Discount purchase programs struggle amid sea of voluntary offerings
Despite potential savings offered, voluntary programs that provide discounts on products, services and tickets to employees are rarely used and seeing almost no growth year-over-year.
According to the Society for Human Resource Managements 2015 employee benefits survey, just 13% of companies offer personal shopping discounts, while 30% offered discounted ticket services.
While the percentage of companies offering personal shopping discounts rose from 6% in 2011, within the next 12 months less than 1% of companies surveyed by SHRM plan to add these discounts to their employee benefits program.
The 13% of companies that offer this benefit considered an employee program and service by SHRM compares to 23% offering legal assistance and services and 9% offering pet insurance, which are also within that category.
The reason why the growth is almost flat is because there are so many other more important programs HR departments are focusing on, says John Crable, senior vice president at Mount Laurel, N.J.-based brokerage Corporate Synergies. When you think about them, there is value for them, he says. But there are often side limitations.
They are another item that both employee and employer feel is taking up space, he adds. There is such a push for voluntary, that every broker or insurance carrier is selling products, like critical illness, Crable says. The employer feels it is yet another item they have to communicate, endorse. For many employers, it is a lot.
Since it not advertised and not well known, employees dont ask for it. Aflac spends hundreds of millions of dollars advertising, so everyone is asking for an Aflac-type product, he says. Even if not Aflac.
While brokers, like Crable, now mention these programs to employers, those employers are still hesitant because of all the other voluntary products they offer, including discount home and auto insurance. Crable says an employer knows most everyone drives a car or owns a home, so they choose to focus on those.
Employee payroll deduction
Purchasing Power, which sells consumer products, vacation and more through a payment plan coming directly from an employees payroll, is used 10 times more frequently than a discount program, says Elizabeth Halkos, the companys chief revenue officer.
She estimates 10% to 20% of companies use Purchasing Power nationwide, which is lower than it should be, she says, but Halkos puts year-over-year growth at 15% to 25%.
For Crable, Purchasing Power, which has a minimum employee count, eliminates a lot of the market. However, Halkos says her company does work with some under-1,000 employers through a partnership with a broker.
Halkos says these products are an income stream for a broker, who is looking for ways to be more competitive and cover potentially decreased commissions and revenue. The broker is using programs like Purchasing Power to cut fees, she says, and the [broker] believes they can make up some of the lost consulting fees with their client through a program like ours.