Business of Well-being

Employee Discount and Purchase Programs - A Smart Employee Benefits Strategy

With the impact that financial stress has on employee productivity and well-being, employers are searching for relief through the addition of various financial wellness options to the employee benefits program.

There is no doubt that employees need some assistance with their financial matters. Look at what full-time employees nationwide said about their financial situation in a recent Harris Poll on behalf of Purchasing Power:

  • 82 percent of employees working full-time have financial stress;
  • 34 percent have had trouble meeting monthly household expenses;
  • 30 percent were not able to make all the major purchases that they or their family wanted/needed in the past year;
  • 40 percent do not have at least $2,000 in emergency savings for unexpected expenses; and
  • 37 percent spend 2-3 hours per week at work thinking about or dealing with their personal finances.

Many employers are providing a variety of financial education and financial counseling benefits.

Some are also adding employee discount and purchase programs that allow employees to obtain products and services at a discount or purchase them through a payroll deduction program. These types of programs give employers a more competitive employee benefits strategy. But what's the difference between them and who uses them?

What's Available in Today's Marketplace?

There are three different types of programs - merchant discount, employee discount and employee purchase programs. All three provide a means for employees to obtain items and services of their choosing. There is little or no direct cost to employers and very minimal, if any, administrative costs for these programs.

Merchant Discounts

Manufacturers and service providers frequently provide discounts for employees of large companies and association members. The process is simple. When the employee or member decides to purchase this item or service, they simply identify their employer at the point of purchase and receive the specified discount.

Types of merchant discounts include computers and electronics; hotels, resorts and amusement parks; rental cars; home and auto insurance; and mobile phone service.

Most merchant discounts are from large, national manufacturers or service providers with recognizable brands. However, many government organizations and colleges obtain discounts from local sources as well, including apartment rental, restaurants and local retail stores.

Employee Discount Program

Employee Discount Programs provide workers access to a wide variety of consumer products and services at a discount. Either employers can contract directly with vendors and merchants to obtain discounts and group rates for employees, or they can engage the services of an employee discount program online platform.

Several companies provide online platforms whereby employees simply log in to the platform's portal and to access discounts on items and services from a multitude of companies. The platforms negotiate contracts with the various vendors so employers do not need to be involved.

There is usually a nominal fee to employers to engage a platform, but beyond that, there is little effort. Many even offer the option to brand the platform with your logo and style and usually have tools to spread the word to employees.

Employee discount programs offer a variety of products and services depending on the company, ranging from hotels and vacation destinations; consumer goods and services; movie tickets/rentals; entertainment and sporting event tickets; auto parts and cars; home services, such as cable and alarm; personal services; beauty and spa treatments; and financial services.

Discounts available can range from name brands to the local pizza shop.

Employee Purchase Program

An employee purchase program provides employees a convenient way to access products and services on an interest-free basis through payroll deduction. As a voluntary benefit, employers can provide it as a low- or no-cost addition to the employee benefits strategy.

For employees who are ineligible or unable to participate in important benefit offerings like tuition assistance and education benefits, wellness benefits or 401(k) plans, an employee purchase program can help close those gaps.

Premier employee purchase programs offers thousands of brand-name products, vacation packages and education services, including:

  • Computers and electronics
  • Furniture and appliances
  • Educational services, including tutoring, test prep services, college courses, career diplomas
  • Luggage and travel
  • Toys, baby and kid products
  • Sports and fitness equipment
  • Automotive services

Who Uses the Three Types of Programs?

The three types of programs are popular with employees for a variety of different reasons, depending on type, because they can:

  • receive discounts on items they are likely to purchase anyway, such as mobile phone service, sporting and entertainment tickets, hotel stays, etc.,
  • purchase conveniently through payroll deduction;
  • shop online without having to go to a retail store or other location; or
  • buy items through a disciplined payment program that they couldn't otherwise obtain because of poor credit.

In the recent Harris Poll on employee purchase programs, employees were asked how likely they were to use these different programs.

  • 64 percent were very/somewhat likely to use merchant discount programs;
  • 67 percent were very/somewhat likely to use employee discount programs through an online portal;
  • 61 percent were very/somewhat likely to use employee discount programs available in their organization's HR office; and
  • 44 percent were very/somewhat likely to use an employee purchase program that allowed them to buy big-ticket items through payroll deduction.

The Future of Employee Discount and Purchase Programs

Employee discount and purchase programs are here to stay. They continue to grow as new products and services constantly added to all three types.

Today's employee benefits offerings make a definitive impact on an employer's recruitment and retention efforts. Employees are looking for more than just a paycheck; they want to be able to choose benefits that are important to them even if it means paying for such benefits. This has led to the rise in popularity of voluntary benefits, particularly the non-traditional ones.

Merchant and employee discount programs will continue to be a favorite of employees because they can obtain a discount on something they were already planning to purchase. Employee purchase programs are a great voluntary benefit to offer because they are low- or no-cost to the employer while providing a great value to employees. They are popular with workers for one simple reason - they increase the employee's buying power through a disciplined, affordable way to pay over time.

About the Author

Elizabeth Halkos is chief revenue officer at Purchasing Power, a voluntary benefit provider of an employee purchase program. She has over 15 years of experience in client relationship development, sales, marketing and product strategy.

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