How to reverse falling digital gift card engagement: A step-by-step guide for reward and loyalty teams
Falling digital gift card engagement is reversed by combining usage analytics with proactive action from the issuing organisation. Analytics show exactly where recipients drop off; what the organisation does with that data decides whether engagement recovers. Programmes that pair the two see measurable gains: Blue Light Card grew Shopping Cards orders 88% year over year after working with Tillo to remove redemption friction.
| Key detail | Information |
|---|---|
| Who this guide is for | Reward, loyalty, employee benefits and incentive teams |
| Average time to redeem | Digital: 16.8 days | Physical: 35.3 days |
| Unredeemed cards | 43% of consumers hold at least one | Average unused balance +30.5% (2023–2024) |
| Causes of lost gift card value | Expiration ~20% | Lost cards 17% | Business closure 12% |
| Blue Light Card results | 15 clicks cut to 3 | +88% orders | +86% transacting members | 12,000+ new weeekly users |
| Virgin Incentives results | 140+ UK brands | £1M+ B2B sales in first months | ~100 new clients |
What is digital gift card engagement, and why is it declining?
Digital gift card engagement is how actively recipients activate, redeem and reuse the digital gift cards issued to them. It is measured through activation rate, time to first use, full redemption rate and repeat redemption.
Across the industry, issuing is outpacing redemption: the average unused gift card balance rose 30.5% between 2023 and 2024, and 43% of consumers hold at least one unredeemed card. For reward and loyalty teams, that is lost programme value. Key takeaways:
- Digital moves faster: Digital cards are redeemed about twice as fast as physical cards (16.8 days vs 35.3 days), so digital programmes show problems, and the results of fixes, sooner.
- Expiration is fixable: Expiration accounts for about 20% of all lost gift card value and is one of the easiest causes to address with reminders.
- Friction suppresses engagement: Blue Light Card cut its purchase journey from 15 clicks to 3 with Tillo and saw 86% more transacting members.
- Ownership makes it stick: Engagement only recovers for good when a named internal owner acts on the data.
How do you reverse falling digital gift card engagement in 7 steps?
Step 1: Define what "engagement" means for your programme
Agree which metrics define gift card engagement for your programme. Common choices are:
- Activation rate: The share of issued cards that are opened or activated.
- Time to first use: How long recipients take to make their first purchase.
- Full redemption rate: Cards spent to zero vs partially used.
- Repeat redemption: Recipients who come back to spend again.
- Breakage rate: Value that is never redeemed.
Breakage is a lagging indicator: by the time a card counts as breakage, the chance to engage that recipient has gone. Tracking the earlier metrics lets a team step in while the recipient can still be brought back.
Step 2: Segment the data before you diagnose
Break usage analytics down by brand or retailer, issue channel (email, app, portal), recipient type (employee reward, customer loyalty, self-purchase), card value and time since issue. Falling engagement is usually concentrated in one segment, such as an out-of-date brand catalogue, a broken notification workflow or missing onboarding messages. Segmenting first stops a broad fix being applied to a narrow problem.
Step 3: Find and remove friction in the redemption journey
Map every step between a recipient receiving a card and spending it, then use usage analytics to see where they abandon the journey. Every extra click, login or app switch is a measurable drop-off point.
Blue Light Card, the UK rewards platform for frontline workers, used this approach. By working with Tillo to embed the whole flow in its app, it cut its Shopping Cards purchase journey from 15 clicks to 3. Results year over year:
- Shopping Cards performance: +86%
- Orders: +88%
- Transacting members: +86%
- New weekly users: 12,000+
The results show that friction, not lack of interest, was holding engagement back.
Step 4: Build lifecycle messaging with reminders, redemption prompts and re-engagement
Expiration causes roughly 20% of all lost gift card value. That makes it the largest single driver of non-redemption, and also one of the most fixable. Treat gift card communication as a full lifecycle rather than a single issue email, with usage analytics triggering each stage:
- Activation prompts: A nudge within days of issue for recipients who haven't opened or activated their card. Digital cards left untouched in the first two weeks are the most likely to become breakage.
- Redemption prompts: Mid-life nudges for partially used or inactive cards, pointing recipients back to the brand catalogue.
