Even coffee shops have loyalty programs for regular customers. So, why don’t companies have loyalty programs for employees who consistently come to work? 😉 An unexpected question, to which this startup responded by creating a platform that rewards employees for every hour worked in the company. And it earns revenue in this unexpected way.
Project Essence
“Why do we get all sorts of perks and bonuses through the loyalty program for constantly going to the same coffee shop, but don’t receive any additional rewards for consistently going to the same workplace?” — Salt Labs posed an unexpected question.
In response to this question, the startup created a loyalty program for employees of companies earning money through hourly work—builders, waiters, couriers, drivers, and other shift workers.
The offer of the Salt Labs loyalty program for employees is “earn more for each hour of your work.”
The catch is that people receive this “more” in the form of digital currency called Salt—they get as much currency as the number of hours they worked.
To achieve this, the employer must connect its time tracking system to the Salt Labs platform—and then the corresponding amount of currency will be automatically credited to the employee’s wallet in the app.
The currency can be spent on purchasing goods and services available in the app’s store. The store includes everyday items like food or groceries and entertainment such as going to the movies or amusement parks.
The principle of selecting goods and services in the store is that it should include items on which such people usually spend their earned money. They can only buy it through the app with the currency they earn in addition to their hourly wage.
This offer proved attractive, as an average of 30% of employees voluntarily register in the Salt app for companies that started collaborating with the platform. This is significantly higher than the level shown by other voluntary employee loyalty programs.
The claimed value of the Salt Labs platform for employers is that their loyalty program retains employees from resigning because they seemingly earn more while working the same number of hours. Although they earn the same amount of money, they can spend more—since part of the expenses is in the automatically credited Salt currency.
For testing its product, the startup chose Puerto Rico, where 75 thousand people have already earned more than 7 million Salt coins. The claimed value of the platform was confirmed there:
The number of resignations in companies using Salt Labs loyalty programs was 71% lower than in similar companies not using this loyalty program. At the same time, 90% of employees expressed readiness to take more shifts because each working hour brought them more “money.” Companies pay Salt Labs for using their platform, and these amounts probably depend on the volume of currency credited to employees (the number of hours worked by them). Additionally, the startup likely receives commissions from sellers when users buy goods from them for Salt currency through the app.
I first noticed Salt Labs in March of last year when it attracted its first $10 million in investments, still in the alpha version with a hundred users. Now, after conducting the first real pilots, the startup has raised another $8 million in investments.
What’s interesting?
Let’s start with the size of the potential market, as this usually determines the prospects of any startup.
In the United States alone, in 2022, 78.7 million people were working or earning income on an hourly basis—constituting more than half of all Americans earning money for their work.
Moreover, 76% of Americans, earning less than $50,000 per year, live “paycheck to paycheck,” with practically no savings. This extends to 65.9% earning between $50,000 and $100,000 per year and 47.1% earning over $100,000 per year. In other words, 50–75% of Americans spend all their earned money only on everyday purchases.
Enter a startup that offers half of working Americans the opportunity to spend more on everyday goods while working the same hours as before. It’s intriguing that only 30% of employees from companies implementing the Salt Labs loyalty program took advantage of this opportunity.
Although, perhaps a “whopping” 30% conversion from offer to user? 😉 In general, it’s another reminder of how compelling our offer may be, yet at least 70% of people may not react to it 🙁
The issue of high employee turnover is also understandable for employers, leading to increased interest in various platforms for employee retention.
In one article, it was mentioned that, based on pilot implementations, employees considered the value of such a loyalty program to be 10 times higher than the price the company paid for using the Salt Labs platform. It could even be said that companies achieved a tenfold return on their investments in the loyalty program—a very positive indicator.
Cynically looking at Salt Labs’ business model, their platform serves as a new marketing and sales channel for companies selling their goods in exchange for Salt currency. This is because they gain access to an audience of buyers gathered within the Salt app.
For Salt Labs itself, it’s an opportunity to generate additional revenue. Roughly speaking, if the stated price of a product is $100, the seller is actually willing to sell it for $50, and the company-employer pays Salt Labs $60 for the corresponding amount of Salt coins credited to the employee—then Salt Labs earns $10 when the employee buys that product through the Salt app.
It’s precisely due to this arithmetic that most platforms for rewarding employees and buyers strive to reward users not with cash but with gift cards.
Following this reward model for the same market of hourly workers, there’s a platform called Onaroll, which I wrote about in October of last year. However, Onaroll rewards employees only for successfully completed actions, such as when a courier delivers an order to a customer on time. Onaroll raised $20 million in investments.
Where to go run
The primary direction is the creation of loyalty programs tailored for hourly and shift workers. This market is substantial and expanding, with the challenge of high turnover being even more pronounced 😉. Since there’s essentially nothing preventing an employee from switching to a different company today and another tomorrow, incentivizing employee retention becomes crucial.
The models of Salt Labs and Onaroll are two very similar approaches that can be considered for adoption within this domain. However, they have one significant difference.
In Onaroll, an employee receives rewards only for specific achievements, which is an additional advantage for the employer as it motivates employees to perform better.
In the Salt Labs model, the platform can generate more revenue from selling products through its store. This is because every employee earns Salt currency for each hour worked, even if their performance is not high enough for bonuses 😉
So, regarding the choice of a specific model, there is still some consideration needed. However, the overall direction seems quite extensive and promising.
About the Company
Salt Labs
Website: saltlabs.com
Latest Funding Round: $8 million, 19th December 2023
Total Investments: $18 million, Rounds: 2