Tips On Managing Tipping Overload For Small Businesses

Depending on what type of business you own, tips can be a crucial part of your bottom line and crucial to making sure that the bills are paid and your employees are fairly compensated. This is especially true in the restaurant or appointment industry, where margins are notoriously very narrow.

When POS systems began to roll out their automatic tipping walk-throughs, the benefits were immediate as the prompts made it easy for customers to add gratuity without a second thought.

But, like with most good things, the tipping environment soon became saturated, and now, there is nationwide tipping fatigue.

With more businesses adding the option to tip following a purchase, combined with prices going up, many customers are fighting back with their wallets. Tipping actually decreased from 2022 to 2023 according to a report from Gusto, which happens to be one of our top payroll systems systems recommendations.

That may ring alarm bells for business owners, and rightly so.

Here are a few simple ways that you can help ensure that your customers are still giving you the gratuity your employees deserve without being overbearing.

Give Customers A Personalized Experience

Your employees are, in many ways, your most valuable resource. They are the face of your business and are responsible for building relationships with your customer base. When your customers feel like they know and trust your employees, tipping becomes less of an obligation and more like you’re supporting a friend. Encourage and train your employees on how to build bonds with customers. Include profiles near your register that give insights into those employees’ interests and future goals. This can make it feel like a customer is supporting a local business or an individual that is important to them.

Be Honest

It’s a good policy in all facets of life, but being upfront with your customer base is a good way to build trust. The high cost of ingredients and materials is a strain on businesses as well, and letting your customers know that tips are an integral part of your employees’ well-being and your bottom line makes you more relatable. Customers will be more apt to help your business if they know where their money is going and why it’s still important to add gratuity to their purchases.

Go Old School

You can’t argue with the fact that auto-tipping mechanisms, like the ones popularized by Square, have changed the game and been a boon, particularly for restaurants, for a long time. But something about the simple tip jar still resonates with some customers. There is a personal touch to throwing some cash down in a jar. Employees get the opportunity to thank a customer directly and many times a cash tip can be much larger than the simple 15% or 20% option on a point of sale system.

Don’t Be Greedy

If you’re a business where tipping isn’t traditionally utilized, don’t be tempted to turn the function on for the allure of a little extra revenue.

Businesses, where your employees don’t offer hands-on, personal customer service, can turn off repeat customers by making them feel obligated to tip when they weren’t expecting it. It’s not worth the occasional few dollars here and there, and it’s a big factor in tipping fatigue overall.

Be Creative

If you’ve implemented the cash tip jar, or if you have a cash-only business, you can go a step further, particularly if you own a cafe or another type of quick-service restaurant, to find creative ways to make it easy to get some cash tips. Changing your pricing to offer popular items or services priced just under common denominations of bills means customers can quickly pass their change on to you.

As silly as it might seem, sometimes just the tip sign or using a silly pun can be the key. You can use humor — you can make it a competition — but surprising customers with something new and fun will remind them that the tip jar is there.

Pay Your Employees Fairly

Even when times are as tough as they are right now in the restaurant industry, ensuring your employees can support themselves, even without excessive tips, is important. Ultimately, your employees are the biggest factor in boosting your revenue and your gratuity and keeping them happy and committed to your business will pay dividends in the long run. Competitive pay and a good benefits package are a good start to keeping employees happy.

Final Verdict

Some of the best point of sale systems for small businesses made it very easy to increase tipping revenue. However, with consumers feeling the pinch, that same level of gratuity is no longer a given.

By taking some common sense steps to increase your overall relationship with your customer base, you can make sure that your business still thrives and that your employees and your customers are happy.