The Problem With Marketplace-First Benefits Platforms

If your company is building new benefits programs, you have many options. You can add stipends to payroll, send out gift cards, or search for a flexible benefits platform. If you settle on the latter, there are a few routes to take when it comes to the employee experience. Some platforms require employees to submit every expense for reimbursement, while others offer a marketplace where employees choose from a curated list of stores and services. 

We’ve already written about why reimbursements suck. Now it’s time to turn our attention to marketplace-first platforms, which may seem innovative but actually provide a limited employee experience. Below are a few reasons to reconsider partnering with a marketplace-first benefits platform. 

They don’t provide the highest degree of employee choice

To put it simply, a marketplace approach limits employee choice. A recent survey from CNBC and SurveyMonkey found that 78% of employees said it’s essential to work at a company that prioritizes diversity and inclusion. When it comes to benefits, the easiest way to ensure that programs are as inclusive as possible is to give employees more choice in how they spend their benefit dollars. That way, you can cater to a wider variety of wants and needs with your benefits program. 

With a marketplace-first platform, there’s no way to know if employees will truly want or care about the available items. Companies often choose to invest in employee benefits because they want to promote employee wellness and help employees manage stress. But it’s important to remember that wellness means something different to everyone. A marketplace can be a powerful way to highlight spending options, but anchoring your program around it may feel limiting in comparison to a platform that leads with the message of spending anywhere to provide the choice your employees crave.

They may not provide global benefit parity

Leading with a marketplace may also create a subpar experience for your global employees. In light of shifting attitudes during the pandemic, more companies are expanding their remote work policies and building a global workforce. This creates a greater need to serve these global employees with the same level of care as U.S. or HQ employees. 

The issue is that marketplace-first platforms often favor certain locations over others. While U.S. employees may have a wide variety of marketplace options, the platform might not have as many partnerships with companies that can serve a global employee base. If you’re evaluating a marketplace-first platform, consider the degree to which this approach may leave your global employees feeling like an afterthought. 

They’re not vendor-agnostic

Today, consumers are more conscious of where they spend. Nearly two-thirds (64%) of global consumers would buy from or boycott a brand because of its position on a social or political issue, according to an Edelman study.

Marketplace-first platforms may promote certain companies or brands more heavily than others, or they may have partnerships with select companies that provide deeper discounts to employees. Inevitably, some of these brands will hold values or have company practices that go against employees’ personal belief systems.  

Discerning employees might interpret these partnerships as an endorsement from their employer, which could negatively impact employee retention. Research from Qualtrics shows that nearly half of employees have considered leaving their company because it did not adequately exemplify their personal values. Over half (56%) wouldn’t even consider a job at a company if they didn’t agree with its values. For employers that are considering a new benefits platform, this means a greater need to evaluate every aspect of the employee experience with a critical eye. 

If employees are scrolling through a marketplace and see companies that have made the news for negative reasons being promoted, it may leave a bad taste in their mouth and weaken the relationship with their employer. A benefits partner that takes a more vendor-agnostic approach and emphasizes employee choice over a marketplace can help you avoid this possibility. 

Points systems are confusing

The marketplace-first approach sometimes relies on a points system where employees collect points that they then redeem for products and services. While this might seem like a fun way to gamify the employee benefits experience, it’s often confusing for employees. Employees are left unsure of core elements such as the conversion rate of points to dollars or how points are distributed and may feel in the dark about the actual value of marketplace items.

If their benefits partner supports reimbursements, employees may be so frustrated by the points system that they bypass the marketplace altogether and buy an item directly from the vendor. They then need to submit the expense for reimbursement, which can be a headache for employees. 

Whether an item is actually more expensive on a points system or not, the confusion and employee perception it creates delivers a user experience that’s less than ideal. Some employees also find the gamification infantilizing and would prefer a simple, easy-to-use dollar system. 

Items may be marked up in price

It may also be the case that items are in fact more expensive on a marketplace than through direct purchase. To monetize their marketplace, platforms might mark up certain items or price them higher so they can offer “discounts” to appear more valuable. 

If your company is evaluating benefits platforms, you probably value transparency and also want an option that will help employees get the most wellness “juice” out of their benefit dollars. 

Marketplace-first platforms that price hike provide the opposite experience. The benefits budget you worked hard to advocate for internally won’t go as far, and both stakeholders and employees won’t trust or understand the pricing strategy. It’s safe to assume that employee engagement and utilization rates will suffer as a result. 

The takeaway

When you’re evaluating benefits platforms, you can’t ignore the employee experience. Flexibility, choice, and ease of use are qualities that should be at the core of your benefits programs. While traditional benefits programs see engagement rates of 15% or less, companies that partner with Benepass often see engagement rates of over 85%. 

Our vendor-agnostic, card-first approach emphasizes the power of employee choice. We believe that employee choice is the key to benefits utilization. Each employee has a unique definition of wellness, and Benepass helps companies cater to every definition by enabling employees to spend funds on a wide range of goods and services they care about. Our platform’s Explore page provides inspiration on where to spend, but employees can easily swipe their card to purchase anything within their eligible spending categories. Ultimately, we prioritize giving employees the freedom to define what wellness means to them and find that this leads to the highest levels of engagement. 

To learn more about Benepass’s approach, reach out to our team or contact us at sales@getbenepass.com.