these ideas:

• Experiment with different reward structures (e.g. discounts, gifts) or point thresholds to see which ones customers respond best to
• A/B test different messaging in subject lines and CTAs 
• Collect feedback regularly on what customers value most: you can even incentivize customers to share this information with additional rewards. Receiving feedback from your customers is extremely valuable and takes the guesswork out of the equation. 

DataCandy’s clients have achieved tremendous results from utilizing the platform to manage their loyalty program. Copper Branch leveraged data to understand customer sentiment and provide attractive rewards.  

Conclusion

A loyalty program is only as good as the engagement it drives. If customers aren’t redeeming rewards, the program is not delivering its full value — to them or to you. By simplifying the experience, providing timely nudges, and making rewards genuinely desirable, you can turn passive program members into active, loyal brand advocates. 

Want to increase redemptions in your loyalty program? Start by walking through the redemption experience like a customer — and then optimize it until it’s irresistible. We’re here to help you with that.