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Should You Offer an Employee Discount Program?

From flexible schedules such as four-day work weeks to employee discount programs, the perks you provide staff can help you attract candidates and build loyalty among current employees. However, before you implement a discount program for employees, it’s important to consider the pros and cons as well as the best practices for offering this type of perk.  

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What is an employee discount program?

An employee discount can be a specific savings on goods and services that you offer employees when they purchase from your company. For example, a restaurant might offer 20% off of food for employees.

However, a discount program is an employee perk that helps your staff save money on other purchases outside of your business. Typically, these programs are implemented in partnership with other organizations. You might partner with local businesses directly to offer your employees a discount or work with an agency that acts as broker to create relationships and negotiate discounts.

Some examples of discounts offered via these programs can include:

  • Savings on auto insurance or car maintenance 
  • Discounts on cell phone services or phones 
  • Coupons for dining or entertainment  

What are some benefits of employee discount programs?

The main benefit of an employee discount program is the savings your staff can take advantage of. However, implementing one of these programs can provide a number of other potential benefits for your business.

A boost to recruitment

An employee discount program may not make or break recruitment efforts, but it can be a way to attract candidates. Knowing they’ll have access to discounts on goods or services can be an incentive for candidates to choose one employer over another, especially if they have a strong affinity for your company’s products or services. 

Better employee retention

Small perks can add up for long-term employees, creating a reason for them to stay with your company. An excellent employee discount program that offers staff members savings opportunities in categories that make sense is just one of the many perks you can offer to support employee loyalty. Employees may be more likely to stay with an employer if they feel they are receiving added value beyond their salary.

Improved employee morale

When employees feel that you care about them and work proactively to take care of them, they tend to be happier in the workplace. While an employee discount program is not a replacement for fair pay and other important compensation benefits, it’s a way to go above and beyond for your staff. 

Sense of connection to your brand

Employees who receive discounts on products or services may develop a stronger connection to the brand. They may feel a sense of pride in using or promoting your company’s offerings, which can foster loyalty and advocacy.

Are there disadvantages to offering discount programs for employees?

Any time you implement employee perk programs, it’s important to consider potential financial, legal or human resource downsides. For example, it’s critical to ensure you implement an employee discount program in a way that is equitable across your entire business — work with internal or external HR and legal teams to ensure you aren’t accidentally creating scenarios that could look like favoritism or discrimination with your program.

You may also need to consider the financial implications — for your business and employees. For example, you might need to pay for inclusion in a third-party employee discount program, and even if you start with a free one, you might incur expenses in establishing it and communicating the benefit to employees. If you launch a program that doesn’t meet employee needs, you could waste money without getting the benefits.

Discounts on things employees don’t really need or want can also present a financial downside for staff. For instance, 20% off of goods or services might sound enticing, but if your employee didn’t even need that item or service to begin with, your discount program might not be worth it.

What to consider when evaluating employee discount programs

If an employee discount program sounds like a good idea for your business, you can begin researching partners and vendors that offer these services. It’s often easiest to partner with an existing discount program, but in doing so, consider the following questions. 

Do credible merchants participate in the program?

If your discount program for employees offers savings at well-known national chains, it can sound more credible and enticing. That increases the potential positive impact on recruitment efforts. 

Are there enough local discounts?

Consider balancing well-known national names with easy local access. A long list of chain restaurants looks great on paper, but if most of those chains don’t have a presence in your town, employees won’t get a lot of use from the discounts. 

How do employees take advantage of the offers?

Choose a program that offers convenient access to discounts for employees. Having to jump through three or four hoops to score 20% off of a service can be frustrating. Programs that support several options, such as mobile or printed coupons, help ensure everyone can take advantage of the offers they want. 

How much do you pay for the program?

Some employee discount programs are free for employers. These typically make money on advertising opportunities within the program, as brands offering discounts see it as a way to connect with new customers. When considering these programs, pay attention to what types of brands are included and ask the vendor whether the offers will change often.  

Other programs may require you to pay a fee for the service. When paying for employee discount programs, take time to try to measure the impact it has on your organization. For example, simply conducting a survey periodically to see if employees are using and like the program can help you understand if it’s worth the money.

FAQs about employee discount programs

What is a qualified employee discount?

A qualified employee discount is a savings opportunity provided to all employees of a business. It allows them to receive a certain discount on goods or services that are sold to customers as a normal part of the business processes. For example, individuals who work for a clothing store may be able to buy clothing items from the store at a discount.

What are some good categories for employee discount programs?

When working with vendors and partners to integrate an employee discount program, consider the type of discounts that might be relevant to your employees. For example, dining, groceries, cell phone services, automotive services such as oil changes and entertainment are all common discount categories likely to benefit employees. 

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