What happens to the reward budget that never reaches the person you spent it on
You saved a few percent on the cost of your reward program.
Now ask about the fifth of it that bought you nothing. Or worse, the part that left someone annoyed with you at the exact moment you were trying to thank them.
Most companies measure what a reward program costs. Almost none measure what it bought. There's a gift card in my glove box, another in a sock drawer, and a few more somewhere in my inbox, and I can remember who sent them, I just can't work out what to search for.
One has seventeen dollars left on it. I've carried around for two years, because there's nothing I want that costs seventeen dollars. Another I gave up on. Six screens into redeeming it I decided it wasn't worth the money.
None of it is worth chasing. That's exactly why it works.
I've spent two decades in the gift card industry. I know where that money ends up, because I helped build the systems it ends up in. The industry calls it breakage. It is the least examined line in your program.
What breakage actually is
Breakage is reward that never gets used. Cards that are awkward to redeem. Balances left stranded. Value that quietly expires.
A participant in one of our studies described it better than I can: "You go and spend ninety-five percent of it, and that last little five dollars is difficult to spend. You feel like you don't get the full value."
That is breakage from the other side of the counter. Not a line in a report. A small, quiet disappointment attached to something you were rewarded for.
Inside the industry, breakage is well known. It just does not get the focus it deserves. Outside the industry, most people buying reward programs have never been shown it at all, and there is nothing in their reporting that would tell them. No complaint, no failed delivery, no line item labelled value your recipient never received. The money left the budget, so the job looks finished. Everyone moves on to the next campaign.
Where the money ends up
When value goes unredeemed it does not disappear. It stays somewhere in the chain, and it is rarely with the retailer whose brand is on the card. It sits with the issuer or the distributor.
That is not a conspiracy, it is how the model was built. If unredeemed value ends up as margin for whoever is holding it, then the commercial pressure to make redemption effortless will never be as strong as the pressure to get the reward out the door. Nobody set out to design it that way. It is inherited convention that nobody went back and questioned.
Which brings me back to the rate you negotiated. Somebody has to make money on that deal. If you squeezed hard at the front, the margin has to come from somewhere, and the quietest place for it to come from is value your recipients never get around to using. You did your job. You got a good price. And in doing so you may have quietly aligned your provider's commercial interest against the success of your own program.
That is the part nobody says out loud in a procurement meeting. The cheapest deal and the best outcome are not always the same deal. Which is also why, in most reward programs,nobody owns the redemption rate. It is not anybody's job.
I am not writing this from a clean position. Giftbee earns breakage too. There will always be some leak, a lost card, a few dollars left on a balance, and that is inevitable. But whether it is a gushing river or a dripping tap comes down to design and experience.
The arithmetic nobody runs
Take a program spending $100,000 on rewards,where a fifth goes unredeemed.
You didn't save $20,000. You spent $20,000 that bought you nothing.
The budget left the building either way. The only question worth asking is whether it purchased anything on the way out.
So what did that $20,000 fail to buy?
It didn't become a moment. Someone treating themselves to something they wouldn't otherwise have bought, attached to your brand, at the exact point they feel good about it. Those moments are the entire reason the reward exists.
It didn't become a shopping trip. Every redemption puts someone in a store or at a checkout, usually spending beyond the value of the card, often engaging with that brand's own loyalty program while they are there.
It didn't become a reason to come back. The reward is the last thing a person experiences in your program. It sets their expectation of the next one.
Whether any of that happens comes down to unglamorous things: how quickly the reward arrives, how easy it is to redeem, and whether anyone helps when it goes wrong. Those are design decisions, not luck.
The pattern doesn't care what industry you're in
We asked Australian consumers who take part in online research panels about their reward experience. Two thirds had hit at least one reward failure in the previous year. Then the number that stayed with me. Three quarters put active effort into tracking their rewards manually, with screenshots, saved emails and printouts.
Three quarters of people have built their own admin system to collect money you already spent.
In a separate study, with everyday consumers in a different sector, entirely different people and an entirely different buying decision, the same behaviours came straight back. One participant prints her digital gift cards so she won't forget them, turning a digital reward back into a physical one just to make it usable. Another described the experience getting worse over time: "It's become a little bit exasperating. Before, it was two steps. The latest one I used, it was five or six different screens before I got the actual voucher."
