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There are some fantastic programs that manage to captivate employees and generate positive engagement outside the office – no small feat. As with any business, there are also some programs out there that aren’t going to provide much value to employees, and a few that can be downright damaging to the company.

Like many businesses, the buyer tends to get what he/she pays for. While we mentioned that most of these programs are inexpensive, there are free employee discount programs available. The lure of free is hard to resist, but there are serious issues with free employee discount programs that should give any executive pause before offering them as a benefit to employees.

What Free Employee Discount Programs Aren't Telling You

Here are ten facts about free and super-cheap employee discount programs you probably won’t hear them admit:

1. It’s free for you, but a revenue generator for them -- How do “free” employee discount programs survive? They collect revenue off every transaction. These are called “affiliate offers,” and they reward referring sites with a percentage of every transaction they generate. The result is that the offers themselves are lower so that there’s enough margin to pay back to the discount provider.

2. They’re giving your employees advertisements -- The affiliates-only model incentivizes the discount program provider to push the most-profitable deals, instead of serving up the most relevant offers to employees. It’s how free employee discount programs maximize their earnings, but it doesn’t help employees too much.

3. There aren’t many offers employees will actually use -- Free employee discount programs are typically almost 100% online-based. While online shopping is growing, it only comprises about 6% of national spending. Employee usage of the program will be dependent upon in-store offers, which are not part of freebie programs.

free employee discount programs4. The deals are publicly available -- The deals being served by cheap and free employee discount programs usually aren’t exclusive or even unique. They’re freely available to the public at large through online searches, daily deal providers, and at deal aggregator sites such as FatWallet. Employees will recognize fairly quickly that a retailer’s “Back to School” sale isn’t really an exclusive benefit, but instead a publicly available marketing campaign.

5. Employee data is likely being sold -- The other way some free employee discount programs create revenue is selling usage and redemption data back to the retail community. This is usually disclosed, but buried in mounds of fine print.

6. There’s no customer service -- Eventually, an employee is going to have an issue redeeming an offer, or a question about why the discount isn’t showing up in their online shopping cart. Free employee discount programs don’t have member service centers, so most of these issues wind up being routed to your HR department.

7. There are no mobile-based coupons -- As smartphone adoption grows, so is mobile coupon usage. The phenomenon is making coupon fans out of groups who haven’t been heavy users in the past, such as men and Millennials. A discount program with coupons available anytime, anywhere on a mobile device is instantly relevant to nearly every person in an organization, but these offers won’t be found in most free or cheap programs.

8. They don’t have a direct relationship with the merchants -- Why does this matter? Major retailers are constantly rolling out deep, limited-time offers and special deals for certain discount programs. Like mobile coupons, these deals simply won’t be found in most free employee discount programs.

9. Your employees will be spammed -- Many free employee discount programs bombard members with an avalanche of marketing, including frequent emails. These programs are comfortable employing spam tactics, but it will wear on your employees very quickly – to the detriment of their employer.

10. They’ll add complicated, fruitless schemes -- To help make the publicly available offers seem more attractive, some free employee discount programs will allow employees to earn points from their purchases that can then be redeemed for merchandise. Unfortunately, the amount of points required to earn a piece of merchandise is so high that most employees will never benefit from this feature. While most people love to earn points on any kind of purchase, there can be repercussions when they can’t actually do anything with them.

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The purpose of an employee discount program is to build good will between employer and employees by helping them save money on their purchases. That requires relevant offers, responsible marketing to drive usage, and solid customer service. Without those, it’s just some offers that maybe employees will stumble on and consider using, with no benefit driven back to the employer.

Making an Investment (And Enjoying the Return)

This is a day and age when at any given time a quarter of employees are looking to change jobs. That means every quality benefit your company offers gives you an advantage. Even better: companies that engage over half of their employees retain over 80% of their customers. There’s an obvious benefit (and ROI) to quality employee benefits.

While free and cheap are hard to turn down, these programs aren’t likely to move the dial in a positive direction. In some cases, they can actually be a detriment to the employee and therefore to the organization.

The good news: great employee discount programs are effective engagement-builders, and roughly cost about the same as buying each employee a candy bar every month. When the typical employee can turn that benefit into a few hundred dollars in savings regularly, that’s an ROI that no other benefit can offer. A freebie program just gives you exactly what you pay for.

(Photo via Flickr)


Topics: Employee Engagement + Loyalty, Benefits Trends

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