The Loyalty Glossary

Account takeover is a form of loyalty fraud in which an attacker gains control of a member's account, usually through stolen or guessed credentials, then drains the points balance or redeems rewards.

Accrual is the process by which a loyalty member earns program currency, such as points or miles, when a qualifying event occurs.

Activation rate is the share of newly enrolled members who take a first meaningful action, such as an initial earn or redemption, within a set period after joining.

Active member rate is the share of enrolled members who have engaged with a program within a defined period, such as earning or redeeming in the last twelve months.

Advocacy loyalty is the stage where members actively promote a brand to others, through reviews, referrals, social posts, and word of mouth, not just buying themselves.

Agentic AI is artificial intelligence that pursues a goal by planning and taking a sequence of actions on its own, rather than only answering a single prompt.

AI agents in loyalty are software agents that carry out program tasks with limited human direction, such as building a segment, drafting an offer, monitoring for fraud, or answering a member's question.

Alliance earning lets a member earn and use loyalty currency across a group of partnered brands, most familiarly airlines in a global alliance, so flying one member airline credits the member's home program.

Anniversary rewards recognize the date a member joined a program or reached a milestone, granting a bonus, gift, or benefit each year on that anniversary.

API-first loyalty is a design approach in which every capability of the system, enrollment, earning, redemption, offers, and member data, is available through documented APIs before any interface is built.

ASC 606 is the United States revenue recognition standard that governs how businesses account for contracts with customers.

Attitudinal loyalty is loyalty measured by how a member thinks and feels about a brand, their preference, trust, and willingness to recommend it, as distinct from behavioral loyalty, measured by what they buy.

Average order value is the mean amount a member spends per transaction, calculated as total revenue divided by number of orders.

Award availability is whether a specific reward can actually be redeemed at a given time, most often whether an airline is releasing seats for miles on the flight a member wants.

An award chart is the published table that shows how many miles or points a member needs to redeem for a given reward, such as a flight in a specific cabin between two regions.

B2B loyalty is a program that rewards business customers for buying from a company and staying with it.

Badges are a gamification mechanic that grants members a visible token for reaching a milestone or completing an achievement.

Behavioral loyalty is a program design that rewards what members do beyond spending: completing a profile, writing a review, keeping an activity streak, referring a friend, or engaging with an app.

Billing and reconciliation in loyalty is the accounting process that verifies every earning and redemption transaction is correctly recorded, priced, and, in partner programs, invoiced and paid.

Birthday rewards give members a gift, discount, or bonus points around their birthday, a widely used mechanic because the occasion is personal and the reward feels like recognition rather than a generic promotion.

A bonus points event is a time-limited promotion that awards members extra points above the standard earn rate, often to drive traffic during a slow period or to launch a product.

Breakage is the share of issued loyalty points that members never redeem.

Burn rate is the pace at which loyalty members redeem their accumulated currency, measured as points burned over a period.

Card-linked offers are rewards tied to a payment card the member has enrolled.

Cash plus points is a redemption option that lets members combine loyalty currency with cash to pay for a reward.

A cashback program is a loyalty program that pays members back a share of each purchase in money or store credit, such as 2% of every dollar.

Challenges are a gamification mechanic that sets members a defined goal to complete within a period, such as making a number of purchases or trying specific products, in exchange for a reward.

Channel incentives are the rewards a maker or vendor pays the firms that resell its goods, and the sales reps who work for them.

Charitable redemption lets members convert their points into donations to a cause instead of taking a personal reward, with the program funding the gift on their behalf.

Churn rate is the share of members who stop engaging with a program over a period, whether by lapsing, disengaging, or formally leaving.

A clearing house in loyalty is the central function that records cross-partner transactions and calculates what each partner owes or is owed in an ecosystem program.

A closed-loop program is one in which members can earn and redeem currency only within a single brand or a tightly controlled set of outlets.

Community loyalty builds attachment by connecting members to each other and to the brand around a shared interest or identity, not only through individual rewards.

Composable loyalty is an approach that assembles a program from independent, interchangeable components, such as a rules engine, an offer service, and a rewards catalog, rather than one fixed product.

Control group testing measures a loyalty action's effect by withholding it from a randomly chosen, comparable group of members and comparing their behavior to those who received it.

Conversational loyalty lets members interact with a program through natural language in chat or voice, asking about their balance, finding offers, or redeeming rewards as if talking to a person.

