The glossary
101 terms
A
- Accrual
- The process of members earning points or other loyalty currency, and the matching accounting entry that records what the program now owes.Full entry available
- Advocacy program
- A program that rewards customers for promoting a brand: referring friends, writing reviews, sharing on social media or giving feedback.Full entry available
- Age restriction
- A rule in a loyalty program's terms that sets a minimum age to join, or limits what younger members can earn, receive or redeem.Full entry available
- Airline alliance
- A group of independent airlines that link their networks and let members of each loyalty program earn, redeem and use status across the group.Full entry available
- ASC 606
- The US revenue recognition standard. For loyalty programs, it treats points as a separate obligation, so part of each sale is deferred until points are used.Full entry available
- Award chart
- A published table that sets how many points a reward costs, such as a flight between two zones or a night at a hotel category.Full entry available
- Award night
- A hotel night paid for with loyalty points instead of cash, under the program's redemption rules.Full entry available
B
- Basket analysis
- The study of which products customers buy together in one transaction, used to shape offers, earning rules and store or site layout.Full entry available
- Birthday reward
- A gift, discount or points bonus that a loyalty program gives members around their birthday, usually in the birthday month.Full entry available
- Blackout dates
- Specific days or periods when members cannot redeem points for certain rewards, such as flights or hotel nights, usually at peak times.Full entry available
- Breakage
- Points or rewards that members earn but never redeem. Programs estimate breakage to plan the real cost of their rewards.Full entry available
- Burn rate
- How quickly members redeem the points they have earned. A steady burn rate is a sign that members see value in the rewards.Full entry available
C
- Cash back
- A reward that returns a percentage of what a member spends as money, a statement credit or a balance to use on future purchases.Full entry available
- Cashback program
- A program that returns a percentage of what a member spends as money or credit, instead of points.Full entry available
- CCPA
- The California Consumer Privacy Act, which gives California residents rights over their personal information and treats loyalty rewards as financial incentives.Full entry available
- Channel partner program
- An incentive program a vendor runs for the businesses that sell its products, such as resellers, distributors, dealers and installers.Full entry available
- Churn
- Members or customers who stop buying from a brand or stop engaging with its program over a given period.Full entry available
- Closed loop
- A gift card, prepaid card or loyalty currency whose value can be used only with the business that issued it or a defined group of partners.Full entry available
- CLV
- Customer lifetime value: the total profit a business expects to earn from a customer over the whole relationship.Full entry available
- Coalition program
- A loyalty program shared by several brands, where members earn and redeem one currency across all the partners.Full entry available
- Community program
- A loyalty model built around belonging to a group of customers who share an interest, rewarding participation rather than spend.Full entry available
- Complimentary upgrade
- A move to a better room, seat or service class at no extra charge, usually given to elite members and subject to availability.Full entry available
- Control group
- A randomly chosen group of members kept out of a test or change, used as the baseline for measuring its effect on the members who received it.Full entry available
- Coupon clipping
- Selecting offers in advance, once from paper circulars and now mostly by tapping digital coupons in an app, so they apply at checkout.Full entry available
- Customer data platform
- Software that collects customer data from many systems, links it into one profile per customer and makes those profiles available to other tools.Full entry available
D
- Dealer incentive
- A reward a manufacturer or supplier offers to dealers, or their staff, for hitting sales targets or completing activities such as training.Full entry available
- Deceptive advertising
- Marketing likely to mislead reasonable consumers about something that affects their decision, including claims that leave out key conditions.Full entry available
- Deferred revenue
- Revenue a business has received but cannot record yet, such as the part of a sale assigned to points that members have not redeemed.Full entry available
- Dormancy
- The state of a member account with no qualifying activity for a set period. Programs use it to trigger expiry, outreach and reporting.Full entry available
E
- Earn rate
- How many points, or how much reward, a member earns for each unit of spend or each qualifying action.Full entry available
- Elite qualifying miles
- Elite qualifying miles (EQMs) count miles flown, adjusted by fare class, toward an airline's elite tiers. They decide status and cannot be redeemed.Full entry available
- Elite status
- A higher membership level that a loyalty program grants to its most active or highest-spending members, with benefits base members do not get.Full entry available
- Employee loyalty
- An employee's commitment to staying with and working for an employer. The term also covers programs that use points and rewards to recognize staff.Full entry available
