Loyalty glossary · 10. Marketing and engagement (20)
Dormancy
Dormancy is the state of a loyalty member who has completed no qualifying activity, such as earning or redeeming points, for a set period, typically 12 months. It is a programme-defined threshold, not a natural condition, and it determines whether an account is treated as active or forfeited.
Dormancy looks like a fact but it is a policy choice. Most programmes set the threshold at 12 months of zero accrual, and then treat anyone past that line as lost. That single definition obscures two completely different groups: members who have abandoned the programme and members who simply have not had a transaction in a year.
The punishing version is the one to watch. A programme that expires points after 12 months of dormancy is not managing risk, it is confiscating value from its most patient members. Those members tend to hold higher balances than active ones precisely because they are not redeeming, and a single forced forfeiture is often the end of the relationship.
Do the arithmetic on a modest portfolio. A programme has 50 million points outstanding, and 20 percent of those belong to members who have been dormant for 12 months. That is 10 million points sitting with no accrual and no redemption. At a redemption cost of 0.4 cents per point, those dormant balances represent a 40,000 dollars liability that the operator can either protect or quietly write off.
Active member rate hides this because it counts only members with a recent transaction. A member who opens every email, follows every promotion, and refers a friend is invisible if they have not earned or redeemed in the qualifying period. Activity-based qualification then labels them dormant, which is a category error that becomes a billing event.
The correct definition counts engagement, not spending. A member who logs in, clicks, or calls support is not dormant, even if their balance is unchanged for 18 months. Programmes that insist otherwise are optimising for breakage, not loyalty, and they should say so.