Cost of redemption is the actual expense a program incurs to fulfill a reward when a member redeems, covering the reward itself plus any fulfillment and partner costs.

Cost per point is the average cost a program incurs to fulfill one unit of its loyalty currency when a member redeems it.

Currency devaluation is a reduction in what a unit of loyalty currency is worth, usually because the program raises the number of points needed for the same reward.

A customer data platform, or CDP, is software that unifies customer data from many sources into a single persistent profile that other systems use.

Customer lifetime value is the total net value a member is expected to generate over the full course of their relationship with a business, not just a single transaction.

Customer loyalty is a customer's steady choice of one company over its rivals, made because they prefer it.

Deferred revenue is income a business has received or become entitled to but has not yet earned, so it is recorded as a liability until the obligation is met.

A digital wallet pass is a loyalty card stored in Apple Wallet or Google Wallet.

Distance-based earning is an accrual model, traditional in airline programs, where members earn currency based on distance traveled rather than money spent.

Dormancy is the state of a member who has stopped engaging with a program but has not formally left, showing no purchases, logins, or redemptions for an extended period.

Dynamic award pricing sets the number of points a reward costs based on real-time factors like demand, cash price, and availability, rather than a fixed chart.

Dynamic segmentation is the practice of defining member segments as rules that rerun on their own, so members join and leave as their data changes.

Earn and burn is the core loop of a loyalty program: members earn a currency such as points or miles through purchases and other actions, then burn it on rewards, discounts, or experiences.

Ecosystem loyalty is a program model in which multiple brands or partners share one loyalty currency and one member base.

Elite status is a tier above basic membership in an airline or hotel loyalty program.

Emotional loyalty is a member's bond with a brand that holds up when a rival offers a lower price or more points.

Engagement scoring assigns each member a number that summarizes how actively they participate in a program, combining signals such as purchase frequency, redemptions, logins, and offer response.

An enrollment bonus is a reward given to a customer for joining a loyalty program, such as points, a discount, or a gift on sign-up, used to overcome the inertia of registering.

Enrollment rate is the pace at which a program signs up new members, often expressed as the share of eligible customers who join over a period.

Event-driven architecture is a software design in which components communicate by producing and reacting to events, such as a purchase, an enrollment, or a tier change, rather than fixed request-and-response calls.

Experiential rewards are loyalty rewards that members redeem for something they do rather than something they own.

Family pooling is a form of points pooling that lets members of one household combine their loyalty balances into a shared account.

First-party data is information a brand collects directly from its own interactions with customers: purchases, app usage, site visits, and program activity.

Fixed-value redemption is a model in which each unit of loyalty currency is worth a set amount toward a reward, regardless of demand.

A frequent flyer program is an airline's loyalty program.

Gamification is the use of game mechanics, such as points, levels, challenges, streaks, badges, and leaderboards, to make loyalty participation more engaging.

Gift card redemption lets members exchange points for gift cards to the brand or to third-party retailers, a flexible and popular reward that converts loyalty currency into recognizable spending value.

Hard benefits are the tangible, quantifiable rewards a loyalty program delivers: discounts, free items, upgrades, waived fees, and points.

Headless loyalty is a loyalty architecture that separates the program's engine from the screens members see.

A hotel loyalty program rewards guests for stays and related spending with points and elite status, redeemable for free nights, room upgrades, and amenities.

Hybrid loyalty is a program that combines models rather than relying on one, most often blending free earn-and-burn mechanics with a paid tier, or transactional rewards with behavioral and experiential ones.

IFRS 15 is the international revenue recognition standard governing revenue from contracts with customers, closely aligned with the United States ASC 606.

In-store attribution is the practice of connecting a physical purchase to a known loyalty member, so offline sales can be tracked, rewarded, and analyzed like online ones.

Incrementality is the share of a program's outcomes that would not have happened without it, the added sales or retention the program actually caused rather than behavior that would have occurred anyway.

Instant win is a promotional mechanic that gives members an immediate chance to win a prize, revealed on the spot rather than after a drawing.

A lapsed member is one who was active in a program but has stopped engaging, typically defined by a period without a purchase or interaction.

Leaderboards are a gamification mechanic that ranks members against one another by points, activity, or achievement, using competition to drive engagement.

Lifetime status is elite standing a member earns permanently after meeting a high cumulative threshold, keeping the tier without further requalification.

A loyalty audit is a structured review of a program's mechanics, economics, technology, and performance to find where it is leaking value or falling short of its goals.

