6 Ways to Increase Gratuities in Tip-Dependent Jobs

6 Ways to Increase Gratuities in Tip-Dependent Jobs

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Restaurants and bars may be the first that come to mind when thinking about business models whose employees rely on tips or gratuities for at least a portion of their income, but they aren’t the only ones.  Here are six marketing strategies that can help increase gratuities for employees in tip-dependent roles.

When your income or that of your staff depends partially on tips, if you increase gratuities it can increase employee satisfaction and retention, too.

Only 8 of the 50 states in the U.S. require that minimum wage for tipped employees (defined by the Fair Labor Standards Act, or FLSA, as those regularly making $30 per month in tips) be the same for tipped as non-tipped workers. The other 42 states allow a tip credit of some sort, presuming that employees in tipped positions will usually more-than-make-up the difference between the reduced minimum wage and their state’s regular minimum wage.

One of the jobs most commonly associated with  gratuities, as part of its compensation structure is that of restaurant waiter or waitress; however, there are many other industries where tips make up a portion of the employee’s income.  This is important because overall employee compensation plays just as big a role in helping these types of businesses attract and retain quality employees – and grow their business – as any other:

  • Restaurants
  • Bars
  • Baristas and coffee shops
  • Catering
  • Salons
  • Spas
  • Pet
  • Valet parking
  • Taxi drivers, chauffeurs, shuttle drivers and other private transportation businesses
  • Hotels / Motels / Bed and Breakfast (almost any type of hospitality business) porters, valets, housekeepers, room service wait staff and many others

If employees at your business working in a tipped position, you may find that they ask for ideas on how to improve gratuities to increase their income. These “tips” can help to increase gratuities, and they can help your business provide a better customer experience in the process. 

How to increase gratuities from customers or clients.

1.  Worry about each client and the tip will take care of itself.

Provide a positive customer experience for each and every client by being present in the moments you have with them, paying attention to the details you know improve the customer experience and keeping an eye out for warning signs that something is not going according to customer expectations.

2.  Unremarkable experiences produce ho-hum tips.

You can improve customer tipping, referrals and word of mouth marketing by ensuring that your customer experience is remarkable, rather than generic.  If your customer can get the same experience with a competitor as they can in your business, it’s simply not extraordinary. Likewise, in a tipped position, if your client can reproduce the experience they receive under your care with another employee in or outside of your business, you have failed to create a unique, remarkable, tip and word-of-mouth-worthy experience for your customer.

3.  Customers don’t care about you or your business until they know that you care.

Loyalty and gratuities in a tip position are not (usually) produced due to the generosity or wealth a client possesses. Rather, they are a direct reflection of how much they feel that you cared about them and their experience as your customer.

4.  Avoid self-serving strategies.

While it may be tempting to recommend high-priced items to a customer in order to increase the basis upon which they will calculate a gratuity, the better strategy for the long and the short term is to only make recommendations which are truly in the clients best interests.  When customers feel that you have their best interests at heart, they are much more likely to rely on your expertise and show their appreciation when it comes time to tip, as well.

5.  Be the co-worker you would like to have.

One poorly-trained, dissatisfied or disengaged employee can bring tips down for everyone; because in many cases more than one employee will impact the customer experience and will have an opportunity to make a negative impression.  For a business whose employees rely on gratuities, whether they are shared or not, creating a culture where employees are motivated to do what is right for the customer – whether it’s their customer or not – will mean higher gratuities and more customer satisfaction, referrals and word of mouth marketing for everyone.

6.  Manage – and exceed – expectations.

Setting your business and your employees up for success in improving client tips, customer satisfaction and increasing referrals, reviews and positive ratings requires that you exceed customer expectations in ways that are buzz-worthy.  To do this, you must also manage customer expectations by educating clients about what they can expect to be true when they do business with you – in a way that provides margins where your employees can then exceed those expectations.  In other words, under-promise, over-deliver!

You might also like: What Does an Ideal Customer Experience Look Like, Anyway?