When unrelated audiences invent the same workarounds, it stops being a sector problem. It is a design problem.
What it actually costs
Loyalty. The reward is the last interaction someone has with your program. If that is the part that frustrates them, that is the impression you have paid to leave.
Engagement. Participation is a habit. Broken rewards break habits. People don't complain, they just stop opening the emails.
Your partners. If you are rewarding someone else's members or customers, the experience belongs to them but the outcome lands on you.
None of that appears in a cost line. All of it shows up in what you pay to replace the people who drifted away.
There is another leak I have not covered here. A reward can be fully redeemed and still buy you very little, if it was the wrong reward in the first place. That one deserves its own piece.
What good looks like, and how we count it
I'll put our own numbers up, because asking an industry to measure something you won't measure yourself is a weak position.
Across our enterprise API clients, 97.6%of digital rewards are claimed within the first three months of a program. Around 89% are claimed on the day they are issued, and more than 94% within a week.
Cohort: rewards issued April to June 2026, measured to 29 September 2026.
Now the part that matters more than the number. We count a reward as redeemed when it is claimed into a Giftbee wallet. So treat that as a claim rate rather than a spend rate. It tells you the reward reached someone and they acted on it. It does not tell you they have spent every dollar. And here is the number almost nobody in this industry publishes, of value claimed into a wallet, 80% has since been converted or spent. 20% is still sitting there as a balance.
Here is why we are comfortable with that distinction, and it goes to the heart of the design argument. Value held in a Giftbee wallet does not expire. It sits there, whole, until the recipient decides what to turn it into. Only at that point does an issuer's expiry date start running, and by then the person has chosen something they actually want and they use it quickly.
Which is close to the opposite of my glovebox. The value is not stranded in a product nobody wanted, counting down. It is held as value until the moment somebody has a use for it.
Two things drive the rest. One is being a lean business. We don't carry a cost base that needs breakage to support it, and we would rather people came back and used our products more often. The other, and the bigger one, is design: making redemption obvious, letting people swap, combine and gift what they receive, and keeping their balance easy to reach whenever they want it.
The point is not that our number is good. The p oint is that the rate is not fixed. It is a design outcome.
What I'd like to see change
Not a change of provider. Measurement.
Redemption rate, time to reward, and support contacts about rewards belong on the same dashboard as the metrics you already report. What doesn't get measured doesn't improve, and most reward programs are still reported on spend rather than outcome.
This isn't theoretical. One participant, who sends rewards to staff in his own working life, described what visibility is worth: "We're able to see whether the receivers have actually opened and used it. Someone thought they hadn't received one, but we could see it had been used. We didn't need to buy a second."
Visibility stopped him paying twice for the same reward. That is the business case in one sentence.
There is a second prize. Redemption data is genuinely interesting. What people choose, how fast they act, which segments engage and which drift, what they do with the value once they have it. That is insight about your own audience, and most programs throw it away.
Four questions worth asking
Ask these of any reward provider, mine included
- What is the redemption profile of your programs, and how do you define redeemed?
- How quickly does value reach recipients, and how quickly do they use it?
- How many support contacts relate to rewards?
- Who is accountable for the redemption rate, in your business and in mine?
That last one is the question the whole industry has quietly left unanswered. If nobody owns the number, the number will not move.
I would rather you did something more ambitious than audit your provider, though. The reward is the last thing your program does, and it is closer to the icing on the cake than the postage on the parcel. It decides how the whole thing gets remembered.
So by all means negotiate hard. Just make sure you know what the saving cost you.
Don't optimise for cost alone. Optimise for return. Every dollar in a reward budget is either buying engagement or buying nothing, and the difference is measurable.
Research panel findings: fielded by an independent research panel provider, late 2025, 153 Australian respondents who had completed at least one incentivised online study in the previous 12 months. Directional rather than statistically representative at this sample size. Consumer findings: nine in-depth qualitative sessions with Australian consumers, November 2025, qualitative and directional.
Redemption figures: Giftbee enterprise digital clients, measured to 29 September 2026, as value claimed into a Giftbee wallet.