- Expiration reminders: Timed alerts by email, SMS or in-app push as a card nears expiry, with a clear final call to action.
- Re-engagement messaging: A separate win-back stage for fully dormant cards, treated as its own segment.
The platform can supply the triggers, but building and resourcing this messaging calendar is the issuing organisation's job. Programs that treat lifecycle messaging as optional usually see the gap come back later as breakage.
Step 5: Offer more brand choice to improve redemption rates
Brand choice improves redemption. Single-brand cards are one of the most common reasons gift cards go unredeemed, because recipients who don't shop at that retailer have no easy way to use the value. But more choice isn't always better: Tillo research shows recipients typically want a choice of 2–10 brands. That's enough variety to find something relevant, without so many options that the decision stalls.
Virgin Incentives shows the payoff: its Leisure Choice product, built with Tillo and offering a choice of 140+ UK brands, generated over £1 million in B2B sales in its first few months and brought in close to 100 new clients before expanding into the US.
Step 6: Benchmark digital against physical, and self-purchased against gifted
Digital, physical, self-purchased and gifted cards all behave differently, so comparing against the right group matters more than comparing against an industry-wide average. If self-purchased digital cards are redeemed within days but employer-issued reward cards sit unused for months, those are two separate problems that need two different fixes, not one programme-wide failure. Usage analytics only becomes actionable when you compare like with like.
Step 7: Assign a named owner for gift card engagement
The issuing organisation is responsible for acting on engagement data. The platform can surface the analytics, but it can't drive redemption on its own. A named internal owner should:
- Own reporting: Manage internal reporting on gift card engagement rates.
- Own reminders: Take responsibility for the expiration reminder workflow.
- Keep friction on the agenda: Make redemption friction a standing item across HR, marketing and customer success.
Every result in this guide came from an organisation willing to act on what its data showed.
What happens when organisations get gift card engagement right?
Sustained digital gift card engagement supports long-term scale, not just a short-term lift. GOVX extended discounted digital gift cards to its 12 million verified members, and Military Connect brought the same model to more than 30 million eligible members of the US military community. Both are built on Tillo StoreFront infrastructure designed to keep redemption simple. Programmes that treat engagement as a design principle scale; programmes that treat it as an afterthought build up breakage.
Frequently asked questions
What is a good gift card redemption rate?
There is no single industry benchmark, because self-purchased, gifted and employer-issued cards all behave differently. The most useful benchmark is your own programme's cohorts, split by card type, issue channel and recipient type. As a reference point, digital gift cards are redeemed in about half the time of physical cards, so a healthy digital cohort should show most first redemptions within the first few weeks of issue.
Who is responsible for improving gift card engagement: the brand or the gift card platform?
The issuing organisation carries primary responsibility for gift card engagement. The platform provides the analytics, infrastructure and triggers, but engagement only improves when the issuing team acts on that data. In practice, that means running lifecycle reminders, removing redemption friction and giving one named person ownership of the engagement metrics.
Are multi-brand gift cards redeemed more often than single-brand cards?
The evidence suggests yes. Multi-brand cards remove the most common barrier to redemption: a recipient being tied to a retailer they don't use. Virgin Incentives' multi-brand Leisure Choice product, built with Tillo, generated over £1 million in B2B sales in its first few months. The aim is relevant choice rather than unlimited choice, because too many options can slow a recipient's decision.
How can reward and loyalty teams reduce gift card breakage?
Reward and loyalty teams reduce breakage by stepping in before a card goes dormant, not after. Use usage analytics to flag cards that haven't been activated, cards that are partly spent, and cards that are close to expiry. Then act with timed reminders, a simpler redemption journey and wider brand choice wherever the data shows a single-brand card is being ignored. Treat breakage as the preventable result of earlier engagement failures, not a fixed cost of running a programme.
Bringing it together
Reversing falling digital gift card engagement isn't a single fix; it depends on internal accountability. Define the right metrics, segment the data, follow it to the specific friction point, and treat what you find as a mandate to act rather than a report to file. Blue Light Card and Virgin Incentives share the same pattern: they used data to find the problem, and the organisation took visible ownership of fixing it.