Loyalty fraud is any scheme that steals or manipulates loyalty value, including account takeover to drain points, fake enrollments to harvest sign-up bonuses, insider manipulation of balances, and reselling of stolen rewards.

A loyalty management system is the software and daily routine a business uses to run its loyalty program.

Loyalty middleware is the integration layer that connects a loyalty engine to the systems it depends on, such as point of sale, e-commerce, CRM, and payment platforms.

A loyalty platform is the technology layer that loyalty programs run on.

A loyalty rules engine is the software component that decides what happens when a member acts: how many points a purchase earns, which tier applies, which offer triggers, and how a redemption is priced.

Member engagement is the degree to which loyalty members actively participate in a program: earning, redeeming, opening messages, using the app, and responding to offers.

Merchandise redemption lets members exchange points for physical products from a program's rewards catalog, from electronics to household goods.

Milestone rewards are one-time rewards a loyalty program gives when a member's activity in a year crosses a set count, such as 20 nights or $1,500 of spend.

Multi-tenant loyalty is a software model in which one platform instance serves multiple separate programs or brands, each isolated as a tenant with its own data, rules, and configuration.

Multiplier events are promotions that multiply the points a member earns during a defined window, such as triple points weekends or a 5x category month.

Net promoter score is a customer-loyalty metric based on one question: how likely a member is to recommend a brand, rated on a scale.

Next best action is a personalization approach that, for each member at each moment, selects the single most valuable thing the program should do next, such as send an offer, prompt a review, or suggest a redemption.

An offer engine is the software component that builds and delivers promotional offers to loyalty members, such as bonus points, a discount, or a free item tied to specific conditions.

Offer fatigue is the decline in member response that sets in when a program sends too many promotions, so incentives lose their pull and members start ignoring them or opting out.

Omnichannel loyalty is a loyalty program that treats a member as one customer in every channel: store, website, app, contact center and partners.

An open-loop program lets members earn or redeem currency across multiple brands or spend it in forms usable beyond the issuing program.

Paid loyalty is a program model in which members pay a fee, one-time or recurring, to join and receive benefits, rather than earning their way in through spending.

Partner onboarding is the process of bringing a new partner into an ecosystem loyalty program, covering the commercial agreement, technical integration, rule setup, and testing before the partner goes live.

A partner portal is the self-service interface where an ecosystem program's partners manage participation, configure and view offers, monitor transactions, and access settlement statements.

Partner settlement is the financial process that moves money between partners in an ecosystem program when a member earns value with one partner and redeems it with another.

Partner-funded rewards are rewards paid for by a program partner rather than the program operator.

Pay with points lets members apply their loyalty balance toward a purchase at checkout, covering all or part of the price at a set conversion rate.

A personalization engine is software that tailors offers, content, and recommendations to each member from their profile and behavior.

Points accelerators are mechanisms that let members earn points faster than the base rate, either as a promotional boost or a purchasable benefit.

Points expiration is a loyalty program rule that cancels unused points after a set time.

Points liability is the balance-sheet obligation created when members earn loyalty points they have not yet redeemed.

A points marketplace is a redemption environment where members spend their loyalty currency across a broad range of options, such as travel, merchandise, gift cards, and experiences, often from many suppliers in one place.

Points pooling lets multiple members combine their individual loyalty balances into a shared pool they can redeem together.

Points transfer is the movement of loyalty currency from one account or program to another.

POS integration is the connection between a point-of-sale system and other business software, so the data from each sale moves without manual entry.

Predictive churn is the use of models to identify members likely to stop engaging or buying before they leave, scoring each member on their risk of lapsing.

Premium loyalty is a paid model in which members pay for a tier of elevated benefits that sit above a free program, rather than replacing it.

Program health metrics are the indicators that show whether a loyalty program is performing, spanning enrollment, active member rate, earn and redemption activity, retention, and liability.

Progressive profiling is the practice of gathering member information gradually over time, asking for a little at each interaction rather than everything at sign-up.

Promo abuse is the use of a promotion in ways its terms were written to prevent.

Propensity modeling is the use of statistical or machine learning models to estimate how likely a member is to take a specific action, such as making a purchase, churning, or redeeming a reward.

A punch card is the simplest loyalty mechanic: a member earns a mark for each qualifying purchase and receives a reward after collecting a set number.

Purchase frequency is how often a member buys within a period, one of the most direct measures of loyalty behavior.

