What are Ghost Loyalty Points and How to Reduce Them

Loyalty programs are designed to keep customers engaged and encourage repeat business. But many businesses struggle with a hidden issue: ghost loyalty points—unused or inactive reward points that accumulate in customer accounts without ever being redeemed.

These unclaimed points may seem harmless, but they can cause serious problems. Studies show that nearly $100 billion in loyalty points go unredeemed globally each year. This creates financial liabilities for businesses and leads to customer disengagement. If points expire or become difficult to use, customers may feel frustrated, reducing their trust in the brand.

Ghost loyalty points often indicate inefficiencies in a rewards program. When customers fail to use their points, it can mean the incentives aren't valuable, the redemption process is too complex, or the program lacks proper engagement strategies. Businesses that ignore this issue risk damaging customer relationships and missing revenue opportunities.

What Are Ghost Loyalty Points?

Ghost loyalty points are unused or inactive rewards in a customer’s loyalty account. These points accumulate but never get redeemed, leading to inefficiencies in a rewards program.

They often result from customer forgetfulness, complex redemption processes, or a lack of valuable rewards. Many businesses face this issue—airlines, retailers, and credit card companies frequently have large pools of unclaimed points.

While they may seem harmless, ghost points create financial liabilities for businesses and reduce customer engagement. If customers can’t easily use their rewards, they may lose interest in the program altogether, making it less effective.

Why Do They Accumulate?

Ghost loyalty points accumulate for several reasons. Customers forget about them, especially if they don’t shop frequently or receive reminders. Complex redemption processes—such as high thresholds, expiration dates, or confusing rules—also discourage usage.

Another factor is a lack of appealing rewards. If points can’t be redeemed for valuable perks, customers see no reason to use them. Some businesses even make redemption difficult on purpose to reduce costs.

Additionally, inactive accounts contribute to ghost points. When customers stop engaging with a brand, their accumulated points sit unused, leading to wasted program potential and financial liabilities for businesses.

How to Reduce Ghost Loyalty Points?

To reduce ghost loyalty points, businesses should simplify the redemption process. Make points easy to use and ensure they can be exchanged for valuable rewards. Offering clear communication about point balances and expiration dates helps customers stay engaged.

Personalized offers can also motivate customers to redeem their points before they expire. Additionally, automated reminders via email or mobile apps can encourage timely use.

Businesses can also reduce point accumulation limits or implement point expiration policies to ensure points are redeemed within a reasonable time frame. This keeps loyalty programs efficient and engaging for customers.

Conclusion

Ghost loyalty points are a significant challenge for both businesses and customers. They accumulate due to factors like complex redemption processes, lack of appealing rewards, and inactive accounts. However, businesses can reduce ghost points by simplifying redemption, offering valuable rewards, and maintaining clear communication with customers.

By actively managing loyalty points and implementing strategies such as automated reminders or expiration policies, companies can minimize financial liabilities and improve customer engagement. Ultimately, creating a more efficient loyalty program benefits both businesses and consumers, ensuring loyalty rewards remain a powerful tool for customer retention and satisfaction.