Pressure to tip stops people from returning

Topics: Customer experience
For: B2C
Research date: October 2024
Universities: BI Norwegian Business School, University of Richmond

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📝 Intro

You’ve just enjoyed a nice cappuccino. As you’re paying by card at the counter, you get the option to choose to add a tip. 

You look up, notice the barista can see how much you will tip, and seems to be watching you. Feeling the pressure, you add a little extra than you planned.

Science says, this extra tip comes at a steep cost.

P.S. Don’t suggest tip amounts to your clients as this creates negative feelings about your brand and further prevents people from coming back

📈 Recommendation

Don’t observe or pressure your customers while they tip. 

For card payments, have your employees look away, or have your card machine face away from the cashier. For cash tips, consider having a tipping jar somewhere discreet or train employees to walk away while customers leave their tips on the table or in the bill folder.

People will be more likely to return and recommend your business to others.

🎓 Findings

• When customers feel observed and pressured while tipping, they are less likely to return and spread positive word of mouth, compared to when they have tipping privacy.

• As part of 4 experiments and an analysis on 36,888 transactions at a bar, researchers found that:

  • Customers at a brewpub were 24.7% less likely to visit again when they were not given privacy while tipping

  • People were 7.4% less likely to refer the business and return when they did not use a private tipping device (e.g. handheld card machine), compared to a private one (e.g. countertop card machine)

  • People were 11.7% less likely to say they would revisit and recommend it if an employee observed them tipping

  • On digital platforms providing services (e.g. deliveroo), people were 40% less likely to return to or recommend a business if the tip was communicated immediately to the employee

  • There was no difference in the amount people tipped while having privacy or not

• The effect weakens if the tip amount can be changed afterward.

🧠 Why it works

• We tip to express generosity, but if we’re being watched, it takes away the spontaneity of the gesture.

• When we’re watched while tipping, we feel negatively pressured, diminishing our sense of control over the decision and amount to tip.

• We’ll try to avoid this negative feeling again by deciding not to come back to the place.

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✋ Limitations

• The study was done in the US, it’s unclear how this applies in countries where tipping is rare or not expected (e.g. Japan).

• The study only looked at card and contactless payments, although the effect likely applies to traditional cash-tipping practices too.

• The study did not segment by customer satisfaction. It’s possible that customers who received excellent service might still return even if tipping wasn’t private.

🏢 Companies using this

• Hospitality venues seem to give customers privacy through different ways.

  • Employees often look away while customers tip or leave the card machine with the client and return afterwards

  • Some businesses also place the card machine so that it faces the customer only and use privacy barrier between the card machine and the employees

  • For cash tips, businesses use non-transparent tip jars or let customers place the tip in the bill folder while they walk away

• Most digital service platforms (e.g. UberEats, Doordash) give multiple tip options.

  • They allow users to tip after all interactions with employees have finished. For instance, Uber reminds people of tips after the ride is completed, giving customers privacy in their decisions

  • Deliveroo allows customers to choose the tip before completing the order and also gives you an option to change the tip up to 1 hour afterwards

Instacard lets customers change the tip amount before completing the other at checkout. 

⚡ Steps to implement

• In physical environments, ensure customers have privacy while tipping. For example:

  • Set up your card machines to ensure higher privacy (e.g. countertop payment devices facing away from employees)

  • Train employees to look away while customers tip or leave a cash bill with the customer and return once they’re finished

• On digital platforms providing services (e.g. Uber or Deliveroo), ask customers for a tip after they’ve received their order and finished interacting with employees. 

• Allow customers to change their tip amount after payment.

• Avoid giving customers suggestions on how much to tip as this makes people feel negatively about your company.

• You can experiment with notes letting customers know employees will not know they amount they tipped

• Use fun ways to ask for tips for win-win outcomes for your employees. For instance, let customers vote with their tips by asking them to choose between alternative tipping jars (e.g. cats vs dogs) to increase the amount tipped.

🔍 Study type

Online experiments and field experiment (at a brewpub in the US, analyzing 36,888 transactions between January 2021 and July 2022)

📖 Research

Tipping privacy: The detrimental impact of observation on non-tip responses. Journal of Business Research (October 2024)

🏫 Researchers

• Nathan B. Warren. BI Norwegian Business School

• Sara Hanson. University of Richmond

Remember: This is a new scientific discovery. In the future it will probably be better understood and could even be proven wrong (that’s how science works). It may also not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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