Burn Rate
Points Burn Rate
Loyalty
The rate at which loyalty points can be redeemed for rewards, determining the real-world value of accumulated points.
What is Burn Rate?
Burn rate (or redemption rate) determines what points are worth when redeemed. Combined with earn rate, it defines your program's value proposition.
Burn rate considerations:
- Points per dollar of reward
- Minimum redemption thresholds
- Reward option values
- Tier-based differences
Example calculation:
If 100 points = $5 off, burn rate = 20 points per $1 value
Balancing burn rate:
- Too high (expensive for customer): Low engagement
- Too low (cheap for customer): Margin pressure
- Sweet spot: Clear value, sustainable economics
Best practices:
- Clear, simple redemption math
- Valuable but sustainable
- Compare to competitor value
- Consistent across reward types
Formula
Point Value = Redemption Value ÷ Points Required
Why Burn Rate Matters
Burn rate determines the actual value customers get from your loyalty program.
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