5 Reasons Why You Need to Stop Encouraging Tipping in Your Business

5 Reasons Why You Need to Stop Encouraging Tipping in Your Business

I’ve always been a great tipper. I’ve also made a lot of money working largely tip-based jobs. However, some people just aren’t inclined to tip. Some cultures don’t even condone it. Believe it or not, no tipping policies can triple profits in a service business.

The choice whether or not to tip has to be made by the customer, without any kind of outside pressure such as pushy staff, conspicuous tip jars, and signs thanking customers in advance for “showing their gratitude.”

Here’s 5 reasons you should stop asking and just be grateful if it happens:

1. Asking is very low end.

The thing that really gets me is bars that charge 300% markups and high-end restaurants that charge $50 or more for a small plate of food. Then you go to pay the bill with your card and that darned “Enter Tip” shows up, sometimes with preset increments instead of letting you put the amount in yourself. What? You not making any money charging me $100 for something that cost you $20 to make? Disagree if you like, but this is what people are thinking when you’re pushing a tipping agenda.

Why tipping shouldn't be encouraged in business

2. You’re telling the world “I’m a cheapskate employer.”

You really are. And it relates back to the first point because, regardless of the profits you may actually be making, most people are savvy enough to know they’re paying WAY more for your products and services than you are. Otherwise, you’re not a very bright business owner! Looking like a cheapskate doesn’t just make you look low end, it makes you look greedy, which doesn’t bode well for branding yourself as a good employer and community partner.

3. It turns people from non-tipping cultures off.

In many Asian cultures, for instance, it’s considered an insult to offer a tip to service workers. Most feel they’re paid well for their efforts and they are. Tipping in these cultures isn’t encouraged at all and sometimes akin to calling someone a low life or broke loser. Travelers and immigrants tend to have a huge community of referrals they can tap into as well, meaning when you lose one global customer, you’ll likely lose many.

4. Asking often defeats the purpose of a tip.

Giving a tip is often a show of gratitude for great service. With that said, many people will tip for shoddy service to avoid looking cheap, or for fear of secret ingredients making their way into their food or drink next time they visit. Regardless, putting up a sign encouraging tipping or asking for it prior to a meal or whatever really puts a damper on the reasons for tipping in the first place.

Arguments about encouraging tipping
Image Credit: Chris Pople/Flickr

5. The practise of tipping literally encourages in-fighting in communal tipping workplaces.

In businesses where communal tipping exists (ie., restaurants, coffee shops, bars, hotels) there’s just no way to accurately monitor cash exchanging hands. There’s been a number of times throughout the years that I’ve went out of my way to secretly tip a waiter or waitress for their good service, while making it clear it was “just for them” because the food was crap but the service was good.

However, this is actually against the rules established in most communal tipping environments and the employees that work in these businesses are often hyper-aware of the fact that this kind of practise and outright tip theft are constantly going on. If you’ve ever worked in such an environment, you know what I’m talking about!

On this point, I’ll end by saying you should pay your valued service staff more by raising your prices and cutting unnecessary costs, and enjoy the benefits that will come afterwards. Otherwise, you should still stop soliciting your customers and clients with tip jars, signs, and payment terminal pop-up screens asking them if they want to pay 5, 10, 15, 20 percent on top of their bill, rather than allowing them to make up their own mind.

Every business out there needs to do everything they can to stay competitive. Remember that customers don’t want to be told what to do, and you’re the one providing the service, not the other way around. Let them decide and your business is sure to grow.

Main Image Credit: Jorge Gobbi/Flickr

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