Picture yourself standing in a coffee shop queue. You place your standard order of a cappuccino and make the payment via your credit card. The cashier then rotates a small screen that displays a prompt for a tip, even before the barista prepares your espresso shot or steams any milk.
As tipping becomes more prevalent in various settings, many people find themselves grappling with a dilemma: should they tip more in hopes of receiving better service, or less or not at all if they feel resentful about being asked to reward service that hasn’t been provided yet? Additionally, some may feel pressured to tip the suggested amounts, which can sometimes be more than half the price of the item they’re purchasing. This dilemma is becoming increasingly common, as ttip jars with loose change and crumpled bills are being replaced by requests for larger tips, even for small purchases such as a $4 coffee.
In a study conducted in 2020, we examined the impact of a contemporary pre-service tipping culture on consumers and its implications for baristas and other staff members who rely on gratuities as a form of recognition for their hard work.
Point-of-sale platforms like Square and Clover are revolutionizing the integration of tipping into the service experience for businesses of all sizes. Traditionally, customers were used to leaving tips in full-service restaurants by filling out a line on the receipt. However, now tipping is becoming ubiquitous in new environments, such as cafes, bakeries, delis, food trucks, retail stores, flower shops, and liquor stores.
While some people find it convenient to leave a tip when placing an order, others feel that they are being pressured into tipping employees who haven’t provided any service beyond taking their order and handing over their purchase. Popular press articles on the trend highlight this dilemma and suggest that it’s creating confusion and discomfort among some customers.
How consumers really feel about it?
In collaboration with fellow marketing professor Hong Yuan, we conducted a series of experiments to investigate how individuals react to differences in tip timing, specifically whether tipping occurs before or after service. We controlled for variables that might influence tipping behavior, such as repeat customers or attractive workers, and assessed how it impacted tip amounts, ratings, and the likelihood of customers returning to the business.
The initial study involved a comparison of real tip amounts at two branches of a popular smoothie chain on the East Coast. One location collected tips when customers placed their orders, while the other requested gratuities only after handing over the smoothie. After examining 7,523 transactions, we discovered that tips were, on average, 75% higher at the location that asked for them after customers received their smoothies.
To further investigate the reasons behind it, we carried out three experiments using online participants and asked them to envision themselves as customers in various scenarios. The scenarios included ordering food and drink at a cafe or getting a haircut at a salon. Participants were randomly instructed to provide a tip either before or after the service.
After experiencing the scenarios, participants were asked to complete a survey using a rating scale to indicate how likely they were to return to the establishment and their overall impression of the tip request. In the third experiment, participants were also asked to specify the amount they would tip and how they would rate the service on Yelp.
The results from all three experiments demonstrated that pre-service tip requests were deemed as unjust and manipulative by participants. This, in turn, lowered their likelihood of becoming repeat customers. In the third study, pre-service tip requests before a haircut also resulted in reduced gratuities and online ratings.