Want to know how to identify a discount program that can effectively engage your employees? This comprehensive buyers guide gives you the tools you need to identify and assess the best discount network for your company.
Who Should Use This Guide:
This guide was written for human resources professionals and other executives tasked with engaging and retaining their best and brightest employees.
What You Should Learn:
The guide will outline the process for identifying an employee discount platform, -or as some call it, a white label employee discount program- with the greatest engagement potential, helping you effectively evaluate competing platforms.
After reading this buyer’s guide, you should have a more thorough understanding of how programs are built, why platforms differ, and which features are most important. This should help you gain confidence when selecting a discount program best suited for your employees.
Table of Contents
- The Business Case for an Employee Discount Platform
- Understanding the Secrets of Consumer Discounts - The Coupon Quality Spectrum
- Comparing the Discount Program Business Models
- 20 Key Elements to an Effective Employee Discount Program
- Why Restaurant Discounts Matter
- Comparing the Size of Discount Networks
- Discount Network Evaluation Checklist
- Glossary of Industry Terms
- Additional Resources
The Business Case for an Employee Discount Program
Of all American retail businesses, 91% offer their customers an engagement/loyalty program, and 98.4% of these loyalty programs use some form of discounting strategy to attract, engage, and retain their customers. Whether it’s reduced airfare, rewards or points that can be redeemed for products, discounts are a tremendous motivator because they leverage all consumers’ collective desire to save money. The best part? Discounts are popular with all demographic groups, regardless of age, income, or gender.
And who better to build engaging, loyal relationships with than your employees?
So it makes sense that a growing number of companies are offering their workers compelling local discounts at restaurants, retailers, theme parks, and travel-related providers. These discounts are the closest thing to a universally appealing benefit, as roughly 96% of consumers use coupons or discount offers.
The more relevant and memorable the discounts you offer, the more willing employees will be to engage with it. A good discount program can also promote financial wellness among employees, which is a significant benefit in a challenging economy.
Turn-Key Discount Platforms
A turn-key discount program can help deliver a selection of consumer discounts to your employees. But an effective program will deliver compelling, relevant, and meaningful offers to your employees, giving you a new tool to:
- Add real value to your benefits package.
- Help employees offset the inflation and shrinking paychecks.
- Connect with employees who have not yet fully engaged.
- Generate goodwill and help boost employee satisfaction and retention.
Understanding the Secrets of Consumer Discounts - The Coupon Quality Spectrum
Before you compare discount programs, it's helpful to know some hidden realities of the world of consumer discounts.
Personal Relevance is Key
For any discount program to be truly engaging it must be personally relevant to each of your employees. If it lacks personal relevance it is unlikely to have the meaningful impact on engagement you’re hoping for. (See this long list of peer-reviewed sources about the persuasive power of personal relevance.)
When it comes to a truly engaging employee benefit, a discount network must deliver on all four of these fundamental characteristics of personal relevance:
- The network must deliver discounts with real and compelling value.
- The discounts must be within close proximity to where employees live and work (both physically or digitally).
- The discounts must be easy and convenient to browse and redeem.
- The discounts must be from merchants employees know and trust.
A successful discount platform must deliver on each of these criteria, or it will languish and be ignored by the people you want to engage.
We're all hungry to find deep and compelling discounts, but we’ve also encountered many so-called discounts that are uninspiring, and not worth the effort.
And yet, because discounts are so popular, many retailers have found an audience for these less than relevant or ho-hum discounts. They flood the market with these modest discounts as a means of up-selling higher-priced products, or clearing out unsold and less popular items.
That’s where private discount networks can help merchants; by delivering a closed ecosystem of ideal consumers.
For example, consumers with a college degree or a professional career have a greater level of disposable income. Accordingly, the best discounts are often reserved for private discount networks that deliver these key consumer audiences.
Retailers are stingy with their deepest discounts. They reserve their best discounts for the purpose of attracting an ideal consumer that will spend more money and with greater frequency. Retailers will go to great lengths to avoid exposing their best and deepest discounts to the general public, and to their existing customers who have already demonstrated a willingness to pay full price.
