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4 Ways to Improve Redemption Rate of Your Loyalty Program
The redemption rate of a loyalty program is the percentage of points issued by you and redeemed by your customers. An average reward redemption rate is impacted by multiple factors like industry, the perceived value of rewards, ease of redemption, overall program awareness, and more.
When you run an e-commerce loyalty program, this metric plays a significant role to figure out its effectiveness. That’s because it determines how many points are actually being redeemed by the customers. If they actively engage with your program, they will redeem their points by increasing this shopping frequency. However, if they don’t redeem them, it is a matter of concern and could impact your program adversely.
Here we have explored a few ways to encourage your customer to redeem earned points and improve your reward redemption rate.
How to Improve Your Redemption Rate
Offer Multiple Ways to Earn Points
A program that offers customers multiple ways to earn points is more appealing and engaging. When you allow customers to earn points for actions beyond signing up and making a purchase, you make it more desirable for them to return to your brand and stay engaged. One of the best ways to do that is rewarding them for social media likes or comments, referring friends, providing feedback, or celebrating a birthday. No matter how you choose to do it, offering more ways to earn points is a surefire way to increase the redemption rate as well as sales.
Set Expiration Date for Rewards
Psychology states that our efforts to avoid a loss are far more than our efforts to gain a profit. Considering this, you can set an expiration date for points. It will motivate your customers to redeem earned points knowing that they are at risk of losing them.
However, there is a fine line between boosting the redemption rate and causing dissatisfaction to customers when setting expiry conditions. So, make sure that the expiry date you set adds value to your customers, not stresses them.
Send Reminders to Redeem
Even with a perfect customer loyalty program solution, you can have a low redemption rate if your customers don’t know that they have points to redeem. Sending reminder emails indicating their point balance along with the expiry date can develop a sense of urgency in their mind and encourage them to redeem them before they expire. Also, make sure to add a clear CTA in the email to redirect your customers to your online store.
Clarify the Value of the Points
Research reveals that 57% of customers do not know their point balance, and 38% are unaware of their points value. If you issue points, make sure to clarify how customers can earn them and what’s their worth. Thus, you can make it easy for them to redeem points and share your program’s value among kith and kin.
An e-commerce loyalty program is not a set it and forget it tool. You have to keep tabs on your redemption rate and make necessary changes to your rewards and earning rules to make the most of your program. These changes will impact your redemption rates significantly and help you achieve more than expected.