Loyalty breakage: what it is, how to estimate it and why it is not a goal
Resources · Finance
Breakage is the share of a loyalty program's points, miles or cashback that is expected never to be redeemed, because it expires or because the member stops using the program. It is estimated from the redemption history of each batch of points, and it affects both program liability and how revenue is recognized.
- Points issued100%
- Redeemed before expiring80%
Estimated by cohort and by batch, with expirations at 30, 60 and 90 days.
In production · October 2026
In production, at the scale of millions of movements.
Qurable manages 18M members today. Each program has its own vault, rules and liability, isolated by organization.
- 11M+Transactions recordedIn a single production environment
- 22M+Double-entry movementsEach with its counterpart
- ~20 msMember history lookupAverage query time
- 18MMembersIn programs running on Qurable
Key takeaways
- Expiration is a rule with a date; breakage is an estimate of what will never be redeemed.
- There is no standard breakage rate: it is estimated batch by batch from the program's own history.
- A program that profits because members do not redeem ends up losing those members.
An outcome, not a target
A program designed for breakage or one designed for redemption.
Breakage always exists and has to be estimated. The trouble starts when it becomes the goal: a program that profits because members do not redeem ends up losing those members.
| Designed for breakage | Designed for redemption | |
|---|---|---|
| What it aims for | Lots of points expiring | Members who redeem and buy again |
| Member experience | Distant rewards, short expirations, hard rules | Reachable rewards and expiration reminders |
| Effect on the relationship | Distrust and program abandonment | Higher frequency and more program use |
| What happens to liability | Drops in the short term while the program loses value | Moves with usage and is managed with data |
| How success is measured | Points expired | Active members, frequency and cost per incremental sale |
How it is estimated
Breakage is estimated batch by batch, not by gut feel.
There is no standard breakage rate: every program has its own. It is estimated from the program's own history, grouping points by issue batch and tracking what share is redeemed, what share expires and when.
Step 1
Group into cohorts
Group points by issue month or batch and follow each group until it expires.
- Question
- Of the points issued in January, what share was redeemed and what share expired?
Step 2
Plot the redemption curve
Measure how cumulative redemption grows over time from issuance. The curve of older cohorts anticipates the newer ones.
- Illustrative example
- If closed cohorts redeemed 80%, estimated breakage is 20%.
Step 3
Split by segment
Active and inactive members, tiers, countries and currencies redeem differently. A single average hides those differences.
Step 4
Adjust for changes
A new catalog, a new expiration policy or a redemption campaign changes behavior. Past history is no longer enough on its own.
Step 5
Compare with actuals
At every close, compare estimated breakage with actual expirations and true up the estimate.
The data you need
To estimate breakage well, you first have to record well.
The estimate depends on the quality of the points record. Without batches and a full history, breakage is calculated on a balance and ends up being a guess.
Batches with issue and expiration dates
Every credit with its issue date and expiration date, so each cohort can be followed to the end.
History that cannot be edited
Every redemption, expiration and reversal as its own movement. If the balance is overwritten, the redemption curve is lost.
Versioned expiration rules
Knowing which rule each batch was issued under, so cohorts with different policies are not mixed.
Projected expirations
What expires in the coming months, to compare estimated breakage with what will actually expire.
Split by currency and country
Each market and each program currency has its own redemption behavior.
With Qurable
The data to estimate breakage, in one ledger.
Your finance team estimates breakage. Qurable gives it the data behind the estimate: batches with expirations, the full history of every point and liability by currency and country.
Expiration by batch
By age, by inactivity or with a date set per issuance, with versioned rules that do not change batches already issued.
See the points ledgerFull history
Movements are never edited: they are reversed with offsetting entries, and any wallet's history can be replayed.
See how the ledger worksWhat expires, before it does
What expires in 30, 60 and 90 days and each member's next expiration, for campaigns that drive redemption.
See next best actionLiability and daily export
Real-time liability by currency, country and store, and every movement exported daily to your data warehouse.
See the points program
FAQ
What people ask about breakage.
Short answers for finance and loyalty teams.
It is the share of issued points, miles or cashback that is expected never to be redeemed, because it expires or because the member stops using the program. It is expressed as a percentage of points issued and estimated from the program's own history.
Points are grouped by issue batch or month, and you measure what share of each cohort was redeemed and what share expired. Closed cohorts give the redemption curve applied to newer ones, split by segment and adjusted for changes to rules or the catalog.
There is no normal rate that applies to every program. Breakage depends on the earn and burn rates, the catalog, the expiration policy and how often members buy. The only reliable reference is your own program's redemption history, cohort by cohort.
Because high breakage usually means members see no value in redeeming. Unreachable rewards or short expirations lower cost in the short term but create distrust and churn. The goal is for members to redeem and come back to buy.
Expiration is the rule that makes a batch no longer redeemable; breakage is the estimate of how many points will expire unredeemed. Changing the expiration policy changes breakage, which is why it should be estimated by the rule each batch was issued under.
Estimated breakage reduces the share of outstanding points expected to be honored, and with it the liability. Under IFRS 15 and ASC 606 it is also factored into how deferred revenue is recognized. This is not accounting advice: your accounting team and auditor set the treatment.
Qurable records every point as a batch with an issue and expiration date, keeps the full history of redemptions and expirations without editing it, projects what expires in 30, 60 and 90 days and shows liability by currency and country. Your team builds the estimate from that data.
Last reviewed
Further reading
Keep reading about program finance.
Pages that explain how breakage connects with liability and accounting.
- ResourceLoyalty points liability
Outstanding points × cost per point × expected redemption rate.
- ResourceLoyalty point value: how to calculate it
Cost per point, perceived value and member return.
- ResourceLoyalty program accounting (IFRS 15 and ASC 606)
How breakage enters revenue recognition.
- ModulePoints ledger
Batches, expirations and a history that cannot be edited.
- ModulePoints program
Earn, redemption and expiration rules.
See your batches and expirations in a ledger.
In a 45-minute technical session we show you how batches, redemptions and expirations are recorded, with a case like yours.