That’s why it’s important to know how to differentiate between coupons that engage and those that don’t. When it comes to discount programs, here are the three basic types of retail discounts found in most turn-key discount programs:
1. Online/Affiliate Offers - ONLINE ONLY TRANSACTIONS
(Example: 5% off online, 1-800-Contacts)
These offers are online only, and usually don’t exceed 5-10% in value. Merchants provide a unique URL to the “publisher,” so each transaction can generate revenue. That means a portion of every sale gets split between your discount provider and other parties.
A few discount networks will pass along the entire available discount to the employee, but most programs will take a portion of the available savings, and give your employee a modest discount with diminished value. Most discounts aren’t unique, and often don’t include a true deal at all.
2. Third Party Aggregated Offers - ONLINE TO IN-STORE TRANSACTIONS
Example: A gym or fitness center offers 10% off monthly fees on a membership)
These offers are sourced via third-party aggregators who compile discounts and package them together for distribution to online retailers and others willing to publish their discount offer. Some merchants, like gyms and spas, will only offer a discount through an aggregator, so these deals are typically not private or exclusive. Aggregators, like ValPak® for example, will allow a discount program to use their inventory of local discounts, but these are the same public offers that are sent en masse to mailboxes that most view as junk mail. The discounts are often forgettable, typically in the modest range of 5%-20% off, and usually, come with extensive restrictions about when and how they can be used.
3. Privately Negotiated Brick Mortar Offers - IN-STORE ONLY TRANSACTIONS
Example: A buy-one, get-one-free offer from a local restaurant
In-store, privately negotiated offers between the discount network and the merchant are the “gold standard” in the discount ecosphere.
That’s because roughly 88% of consumer spending occurs in a brick & mortar location, so brick-and-mortar discounts usually have the highest relevance and usage. Since these offers are negotiated on a location-by-location basis, they can be costly to acquire for the discount program and is why they are rare to find. These are the offers that will get your employees the most excited because they deliver the most value.
20 Key Elements to an Effective Employee Discount Program
The rule of reciprocity suggests that people are far more likely to engage with any organization if they are first offered something of significant value. People want value from any organization they associate with, but it's especially important that employers deliver ongoing value to their employees.
When it comes to boosting employee satisfaction, engagement, and retention, when a discount program is part of a suite of powerful employee benefits, these benefits can have a significant impact on a company's bottom line.
But not all discount programs actually work. Some may appear to have what it takes to be a compelling employee benefit, but they lack in some key ways. That’s why it’s important to know how to differentiate between discount programs that engage and those that don’t.
Because programs vary widely, when vetting discount programs, look for those that incorporate each of these key elements:
1. Is it a Closed (Password Protected) Discount Network?
Merchants reserve their best discounts for closed networks where they can control the exposure of their discounts behind a password-protected wall. Discounts offered to the general public are usually not compelling, and aren’t typically a retailer’s best discount. Closed discount networks allow merchants to expose their best discounts to a targeted audience. Without that level of security, your discount network will likely scare away many popular merchants.
2. How much of their revenue comes from online transactions, insurance sales, and other sources?
Some discount platforms don’t want you to know that their “free” or “nearly free” discount program has some hidden costs. Their business model shifts the cost burden of your so-called benefits program to the backs of your employees. Frequently, it's because they have obtained their discounts from sophisticated affiliate marketing programs via an online affiliate network.
Consequently, these “free” programs don’t provide many (if any) of the most popular in-store discount offers because they can’t make money off them like they can an online transaction. Programs that offer mostly online discounts are frequently ignored by employees because they typically lack value.
3. Is your organization’s branding front and center?
A major benefit of employee discount programs is the regular, positive interactions your employees have with your company. As such, a discount program should provide the ability to private label the program on your company's behalf. So when employees save, it's your brand that benefits from the boost in awareness and goodwill.
Alternatively, some program providers just promote themselves throughout their web properties and apps. You don’t have to settle for that.
4. Do the majority of their discounts consist of in-store offers at a brick & mortar storefront?
Although online spending is growing, still 88% of all retail purchases are made in-store. If the discount program consists mostly of online discounts, then your discount program won’t have enough relevance to keep your employee’s attention. In-store offers are where consumers shop, yet most discount programs don’t have local, in-store offers because they are expensive to acquire and maintain. Always ask your discount program what percentage of their discounts are from local brick-and-mortar stores where the offers are redeemed at a cash register.
