Last week, Target made headlines by announcing it will offer Fitbit activity trackers to its 335,000 U.S. employees, becoming the latest firm looking to wearable devices as a way to improve its workers’ fitness and reduce healthcare costs. The deal is one of Fitbit’s largest corporate accounts yet. While corporate services generate less than 10% of Fitbit’s revenue, it’s “one of the fastest-growing parts of the business,” according to Chief Executive Officer James Park.
Target deserves praise for investing so heavily in its employees, but we would argue that its investment is money that is not being spent wisely. Below are a few questions that Target should have asked itself before purchasing Fitbits for all of its employees.
What happens to employees who own a non-Fitbit activity tracker?
Although Fitbit is the market leader in activity trackers, it only had 24% market share in Q2 2015. Since the 90% of Fitbits devices go directly to consumers, it is probably safe to assume most of their competitors have a similar breakdown, which means 90% of the remaining 76% of devices sold in Q2 2015 are being purchased by consumers, many of which are Target employees. If an employee owns an Apple Watch, does Target expect them to quit using it or also wear a Fitbit in order to participate in the Target wellness program? Getting employees to engage in wellness programs is difficult enough. Adding a major hurdle like forcing an employee to quit using the technology that they purchased causes way too much friction and does not embrace employee ownership of the health.
What happens when employees no longer use their device?
Several months ago, we wrote a blog post stating that “more than 70% of Fitbit purchasers from the first three quarters of 2014 churned before the end of the year.” We would argue that the churn rate for corporate devices will be even higher because everyone gets a device without having to see enough value to have to pay for it, which is the case for consumers who buy devices for themselves. If Target assumes their employees will have higher than 70% attrition, would they still think purchasing Fitbits is a good decision? Once users attrition off of Fitbit, how will they engage in the Target wellness program? What happens to employees who lose devices or break them? The uncertainty and limitations that arise once any employer answers these questions should cause them to think twice before incurring such a heavy expense.
How will the wellness program go beyond step tracking?
Fitbit does more than just count steps, but these features are heavily under-utilized and far from Fitbit’s area of expertise. By purchasing Fitbits and using the free Fitbit corporate wellness platform, Target is significantly limiting its ability to offer a broad approach to wellness. These limitations will hinder its employee engagement in their program.
So what should have Target done? We recommend corporate wellness programs to implement a bring your own device (BYOD) wellness strategy that allows employees to use the devices and apps that make the most sense to them. Employers can reallocate the funds traditionally reserved for devices to other engagement enhancing elements of their programs, such as rewards. Through this approach, employees with devices other than Fitbits can use their technologies in the corporate wellness program. These technologies will be based on the employee’s preferences and can go beyond traditional step tracking.