DENVER (CBS4) – Zestful celebrated raising a total $6.2 million in funding on Tuesday as it recruits more employers to change the way they compensate their workers — relying less on higher salaries and instead rewarding them with perks the company pays for in advance like a debit card.
“It was really, really hard for them to attract and retain top talent,” said Mat Vogels, CEO of Zestful. “What they really want is something that feels a little more personal to them.”
Vogels came up with the idea for the company when he was living in San Francisco. He saw large employers win over job candidates with high salaries and impressive perks that smaller businesses could not offer. But he also saw an opportunity for those companies that could not provide higher incomes to win over workers another way.
“Employees are valuing these experiences or products more than the salary difference,” Vogels said. “We try to add products that we think benefit or amplify someone’s personal life.”
Zestful surveyed employees in 2018 and discovered that a majority would rather earn $100,000 and enjoy many of their favorite perks paid for by their employer than a salary of $130,000. Even though the perks only totaled a fraction of the gap in income, around $6,000, the results showed 80 percent of respondents preferred the perks over the higher income.
“It’s the perceived value of their happiness,” Vogels said. “That just feels more valuable to me.”
But the concept does not only work for six-figure salaries. Zestful finds most of its clients are companies with 100 employees or less. Coffee shops and tire stores have also started to use the service.
The survey mentioned a lot of the popular products companies are choosing to include in their “programs” for employees like HBO, Netflix, Spotify, gym memberships, food subscriptions, or AirBnB.
Money can be allocated for a specific company or product as well as a category like “fitness” and users can then choose the gym they want to qualify for the perk. There is a catalog of 1,500 products and Zestful is adding another 50 each week.
The average user is in their 30s, but more traditional workplaces like law firms with older employees have also signed on.
“This shouldn’t be a replacement for salary,” Vogels explained.
The company does not let grocery stores, health insurance, or student loans apply for employer programs. Part of the success among younger users is the need for them to prioritize their salary toward a range of expenses, they enjoy knowing that the services that make them happy are paid for separately.
“If you’re looking to give your employees a little bit of something to add that extra happiness level, then we’re probably the right tool for you,” he said.
The cash infusion they have enjoyed over the past couple of years is a vote of confidence in their business model and also allows them to focus more on improving their product. They want to increase access and control on mobile devices as more people join Zestful.
“We try to make it easy for any company of any size,” Vogels added. “It really solidifies that we’re on the right track.”