5. Are the discounts in close proximity to where your employees live and work?
This research shows how the average consumer travels just 15-20 minutes for most of their everyday purchases. The more frequent the purchase, the less willing they are to travel. Consumers will typically travel less than 8 minutes for gas or groceries but may travel 15-20 minutes for other, less frequent purchases like a nice restaurant, a movie, auto services, or apparel. If the discounts aren’t near where your employees live and work, they are unlikely to engage.
6. Are the discounts easy and convenient to redeem?
Consumers demand ease and convenience from the merchants they patronize. That’s why each offer must be easy to redeem, such as showing a coupon or a mobile phone at the point of sale. Serialized bar codes are also a great way to make redeeming easy, as a cashier simply scans the code and redemption is automatic. Beware of coupons that require multiple steps to redeem an offer, like buying a gift card, then forcing consumers to make their purchase before the discount is applied. Multi-step redemptions are annoying and cumbersome. Also, avoid coupons where the user must wade through a flood of terms and conditions. In these cases, redemption will be frustrating and lose its practical value.
7. What percentage of merchant offers are negotiated directly with merchants, and what percentage is obtained from a third-party source?
If the discount network has direct relationships with merchants, they typically get the deepest discounts. Smaller regional programs don't have the clout to secure deals from national merchants, so they usually resort to using a third party, where the discounts are typically modest and forgettable.
8. Are the discounts unique or exclusive, or are they available to the general public?
The scarcity principle hearkens back to the economic fundamentals of supply and demand: the more exceptional or exclusive an opportunity, the more valuable it is perceived. When discounts are offered to the general public, they have little or no lasting appeal. Additionally, because so many consumers comparison shop on Amazon, free discount programs are finding it difficult to compete with Amazon whose prices can usually beat most public-facing offers. So, look for discount programs that deliver unique or “members only” discounts. Ask any potential provider if their discounts are also available to the general public.
9. Do they offer the types of merchants where consumers make everyday purchases?
Compelling discount programs must deliver discounts at places where your employees like to shop, and on the things they already purchase. That includes fast food, pizza, casual dining, popular apparel and accessories, electronics, movie tickets, auto care, cell phone plans, etc. Discounts on everyday items like these should comprise the majority of discounts on your program.
Many discount programs consist of a high percentage of discounts on things like day-spas and Jiu Jitsu classes. However, usage of these offers is so infrequent, that they should consist of less than 1% of your network. These deals won’t inspire your employees to use your discount program regularly.
10. How deep are the discounts?
It goes without saying that people want deep discounts and freebies. And while not every merchant is willing or able to offer a 50% off or BOGO offer, the best discount programs will offer very few ho-hum 5%-15% off deals. The deeper the discount, the more excited employees will be to use the discount program on a regular basis. Look for programs where the average discount across all discount categories exceeds 25%-40% or more. Anything less than that is unlikely to inspire employee engagement. The deeper the discount, the more excited employees will be to use the discount program on a regular basis. Look for programs where the average savings across all discount categories exceeds 25%-40% or more. Anything less than that is unlikely to inspire employee engagement.
11. Do they manage your employee data securely and confidentially?
All discount programs require the sharing of some employee data just to verify and validate membership in your discount program. Most will need a name and an email address at a minimum. Some programs may have secure credit card capability to allow for online purchases of things like movie or theme park tickets. Protecting this vital information is of the utmost importance to your organization.
Be wary of discount programs that give away their discounts in order to get at your data for marketing purposes. Look for employee discount programs with a history of success in managing complex security demands, like those that have large corporate clients with sophisticated data security procedures and protocols. If a billion-dollar company is willing to trust their data with your discount network, you’ll know you’re in good company.
12. Do they offer instantly redeemed mobile coupons?
91% of college graduates own a smartphone. The fastest growing segment of coupon usage is from a mobile device redeemed in-store. The key here is redeemable in-store. At a cash register. On the spot. In contrast, some “mobile coupons” are really just an upsell to purchase a companion coupon booklet, or print the coupon at home. Make sure mobile coupons can be redeemed simply by showing the mobile device at the point of sale.
