Have we got a deal for you. Employee discount programs, generally part of a larger work-life benefit package, are proving to be valuable door-openers for brokers.

Small-, mid- and large-sized companies that offer these discount programs believe they help achieve goals of worker retention, job satisfaction and company loyalty. The savings augment income for workers, who in turn represent a valuable customer source for vendors.

"The working employee base is a great targeted demographic because essentially everyone has a job," says Matt Tabor, vice president of business development for the discount program supplier Sparkfly. "Employees are more likely able to go out to [a restaurant and] eat, to travel, buy tickets and cars and so forth."

The Atlanta-based company works primarily with employers in the Southeast, but services employees worldwide. The most well-known brands Sparkfly works with are Coca-Cola, SunTrust, Aflac, The Weather Channel and Emory University.


Vendor links

Employee discount programs give workers access to exclusive offerings from local and regional vendors and can take varying forms. They include percentage discounts from the vendor, reductions in price off products such as automobiles and appliances, and special member access to events or organizations.

U.S. companies such as GM, Ford and Dell were the first to start offering discounts on their products in the 1990s, Tabor observes. "Employees can get discounts on any product, good or service that would be made available to the consumer, such as computers, event tickets and mortgages," says Tabor.

If an employee has been eying an electronic tablet, for example, Sparkfly will provide a specific link taking the worker directly to an online store such as Apple, where he or she can buy the tablet at a pre-arranged discounted price.


Universal benefit

"The best thing about having an employee discount program is that it's a universal benefit, and in our years of experience we've had every type of employee from executive level to the security guard utilize the program," says Tabor. "Not only will some companies make it available to just the employees, but [they will provide it for] their spouses and children as well."

Working Advantage has been providing employee discounts and reward programs to corporations for 16 years. Mike Giles, vice president of business development, says the company takes pride in alleviating the administrative burden off of HR departments and provides 10,000 corporations and 10 million users with family-oriented entertainment such as Broadway shows, movie tickets and sporting events.

Working Advantage purchases all the products in high volume and receives a substantial discount price, and then offers them to consumers for a lot less than they would be able to get by going to the box office, the ski resort or amusement park directly.

Although Giles says these types of programs are low on the priority scale of benefits, "they're still a nice perk to provide."

The wide range of potential savings in discount programs helps workers stretch their pay checks.

Sparkfly discounts, for example, range from 5% to 50% and are available year-round to employees on websites and intranet sites.

Although standard discounts are 15% to 20%, others can reach 50% off entertainment tickets, or limited time offers from a restaurant, such as "buy one entrée, receive another free."

Employee discount offerings can be online one day but gone the next, says Sparkfly's Tabor. "Discounted products really vary," he says. "It's usually inventory ... If it's not used, it's something they have to get rid of - so dining, entertainment tickets; they're last minute."


A sweet sale

Tabor says that brokers and advisers should think of this type of benefit offering as a "spoonful of sugar."

"The great thing about discounts is that everybody loves them," says Tabor. These programs "bring folks in and they say, 'Oh wow, there's also a discount on Liberty Mutual insurance or on pet insurance,' for example."

Brokers can use an employer's need for an employee discount program as an opportunity to get their foot in the door to sell other insurance products as well.

Tabor adds that in an employee's day-to-day life they're more likely to go to a movie than they are to change car insurance, but discount programs continue to bring employees back to see what new offerings are available.

"Although insurance products are important, they aren't necessarily interesting or exciting. Extensive discount programs - ones that offer dining, entertainment, travel, electronics, [and more] - offer a wide variety of merchants that will generally keep employees coming back to the site on a more frequent basis," he says. "If they have a great product with a superior offer they should see great sales."

Sparkfly participants visit as often as once a week, or up to once a month. Many times they come to the website for a specific purpose. "They're interested in a certain concert or planning a trip to an amusement park and would like to save money," says Tabor.

Working Advantage's Giles says site visits vary, and that depends on how often the product is marketed to employees. "The relationship that we have with HR providers is really crucial in the whole process. They're giving the 'stamp of approval,' sending email blasts to employees, hanging things in break rooms and other means of distribution," he says. "We'll provide them with information and they market and send everything out and [track] how many signed up."

To get the program in the employees' mind, it should be given space on the company intranet/broker website, says Brian Roland, president and CEO of program vendor Abenity.

Utilization rates tend to vary. "Programs announced by e-mail typically receive 40% voluntary participation with employees within the first year, and programs that hand out membership cards or savings guides," typically see 60% of voluntary participation, Roland says.

Abenity also sends a monthly newsletter to employees featuring new and limited time discount offers that are relevant to the current season. This newsletter is branded for the employer and able to come from the email of their choice. The perks and discount newsletter receives up to 25% open rates and 23% click-through rates.

Once a product is purchased via Working Advantage, orders are handled 100% in-house, says Giles. "We hold inventory in a room 50 feet from where I'm sitting," he says. "Employees can receive help from customer service if they have questions," and representatives can walk over to the inventory to read the fine print. The company can pack and ship from their warehouse, responding easily to any changes customers have in their orders.


Affordable and attractive

For employees, discount programs are free and for the employer they can be as little as $1 per employee/per year, or less, says Tabor.

Popular categories differ among platforms for small, mid- and large-size employers.

The most popular categories through Sparkfly are: travel, entertainment, computers/electronics and automotive.

Peter Marcia, CEO of consulting and technology firm YouDecide, agrees that electronics seem to be one of the most sought-after categories for his discount company as well, though it depends on the employer communications.

"It's all over the board," he says.

Working Advantage's Giles says movie tickets are popular since employees go at least once a year. The winter ski ticket platform is also popular, given the selection of 70 mountains with attractive discounts on lift tickets for avid skiers and snowboarders.

Roland says that manufacturer's coupons, automobile services, discounts on lenses and glasses are among the most sought-after by employees.

Abenity has 200,000 corporation clients, including U.S. Bank, Virgin Mobile USA, Nationwide, Harris Teeter and Express Scripts - totaling 1.5 million users. "Bringing what the employees want will create loyalty that brokers and employers are looking to get," says Roland. "Because there are pretty savvy shoppers out there."

Employees who use discount programs are sometimes shocked at the percentage off they can save, says Tabor. For example, Tabor recalls a professor from Emory University who wanted to purchase a Toyota Prius several years ago.

"When the Prius first came out, they were really hot and were in high demand, so the professor, sometimes skeptical, was looking for a discount and decided to give Sparkfly a try," says Tabor. "He ended up using the vendor on our site and saved several thousand dollars compared to the quote he received from dealerships."

Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access