Loyalty glossary · 1. Program mechanics and currency (40)
Accrual
Accrual is the rate and process by which members earn loyalty currency from qualifying spend or activity. The earn rate, usually expressed in points per pound or mile, sets the top line of the programme's promise. But a high accrual rate is not value. Value appears only when those points convert into something usable at redemption.
Accrual is the engine that turns spend into points. The trap is thinking the earn rate means value. It does not. The rate is a marketing promise, not a valuation, and the promise only becomes value at redemption.
Work the arithmetic, because the argument only lands with numbers on it. A cardholder earns 3 points per dollar on a 500 dollar monthly spend, so 1,500 points accrue each month. If a point redeems at 0.5 cents, that 1,500 points is worth 7.50 dollars. Raise the advertised rate to 5 points per dollar and the same spend produces 2,500 points, but if redemption value falls to 0.3 cents, the member still gets 7.50 dollars. The headline number changed and the actual value did not.
Co-brand cards push accrual hard because the issuer pays the programme for every point, so the member is earning a subsidy rather than a return. Coalition loyalty works the same trick across partners, and the points pile up fast. The problem is that every extra point accrued without a matching redemption path is a future breakage event, not a future reward. The earn rate is the easy half of the equation. The redemption catalogue is the hard half, and it is the half that decides whether the accrual was worth anything.
Programmes that optimise accrual while ignoring redemption are building a liability, not loyalty. A 10 percent increase in earn rate looks good in a press release and changes nothing in a member's wallet if the redemption value drops by 10 percent in the same quarter. The only accrual number that matters is the one that survives contact with the redemption catalogue. Everything else is accounting noise.
The only honest way to read an accrual rate is against the redemption value and the breakage assumption behind it. A programme that raises the earn headline while cutting the value of a point has not improved its offer. It has rewritten the price tag.