13. Do they offer travel and other big-ticket items?
Everyday relevance is important, but seek out a discount network with deep discounts on large purchases too. Discounts at major theme parks are increasingly hard to find, but some discount networks are large and powerful enough to negotiate discounts at places like DisneyWorld® and Disneyland® Resort, etc.
Discounts on hotels and car rentals are also popular with employees, but only if those discounts are better than the online travel booking engines. In addition to travel, look for discounts on new cars, auto repair, home and garden items, etc. All are essential to a robust discount program.
14. Do they offer a merchant compliance program?
If one of your employees has a coupon rejected while at the front of a busy line or in the company of friends, it’s embarrassing enough to keep them from ever using the discount program again. It’s critical that merchants accept every coupon from your discount program. But sometimes businesses change ownership, or the teenager at the counter hasn’t been sufficiently trained about which coupons are legitimate or not. Ensuring compliance requires a good relationship between the discount program and the merchant. Without a direct relationship, employees risk having a bad experience when they go to redeem a coupon.
One way a discount program enforces compliance is by using serialized (one-time use) barcodes. These codes are scanned or manually entered into the cash register so the discount is instantly and reliably applied.
15. Do they offer marketing and promotional services?
How will your employees learn about new and relevant offers? Your staff should NOT have to create and execute a marketing strategy all on its own. Quality employee discount programs promote the network to employees on your behalf through email, social media, printed materials, and more. Ongoing education is vital, as it can take time to get employees in the habit of saving.
Push for high standards in this area, as there is a direct correlation between promotion and usage. The better the provider is at communicating relevant messages, the more your employees will use the program.
16. Do they offer high-touch, tailored customer support?
Consumers sometimes need a little hand-holding with even the best discount programs. Maybe they need help downloading the mobile app, or an older alum wants some help finding a specific restaurant for the discount network? Who should they contact? Quality employee discount programs will provide support for your employees as part of their program offering. Look for seamless methods to handle issues, including call centers, email, and real-time chat.
17. Do they want to be a partner or just a vendor?
A successful discount program takes more than just throwing money at it. Find a provider who’s willing to act as a partner. One who is just as invested in the success of the program as you are. Work with that partner to create a great launch effort, set goals, monitor and adjust key performance indicators, and change the program as necessary. Whether you’re having monthly or quarterly calls, you should be able to trust that your partner is working behind the scenes to make your discount program performs as well as possible.
18. Do their offers require a purchase of a certificate or other multiple-step redemption process?
Ease of redemption is a key factor in a successful discount program. When a discount is confusing to redeem, it’s a forgettable experience that few employees will want to use. Some dining deal programs, for example, require the purchase of a coupon/certificate, so redemption is difficult, takes time, and is usually disappointing. Look for a discount program that has instantly redeemed coupons.
19. Do they charge merchants to join your discount network?
Aside from making money from online transactions, other discount networks will charge merchants to join their network, using your organization’s name as leverage. While it’s important for discount networks to build their discount network for your employees, the big difference is in how it’s done. Free programs will accept any merchant as long as they pay to participate. Leaving their network with mostly massage therapists, lawyers, or multi-level marketers who have a very narrow audience and limited employee appeal.
20. Do they have only one-off, daily deals, or do they have evergreen offers?
As opposed to daily deals, evergreen offers have no looming expiration date. Evergreen offers are a win for consumers, as the deals are available when the employee has the greatest need, not merely when the merchant is trying to clear out unwanted inventory.
The key to selecting an effective discount program is to consider factors other than whether or not it's free. Free discount programs may tout themselves as having great appeal, but if you dig a little deeper, you'll know their true costs in terms of engagement, trust, and loyalty.
Why Some Merchants Don’t Offer Discounts
While it seems like all merchants offer a discount of some kind, the reality is that certain merchants simply aren’t interested in participating in the discount space, and won’t appear in any discount program. Here are four primary reasons why:
1. Low Margins:
Retailers, like gas stations or Walmart®, are aggressive competitors in the low-price retail space. They are profitable by selling their products in high volume but at very low-profit margins. Consequently, they typically can't be profitable if they offer additional discounts to a discount program.
