Loyalty glossary · 10. Marketing and engagement (20)
Lapsed Member
A lapsed member is a loyalty programme participant who has not completed a qualifying activity for the period the programme defines as lapsed, commonly six to twelve months, and who is excluded from the active member base while usually retaining accrued points and status until a separate expiry rule applies.
Lapsed is a status a programme assigns, not a condition a member discovers. A member becomes lapsed only when the operator's chosen inactivity window runs out, and that window is what separates the lapsed cohort from the active member rate calculation. The same member can be counted as active one day and lapsed the next without any change in her own behaviour, because the line moved over her.
Activity based qualification makes the threshold measurable and, often, gameable. If the programme requires a stay within a rolling window, a member can book a cheap room just to stay technically active, while a high value member who stops transacting falls out. That asymmetry is why lapse rates alone mislead.
Work the arithmetic, because the cost of lapsed members hides in points liability. A programme issues 1 billion points in a year and sees 20 percent of members lapse, so 200 million points sit with members who are not active. If those members return after 12 months and redeem at 0.8 cents per point, that is 1.6 million dollars of redemption cost the programme had not budgeted for immediate spend.
Accrual is the first casualty of lapse. A member who is no longer active usually stops earning on everyday spend, so the programme loses the data and the habit that made her valuable. Yet the points she already holds do not disappear just because activity stopped, and neither does the accounting liability. Treating lapsed members as gone is a mistake: they are dormant, not departed.
The trap is to wait until lapse is confirmed and then spend on offers to win back members or, worse, to let points expire quietly. Programmes should instead design activity based qualification so that the lapse threshold signals a real break in engagement, not a missed reminder. The active member rate then measures the health of the programme, and lapse becomes a line to manage rather than a bucket to write off.