- Escheatment
- The legal process by which unclaimed money or property is reported and handed over to a state after a set period without owner activity.Full entry available
F
- Float
- The cash a loyalty program holds between receiving payment for points and paying for the rewards they are redeemed for.Full entry available
- Frequent flyer program
- An airline's loyalty program. Members earn miles or points for flights and partner spending and redeem them for award seats, upgrades and other rewards.Full entry available
- Fuel surcharge
- A cash charge an airline adds to a ticket, often labeled as fuel cost recovery. On award tickets it is paid on top of the miles and lowers their value.Full entry available
G
- Gamification
- The use of game mechanics, such as challenges, progress bars, badges and streaks, in a loyalty program to encourage specific behaviors.Full entry available
H
- Hybrid program
- A loyalty program that combines two or more models in one membership, most often points earned on spend plus tiers or a paid layer.Full entry available
I
- Idempotency
- The property that repeating the same request has the same effect as making it once, so a retried transaction does not post points or redeem rewards twice.Full entry available
- Interchange
- The fee a merchant's bank pays the cardholder's bank on each card purchase, under rates set by the card network. It funds much of card rewards.Full entry available
L
- Late checkout
- A hotel loyalty benefit that lets a member keep the room past the standard checkout time, often until 2 p.m. or 4 p.m. depending on tier.Full entry available
- Liability release
- Removing part of the points liability from the balance sheet and recognizing it as revenue, because points were redeemed, expired or are expected never to be used.Full entry available
- Lifecycle marketing
- Marketing that sends each member messages and offers based on where they are in their relationship with the brand, from new to lapsed.Full entry available
- Lifetime status
- A loyalty tier a member keeps permanently, without requalifying each year, after meeting a long-term threshold.Full entry available
M
- Market development funds
- Money a supplier gives channel partners to fund marketing and sales activities that build demand for its products, usually approved against a plan.Full entry available
- Member pricing
- Lower prices on selected products that only identified program members receive at checkout.Full entry available
- Mileage run
- A trip booked mainly to earn miles or elite status credit, usually on a cheap fare with little or no time spent at the destination.Full entry available
O
- Oneworld
- A global airline alliance whose members recognize each other's frequent flyers. Its Ruby, Sapphire and Emerald tiers come from status in a member airline's program.Full entry available
- Open loop
- A rewards or gift card model where value can be earned or spent across many unrelated merchants, usually through a payment card network.Full entry available
- Opt-in
- A consent model where a member must take a clear action, such as ticking an empty box, before the program can send them a type of message.Full entry available
- Opt-out
- A member's request to stop receiving a type of message or data use, or a consent model that assumes permission until the member says no.Full entry available
P
- Paid membership
- A program that members pay a fee to join, in exchange for benefits such as discounts, free delivery or other perks.Full entry available
- Partner award
- A reward a member gets with program points that is supplied by another company, such as a partner airline, hotel or retailer.Full entry available
- Partner network
- The set of outside businesses where members can earn or redeem a program's currency, or that fund and distribute its benefits.Full entry available
- PCI DSS
- The Payment Card Industry Data Security Standard: security requirements for any organization that stores, processes or transmits card data.Full entry available
- Point value
- The cash value of one loyalty point, usually stated in cents. It varies with how the point is used and who is measuring it.Full entry available
- Points bank
- A member's running balance of loyalty points, with the record of every point added and removed.Full entry available
- Points liability
- The value of points that members hold but have not yet redeemed, which a business carries as a future cost.Full entry available
- Points pooling
- Letting several members, usually a household, combine points into one shared balance so they can reach rewards together.Full entry available
- Points program
- A loyalty program where members earn points for purchases or actions and later redeem them for rewards, discounts or other value.Full entry available
- Points transfer
- Moving points out of one account, either to another member of the same program or into a different program's currency.Full entry available
- Price discrimination
- Charging different customers different prices for the same thing. Loyalty programs do it through member prices, tier earn rates and targeted offers.Full entry available
- Punch card
- A simple loyalty card that records each qualifying visit or purchase with a punch or stamp and gives a reward after a fixed number.Full entry available
- Push notification
- A short message from a brand's app that appears on a member's phone or device outside the app, such as on the lock screen.Full entry available
R
- Reactivation