Merchants, like supermarkets, will only offer discounts on their own private-label brands through their store-owned loyalty program. They too work on very low-profit margins, but will honor the ubiquitous coupons from manufacturers of consumer packaged goods (CPG), but only because the store is reimbursed for all related costs.
High-end or niche merchants, like Rolex® Chanel®or Whole Foods® have a philosophy that discounting is contrary to their reputation as a premium or luxury brand.
Popular retailers, like Apple®, can generate enough consumer demand for products, like the iPhone® or Apple Watch®, without ever having to offer a discount.
Discount Programs: Comparing Business Models
Knowing how a discount program makes money will reveal much about the company’s ability to attract and engage its employees. Although each program will differ to varying degrees, most all discount networks operate on one of these two basic business models:
“Employee” Funded Model (EFM)
An Employee Funded Model is usually a free discount program. These networks charge little or nothing upfront. Instead, employees subsidize the administrative costs via online purchases, up-sells for insurance, or other means. The vast majority of discounts are redeemed online because the EFM must be able to monetize each transaction. Consequently, employees typically experience smaller savings because a portion of each transaction is being divvied up among various entities.
Organization Funded Model (OFM)
The Organization (or employer) Funded Model (OFM) is a network that doesn’t depend upon digital transactions to monetize its program but charges the organization a subscription or fee for employees to access the discounts. This allows employees to experience larger discounts and a greater selection of merchants because both brick and mortar stores and e-commerce merchants can participate in the discount program.
Knowing how a discount program makes money will reveal much about how well they are aligned with your business goals.
"Employee" Funded Model (EFM)
Discount networks that use an employee-funded model are more often used by companies wanting to "check the box" when it comes to offering an employee discount program. These organizations are typically less concerned about whether employees will actually use and engage with the program over time.
Although the barrier to entry is low for the company, free discount programs give away access to their discount program because they can generate their operational revenues in other ways. Ways that may not be readily apparent. Ways that may end up hurting employee engagement and your company's reputation.
Here are five ways an EFM (i.e. free discount programs) generates revenue from your employees:
1. Monetizing employee's online transactions:
EFMs consist mostly of publicly available affiliate offers where transactions occur online. This will likely be a significant source of revenue. Most EFMs don’t negotiate directly with merchants but obtain their discounts from sophisticated affiliate marketing programs that are incentivized to promote discounts via an online affiliate network. Consequently, EFMs don’t provide many private, "brick & mortar" offers because these types of coupons are simply redeemed at the cash register, and can’t be monetized like an online transaction can be.
2. Upselling employees on insurance or other products:
Many discount networks use their network as a lead generation engine, aiming to contact your employees and solicit them for insurance products. These types of discount programs then generate revenue from premiums, interest, or investment income earned from those premiums.
Some discount networks are subsidiaries of licensed wholesale and reinsurance brokerage firms that offer risk management, underwriting management, and benefits consulting products. Depending on the laws in each state, they may or may not be required to divulge the amount of commission revenue they generate from your employees.
3. Soliciting merchants to join their discount network for a fee:
It’s critical that your discount network continually add new merchants. However, when a discount network relies on generating revenue from merchants who join its program, it is likely to solicit and accept almost any merchant willing to pay a fee to gain access to your employees. Similarly, popular merchants like restaurants will not participate, since they have little incentive to pay a fee to join a discount network that delivers few if any financial benefits. Consequently, many EFMs rely heavily on less popular merchants like spas, massage therapists, or tax preparation services, all of which have a very narrow audience, limited popularity, and low usage.
4. Selling, renting, or loaning employee contact information or usage data:
Some EFMs will generate revenue from selling, renting, or loaning your employee's user data to the highest bidder. Some call it “Bulk Enrollment,” where your employees’ personally identifiable information is loaded onto a partner’s database, often without your employees’ consent. Others will collect aggregated user data and sell that information to data warehouses.
5. Using points/gamification:
Some discount programs will heavily promote a points or “rewards” program, offering prizes or extra value to incentivize frequent purchases. To pay for it, they entice users to make purchases on clearance or unpopular items that, after fees and taxes, will often cost more than retail. Additionally, the rewards threshold is set as high as $1,000 in total purchases before users can redeem any points.
