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BetterWorks aims to be Groupon of employee perks

Startup is striking deals with local merchants and employers in order to offer workers great deals on all kinds of entertainment, education, meals, and more.

Employees love their perks, be it cheap gym memberships, lower-priced ski lift tickets, or discounted restaurant meals, and a new startup is aiming to do for these kinds of rewards what Groupon and LivingSocial have done for local coupons.

The startup, Los Angeles-based BetterWorks, has a simple idea: reach out to local merchants and strike deals for year-round offers while at the same time signing up companies that will offer those deals to their employees. The result? The companies have new ways to incentivize workers, merchants have a new source of regular customers, and employees get a wide range of new perks--and maybe even a sense that their employers care about them.

BetterWorks has already launched its service in the LA area, and has now come to San Francisco. It plans to expand next to Austin, Texas, and then into other cities at a rate of about one a month.

Perks like free or discounted meals, cheap massages, and low-price movie tickets are a great way to build employee loyalty, the company believes. According to BetterWorks CEO Paige Craig, a recent study showed that workers value perks like these at three times their dollar value. And if true, BetterWorks' service gives companies a way to cement relationships with staff at a bargain.

Already, Craig said, BetterWorks has signed up more than 200 companies as customers, and is making negotiated rewards available to more than 20,000 employees who can log on to BetterWorks' Web site and choose from a broad array of offers. Craig explained that restaurant meals come at discounts of between 10 to 30 percent, while in-person services have prices slashed at between 30 and 55 percent. Online services have even better pricing, with discounts of between 50 and 80 percent, he said.

Designed to be shared
One feature of BetterWorks' system that seems geared toward attracting the participation of significant numbers of employees is that all perks offered through the service can be shared by multiple people. That means, Craig said, that when an employee signs up for a discounted meal, the discount can also be applied to additional employees. Or, for example, lift tickets may come in sets of two or more.

The idea here is that this helps BetterWorks leverage group-buying and get better deals from merchants. And when the company explains its system to such venders, he added, 75 percent sign up.

But regardless of how many employees a company has, or how many perks those employees buy, companies pay a set monthly fee. There are no per-employee costs. At the same time, merchants only get paid when employees choose their services. Craig said that so far, 7 percent of employees at companies that offer perks through BetterWorks log on to the system every day.

And while BetterWorks' system seems fairly low-tech, Paige said that in fact, there is a good deal of technology operating behind the scenes. For the most part, that revolves around personalization and tools that drive users' selections. Craig explained that the service aims to learn what users like, and to point them to the kinds of perks in which they're most interested.

At the same time, BetterWorks is trying to come up with business rules that govern how certain kinds of perks are offered. For example, he said, in order to give employees reasons to stay late, some dinner offers may only be available to groups after 7 p.m. willing to have food sent to the office. Craig said that rules like these will begin to roll out within two to three months. He said these kinds of systems will be created in conjunction with customers.

BetterWorks has been a study in speed. Craig said that the company only began hiring in January after putting together its own financing last November. It closed its first venture capital round in July, and expects to complete a "pretty large round" in the near future, Craig said.

Correction at 2:25 p.m.: This article originally misstated how BetterWorks' system applies perks for individuals.