Loyalty Register glossary
Churn
Members or customers who stop buying from a brand or stop engaging with its program over a given period.
Churn is the loss of members or customers who stop buying from a brand, or stop engaging with its loyalty program, over a given period. The churn rate is that loss as a share of the members at the start of the period, usually measured over a year. It is the opposite of retention.
Updated · By Loyalty Register Editorial TeamRelated terms
How do you measure churn in a loyalty program?
First define what “active” means: a purchase, a visit, an earned point or a redemption within a set window. Then count how many members who were active at the start of the period were no longer active at the end. The definition matters more than the formula. McDonald’s, for example, describes its loyalty members by visit frequency: guests who visit more than once a month, guests who visit about once every 90 days, and members who have not visited in a few months. Each group needs a different response.
What causes members to churn?
Some churn is natural: people move, change habits or simply stop needing a product. Much of it is designed in. Rewards that are too hard to reach, a catalog that does not appeal, or status thresholds that members just miss all push people away. In a tiered program, members who fall just below a qualification threshold often leave at a much higher rate than members who clear it, so moving a threshold changes churn.
Why does churn affect points liability?
Points that members earned stay on the books as a future cost. When members churn, many of their points will never be redeemed, and that changes the liability estimate. A program that assumes nobody leaves keeps a liability for members who are already gone; a program that assumes too much churn understates what it owes. Either way, the churn assumption should be explicit and reviewed.
How can a program reduce churn?
Find out which members are leaving and why before changing anything. Common fixes include lowering the first reward threshold, adding rewards members actually want, warning members before points expire, and contacting lapsing members while they still have a balance. A falling churn rate is only good news if it falls for the right reason.