While an Employee Funded Model can be enticing because of the low barrier to entry, its business model prevents organizations from offering significant value. In the EFM model, engaging your employees will take a back seat to the necessity of the provider recouping their costs. The average discount per transaction is in the range of 4%-12% per transaction. Consequently, most EFMs experience low usage and are forgotten by employees because they lack compelling value to keep them coming back.
The Organization Funded Model (OFM)
An Organization Funded Model discount network is funded by the company in the form of an annual or per-employee licensing fee. Discount programs using an OFM are incentivized to engage as many of your employees for as long as possible, in order to retain your organization as a paying client.
OFMs are typically best suited for companies who want to engage their employees or use the discount program as a means of driving employee satisfaction or retention.
For OFMs, value must be compelling and relevant. Otherwise, employees fail to engage and the ROI is unsustainable. A true OFM doesn’t depend on user transactions as a source of revenue. To succeed, it must focus on delivering compelling value to the organization's employees in the form of privately negotiated brick & mortar offers. Consequently, OFMs typically have an average discount in the range of 25%-40% off per transaction. Because OFMs generally don’t charge merchants to join their network, they must be more selective about who they will allow joining their network – favoring popular local merchants instead of low-usage, online-only merchants.
Why OFMs Deliver Better Value to Organizations
Employee Funded Model discount programs have few if any, direct relationships with merchants. On the other hand, OFMs rely heavily on their direct relationships with merchants. OFMs cultivate and nurture ongoing direct relationships with merchants. This allows them to deliver greater value to your employees because:
- They can negotiate directly for better discount offers;
- They can execute custom redemption codes and serialized coupon offers to make redeeming easier and more reliable;
- They can work directly with merchants on behalf of your employees, to provide higher levels of customer service, resolving questions and issues quickly and efficiently;
- They can pass along to employees the entire discount the merchant is willing to offer, rather than keeping a portion to help pay for expenses.
OFMs are incentivized to grow the number of employees who sign up and actually use the discount program. The more employees they can attract and engage, the more the OFM will benefit. As the program grows and more constituents use the discount program, the cost per employee should actually decrease.
The “Hybrid” Model
Keep an eye out for programs that charge a monthly subscription fee, yet also rely heavily on monetizing their business from online transactions.
You can recognize a "Hybrid" model program by knowing the percentage of their merchant network that has Privately Negotiated Brick & Mortar Offers versus the percentage of Third Party Aggregated Offers and Online Merchant Offers.
Discount programs using the hybrid model, in large part, consist mostly of Third Party Aggregated Offers and Online Merchant Offers. A very small percentage are Privately Negotiated Brick & Mortar Offers. Ask your sales representative for the percentage of contractual relationships they have negotiated directly with merchants, and how many are obtained from third parties. This will help you identify whether or not their network consists of the prime Privately Negotiated Brick & Mortar Offers. They may not be willing to share this information, which should serve as a red flag.
Why Restaurant Discounts Matter
Because most people are accustomed to dining out, restaurant discounts are critical to getting employees to participate in your discount program.
On average, Americans eat out 4.2 times a week, or a little over 18 times per month. According to the Bureau of Labor Statistics, the average American spends $232 per month or $2,784 per year to eat commercially prepared food outside the home. High-income individuals (in the top 20% income bracket) will spend a whopping $6,510 per year on commercially prepared food.
National chain restaurants
Although most national chain restaurants have wonderful name recognition and consumer appeal, they are typically quite restrictive about giving real, honest-to-goodness discount offers that are redeemed at the point-of-sale. Most use gift cards and other methods that require a multiple-step redemption process, making it more difficult for employees to truly save money. While casual and fine dining restaurants are popular and searched for most frequently, quick serve (fast food) restaurants are typically the most frequently redeemed. Make sure your discount program has a good mix of casual, fine, and quick-serve restaurants.
This can be expensive for the discount network, but pays off significantly for your organization, as employees will frequently return to your mobile app or online discount network to look for a local restaurant discount.
Size Matters: How To Compare Discount Networks
When doing your due diligence, be prepared to encounter some rather creative methods with how discount networks compare themselves to competitors. It’s helpful to know how they spin those numbers to their advantage, making it harder for you to arrive at an apples-to-apples comparison.
