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Employee Discount Programs Can Offer a Range of Benefits at Little Cost to Employers

  • Employee Benefits
  • Article
  • 6 min. Read
  • Last Updated: 12/23/2019

employee shopping online using employee discount program
Employee discount programs provide a meaningful benefit to employees and the company. Discover types of employee discounts and potential advantages.

Table of Contents

Effective employee discount programs can make a considerable difference to job seekers as they weigh opportunities, as well as to companies looking to stand out in today’s competitive labor market and strengthen retention efforts.

What are employee discount programs?

These programs are a popular option that, ideally, are well-utilized when offered. Discounts can range from below-market prices on company-produced items to reduced membership fees at local businesses, and other nationwide programs administered by a third party.

Common employee discounts

Often, a small business offers its own products or services to employees (and family members) at a significantly reduced price. This is frequently the case with restaurants and retail outlets.

Another version of employee discount programs is tied to relationships or affiliations with other businesses in the community. Such group-shopping programs can include membership at a community gym or fitness facility, low-cost tickets for movies or other local entertainment, and special offers to area restaurants or hotels.

What are other types of employee discount programs?

Over the years, discount programs for employees have expanded from shopping discounts to offers that can positively impact employees' lives. These include:

  • Manufacturer or service employee discounts. It's not unusual for a business to receive discounts from manufacturers or service providers. Companies can pass along such discounts to their employees. Office Depot Business Solutions, for example, offers small business owners special purchasing arrangements for their products (electronics and office supplies, for example), which can then be shared with employees.
  • Discount programs for small businesses. Companies can also negotiate special discounts as part of their vendor contracts. It may be necessary to offer some concession in return, but the potential benefit (both to the company and its employees) can be sizable. Negotiated discounts on a vendor's products or services can also be passed along to employees.
  • Employee purchase program. Under this arrangement, employees can gain access to products, services or special package offers through a payroll deduction. Common examples range from education-related services (tutoring, college courses) to opportunities for travel, and fitness equipment designed to improve employee health.
  • Employee wellness programs. Programs that offer discounts and access to wellness activities can be a game-changer when it comes to employee recruitment and retention. Among the most popular wellness programs are those relating to smoking cessation, weight loss, yoga or other instructional classes, lunch and healthy snacks, and employee assistance programs.

Why should your company offer employee discounts?

As noted, an employee discount program is a great way to differentiate your small business. Other compelling reasons include:

Employee discounts can attract new employees

Small businesses need to stand out when recruiting, as larger companies may have more marketing and recruiting resources to leverage when attracting talented candidates. Unique benefits, including discount programs, are one way to accomplish this goal. Often, the breadth of a well-administrated discount program allows employees to find something that truly matches their personal interests. Discounts on local services can assist new employees who are moving into the area and need recommendations on items such as gyms, moving companies, and local entertainment.

Discounts are unique employee benefits provided at little cost

One of the best reasons to offer employee discount programs is that they're often cost-beneficial. When employees take advantage of external discounts, they generate business for third parties. For example, a theme park may offer discounted tickets to help attract crowds on less-popular days. This win-win situation results in lower overall costs to provide discounts, as all parties involved benefit. As a result, most discount programs cost very little to implement and administer.

Employee pride and marketing opportunities

Businesses' marketing efforts can benefit from offering discounts on its own products or services to employees. Discounted or free branded materials used by employees and seen by others in a public setting can help boost brand awareness and act as a no-cost way of getting the word out about the company's offerings.

Staff discounts can improve the workplace environment

Many employees experience stress both on the job and outside of work related to personal finances and work/life balance. Adding small benefits like a discount program is one way to help employees find services they need at an affordable price.

Activities like vacation planning can be made easier through discount programs offering reduced rates at theme parks and hotels. Legal or financial planning services provided at a discount through reputable providers may also provide employees with the opportunity they need to help manage their hard-earned dollars. All such efforts can help facilitate enhanced morale and a happier, more productive workplace environment.

What to consider when offering employee discounts

Before getting started, employers should carefully weigh potential pros and cons of employee discounts:

  • Discounting products or services offered by the company may increase sales, but it can also cut into profits.
  • Businesses that align themselves with third-party discount programs may find themselves actually less competitive in the job market, because similar programs may be offered by other competing companies.
  • Implementing an employee discount program can boost morale, but it also takes time and resources to get the program off the ground.

Costs and benefits must be taken into consideration before implementing an employee discount program for small business, and even after a program is in place and is being evaluated.

In the end, evaluating the benefits of employee discounts and possible drawbacks is a crucial step. Comparing available programs and their prices can uncover discounts that best match employees' needs. Explore the options of offering an employee discount program here today.


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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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