- Bringing a lapsed or dormant member back to active earning or redeeming, usually through a targeted message, offer or program fix.Full entry available
- Rebate program
- An incentive that returns part of what a customer or partner paid, after the purchase, once agreed conditions such as a volume target are met.Full entry available
- Receipt scanning
- A way to earn loyalty rewards by photographing or uploading a purchase receipt, which the program reads and checks before posting points.Full entry available
- Redemption
- When a member uses points or rewards to get something of value, such as a product, a discount, a flight or a hotel night.Full entry available
- Redemption rate
- The share of issued points or rewards that members actually redeem.Full entry available
- Referral program
- A program that rewards existing customers or members for bringing in new ones, usually once the new customer joins or makes a qualifying purchase.Full entry available
- Referral reward
- The incentive a program pays when a member refers a new customer, often matched by a welcome reward for the person referred.Full entry available
- Reseller program
- A supplier's formal program for businesses that resell its products, setting margins, tiers, incentives, support and rules for the relationship.Full entry available
- Retention rate
- The share of customers or members from a starting group who are still active at the end of a period, leaving out anyone who joined later.Full entry available
- Revenue recognition
- The accounting rules that decide when a business records revenue. For loyalty programs, they decide when money tied to points becomes revenue.Full entry available
- Room upgrade
- A loyalty benefit that moves a member to a better room than the one booked, at no extra charge, usually depending on availability.Full entry available
- Rounding rule
- The rule that decides what a program does with fractions of points when earning, converting, transferring or reversing points.Full entry available
S
- Segmentation
- Dividing members into groups that share traits or behavior, so a program can give each group different offers, messages or rules.Full entry available
- Sell-through
- The share of stock a channel partner has sold on to end customers, out of the stock it bought from the supplier in a period.Full entry available
- SkyTeam
- A global airline alliance founded in 2000 whose member airlines connect networks and recognize each other's frequent flyers, including Elite Plus members.Full entry available
- SMS marketing
- Sending marketing and account messages to members by text message. In the US it requires prior written consent for automated marketing texts.Full entry available
- Soft landing
- A tier policy that drops members who miss requalification by only one level, or gives them a grace period, instead of sending them back to base.Full entry available
- Spiff
- A short-term bonus paid to a salesperson or channel partner for selling a specific product or reaching a narrow target.Full entry available
- SSO
- Single sign-on: a login method that lets a person sign in once and use several connected sites or apps without entering credentials again.Full entry available
- Stamp card
- A loyalty card, paper or digital, that gives one stamp per qualifying visit or purchase and a reward when the card is full.Full entry available
- Star Alliance
- A global airline alliance whose member airlines recognize each other's frequent flyers. Its Silver and Gold levels come from status in a member's own program.Full entry available
- Statement credit
- An amount a card issuer applies to a credit card account to lower the balance owed, often from redeemed points, a refund or a card benefit.Full entry available
- Status challenge
- An offer that lets a member earn or keep a tier by meeting a reduced target in a short window, often aimed at elite members of a competing program.Full entry available
- Status match
- An offer that grants a new member a tier equal or close to the status they already hold in a competing loyalty program.Full entry available
- Surprise and delight
- Unannounced rewards, such as a free item, an upgrade or a handwritten note, given to members outside the published earning rules.Full entry available
T
- Tier structure
- The set of levels in a loyalty program, with the requirement to reach each one and the benefits each one gives.Full entry available
- Tiered loyalty program
- A loyalty program that groups members into levels by spend or activity, with better benefits at the higher levels.Full entry available
- Tokenization
- Replacing sensitive data, such as a card number, with a substitute value called a token. The word is also used for turning loyalty points into blockchain tokens.Full entry available
U
- Unclaimed property
- Money or property held by a business for someone who has not claimed it within a set period, which state law may require the business to report and hand over.Full entry available
- Unit economics
- The revenue and cost of a business measured for one unit, such as one customer, member or point, before fixed overheads.Full entry available
W
- Waitlist
- A request for a flight, award seat or upgrade that is not available at booking, confirmed only if a seat opens up before departure.Full entry available
- Webhook
- An automatic message one system sends to another over HTTP when a specific event happens, carrying data about that event.Full entry available
Z
- Zero-party data
- Information that customers choose to share directly with a brand, such as preferences, intentions or birthdays.Full entry available
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