According to the U.S. Census Bureau’s Quarterly Retail Report, 88% of all disposable income is spent at brick and mortar stores, while just 12% is spent online. If your discount program has only online merchants, then it will only be relevant for only 12% of your employees' overall purchases. In-store offers are critical to the success of your discount program.
That’s why the number of physical merchant locations within proximity of your employees can mean all the difference when it comes to employee engagement. The more physical locations where your employees can save, the more opportunities they’ll have to engage with your program. But because most discount programs are monetized by online transactions, they have little motivation to include merchants with physical locations. In these cases, you’ll notice they simply avoid any mention of their total number of in-store merchant locations.
Instead, they use creative methods to arrive at an estimated number of discount “offers” or “discounts.” But this tactic is prone to manipulation and can obfuscate the true breadth and depth of their savings network. If a discount network lacks a significant number of physical locations for your employees to save, be on the lookout for these creative methods to deceptively report the size of their discount network in one of these ways:
1. Creative Math:
Some programs add the number of locations and discount offers together, calling them “opportunities to save” or “ways to save.” A savings location should be just that: a single physical location with one or more discounts on its product or service.
2. Multiple Counting of Same Location:
Some programs count the same offer multiple times simply by manipulating the expiration date. For example, they will list the same product/service for an entire year, but expire an offer each month. In this way, the program will count 12 offers for the same product and/or service. This practice underscores the reason to compare physical locations rather than the number of “discounts” or “offers.”
3. Counting Redemption Type:
Another technique used to artificially inflate the size of the merchant network is to count each type of redemption method as a unique offer. For example, a mobile coupon, an in-store coupon, and an online discount are counted as three distinct offers, when in fact the discount and product are the same.
4. Counting Cities Instead of Locations:
One technique used to inflate the size of networks is to count the number of cities where savings can be had. But rather than counting cities or towns with physical locations, some providers count all municipalities because any user with access to a computer can use an online discount. Look for savings networks that count in-store locations with a discount offer. The most recent U.S. Census of Governments reports 19,522 municipalities in the United States. So be on the lookout for those networks that use municipalities as their only measurement for the size of their network.
5. Location Inflation:
Some providers inflate their numbers by using grocery/convenience stores and pharmacies in their location counts. To justify this, they may offer public-facing grocery coupons or pharmacy discounts that offer very little value and are available virtually anywhere. With 40,000 grocery stores, 155,000 convenience stores, and over 67,000 pharmacies, ask your program if they include these types of stores in their location counts.
6. Clients Instead of Locations:
When the number of physical locations is not convenient to report, some discount networks will cite their number of clients. This says nothing about how many ways your employees can save.
Discount Network Evaluation Checklist
This worksheet can help your organization determine how potential discount networks deliver on the most important features relating to your organization's goals. (Download a PDF here)
Download the evaluation checklist for Access Perks / Access Development here.
Affiliate network: A web publisher or network of websites that promote discounts via its online channels.
Affiliate marketing: A type of performance-based marketing in which a business rewards an affiliate or “publisher” for delivering web visitors to its e-commerce website.
Discount platform: (or Discount Network) A collection of merchant-offered discounts that are bundled into a coupon book or digitally delivered platform and given as a benefit to a closed group or constituency group.
In-store: A merchant location where a purchase is made for a product or service at a physical location, sometimes referred to as a brick and mortar store.
Merchant: A retailer or brand with one or more locations.
Mobile coupon: A discount offer redeemed wing a mobile device at the point-of-sale.
Offline merchant: A physical store location, not an e-commerce site.
Online merchant: An e-commerce site selling goods or services.
Print at home: A coupon or offer that is printed by the user.
Retail proximity: A merchant within a consumer’s typical travel distance.
Store Location: A physical store offering to sell goods or services.
If done thoughtfully, a turn-key discount platform can have a significant impact on your organization’s ability to attract and engage your constituents. For additional information, you may want to consider the following resources:
See how other organizations have used a discount program to solve specific challenges
- Why Employee Discount Programs Work: From One HR Professional to Another
- The Discounts Employees Want (Based on What They Buy)
- Employee Engagement and Loyalty Statistics
- Employee Benefits and Perks Statistics
- How Amazon is Killing Free Discount Loyalty Programs
- Research: How Far Will Consumers Travel to Make Routine Purchases?