Qualifying spend is the portion of a member's spending that counts toward reaching or keeping a tier, as opposed to spending that only earns currency.

A reactivation campaign is a planned series of messages and offers aimed at loyalty members who are still enrolled but have stopped buying or earning.

Real-time processing is the handling of loyalty events the moment they occur, so a member's points, tier, and eligibility update instantly rather than in an overnight batch.

Receipt scanning lets members earn loyalty currency by photographing a purchase receipt, capturing transactions that happen outside a brand's own point of sale.

A recommendation engine is software that predicts which products, rewards, or content a member is most likely to want and surfaces them, drawing on the member's history and patterns across similar members.

Redemption is the moment a loyalty member exchanges accumulated program currency for something of value: a flight, a room night, merchandise, a discount, or an experience.

Redemption rate is the share of issued loyalty points that members redeem, calculated as points redeemed divided by points issued for the same period or cohort.

A referral program is a system that rewards existing customers for bringing in new ones.

Retention rate is the share of members who remain active in a program from one period to the next.

Retroactive points are currency credited for a past qualifying purchase that was missed at the time, awarded after the member claims it or the program identifies the gap.

Revenue-based earning is an accrual model in which members earn loyalty currency in proportion to how much they spend, rather than by units purchased or distance traveled.

RFM segmentation scores each customer on recency, frequency and monetary value, then groups customers whose scores match.

Rolling qualification measures a member's tier progress over a moving window, such as the trailing twelve months, rather than resetting at a fixed calendar date.

A sandbox environment is an isolated copy of a loyalty system where teams test rules, offers, and integrations against realistic data without affecting live members.

Share of wallet is the percentage of a customer's total spending in a category that goes to one brand.

Single sign-on, or SSO, lets a member use one set of credentials to reach multiple applications or partner sites without logging in again at each.

Soft benefits are the intangible rewards of a loyalty program: recognition, priority, status, and special treatment that cost little to deliver but shape how a member feels.

Soft landing is a program design that moves a member down only one tier, rather than all the way to the base, when they fail to requalify for their current level.

Spend-based earning is an accrual model where members earn loyalty currency based on the amount they spend.

Stackable offers are promotions that a member can combine on a single transaction, so two or more incentives apply at once, such as a category bonus layered on a tier multiplier.

Standalone selling price is the price a business would charge for a good or service sold on its own.

A status match is an offer in which an airline or hotel program grants elite status based on the status a member already holds with a rival program.

Streaks are a gamification mechanic that rewards members for a continuous run of a desired behavior, such as buying or checking in on consecutive days or weeks.

Subscription loyalty is a loyalty model in which members pay a recurring fee, monthly or yearly, to keep a set of benefits switched on.

Surprise and delight is a tactic of giving members unexpected rewards or recognition they did not earn or request.

Sustainability rewards recognize members for environmentally or socially responsible choices, such as recycling, choosing lower-impact products, or offsetting a purchase, giving points or perks for the behavior.

Targeted offers are promotions a loyalty program sends only to the members it picks, based on purchase history, tier or a model's score.

A tier is a level within a loyalty program that grants members escalating benefits as they qualify, usually by spend, activity, or status.

Tier qualification is the set of requirements a member must meet to reach or keep a level in a loyalty program, such as a spend, nights, or flights threshold within a defined period.

Tokenization is a security technique that replaces sensitive data, such as a payment card number or a member identifier, with a non-sensitive substitute called a token that has no exploitable value if stolen.

Trade loyalty is a program aimed at the trade, the professionals who buy or specify products in their work, such as contractors, mechanics, or stylists, rewarding them for choosing and recommending a brand.

Transactional loyalty is loyalty driven by the tangible rewards a program gives for spending, where a member keeps buying mainly because of the points, discounts, or perks.

Transfer partners are the external programs a loyalty program lets members move currency to or from at an agreed exchange rate.

A webhook is an automated message one system sends to another the instant an event happens, delivering the event's data to a URL the receiver controls.

A welcome bonus is a reward given to new members for joining a program or completing a first action, designed to spark early engagement.

White-label loyalty is a loyalty program that runs on a provider's software under the brand's own name and design.

A win-back campaign is a planned effort to bring back customers who have left a brand, by canceling a plan or closing an account.

Zero-party data is information a member intentionally and proactively shares with a brand, such as preferences, intentions, and interests provided through profiles, surveys, or quizzes.