Future of Payments
April 10, 2023

How to Choose the Best Tipping Model for Your Business

When it comes to tipping out stylists, wellness professionals, or any other tipped employee, every business has different needs. One thing all businesses that accept tips have in common, however, is the balancing act between finding a process that’s operationally efficient for the business and being beneficial for your customers and staff.  

Keeping your staff motivated, happy, and financially stable is more important than ever in today’s continuously tight labor market. Whether you’re adding tips onto bi-weekly paychecks, using cash, or opting for digital payouts, different tipping methods have their own pros and cons. Let’s explore some of the most common methods for tipping out service industry professionals and what you can expect from each. Finding the right method for you can help your business thrive—and your workforce thrive, too.

7 Popular Tipping Methods

1. Cash

It used to be that cash was king across all industries—now, the opposite seems to be true. From 2016 to 2022, the share of consumers who prefer to use cash has dropped from 27 percent to 19 percent. What used to be a reliable tipping method has now become more of a hassle. Consumers don’t often have cash on hand, so the majority of consumers tip on cards. And if you don’t have cash coming into your business, it naturally becomes harder to tip out your employees in cash. This leads to unnecessary bank runs and cash flow management time that could be keeping your staff from bigger tasks. 

2. Putting Tips on Paychecks

While it may not affect your clients or your administrative staff, having your stylists or wellness professionals wait two weeks to receive their tips has some significant drawbacks for them. One of the draws of working in an industry where you can earn tips is the immediacy of receiving that pay. Many industry professionals cite this as a reason they choose to work in the spa or salon space. Without that immediacy, your staff is likely to lose motivation—and to look elsewhere for work. 

3. QR Codes & Links

QR codes have gained popularity since the pandemic, with restaurants and other hospitality businesses using them as an easy way to display information directly to customers’ phones. With tipping, QR codes can also make your customers’ lives a lot easier. They simply open up their phones to the camera app and scan a QR code in order to be prompted to tip their stylist after their service has ended. This provides not only a more personalized experience but also a level of privacy, as tipping occurs directly on a customers’ phone and they may feel more comfortable in leaving the amount they truly want.

Using a link to tip is similar to using a QR code. For example, Tippy provides links that can be sent in text or email to allow clients to tip from anywhere. This is ideal for customers who leave and forget to tip, or call to pay over the phone. 

4. P2P Payments 

While it may seem tempting to let your customers use peer-to-peer (P2P) tipping methods like Venmo, CashApp, or PayPal to tip out wellness professionals directly, there are several things to consider. Yes, it may seem convenient, but it’s becoming more and more common to view this as an unprofessional tipping method. Stylists and other wellness professionals feel they can’t disconnect from their job as easily when clients have a direct form of communication with them outside of the business. Plus, with new rules about how much money can be sent over these platforms, it’s better for your business to stay compliant and shy away from relying on these apps. 

5. NFC Tags

One of the latest advancements in mobile payments technology, NFC stands for “near field communication.” NFC tags are stickers you can attach to your phone so you can tip out someone anywhere. Again, this provides a personalized and more private tipping method for customers, which bodes well for customer satisfaction and streamlining operations. 

6. Kiosks

Having a specialized tipping kiosk at your front desk can make the tipping process more personalized and positive. With kiosks, a customer is taken through a few short prompts in order to tip their stylist or wellness professional. Part of that process involves seeing a picture of their stylist and being given options for standard tipping amounts to choose from. In this method, the personal experience between the client and service provider is highlighted, which can often result in higher tip earnings. Customers also feel reassured that the entirety of their tip is going directly to the professional. 

7. Eliminating Tipping Altogether

A somewhat controversial option is to eliminate tipping altogether and raise the price of services instead. Again, it’s a delicate balance between doing what is best for your business and  customers and what is best for your workforce. Some salons and wellness companies have managed to raise prices enough to offset the need to tip. This allows them to pay their employees a higher wage where tipping is no longer necessary. However, removing tipping can be similar to removing the incentive for why many professionals entered the industry in the first place: the immediacy of seeing those funds at the end of each day. Plus, many customers prefer to tip, so you may find even if you go this route that stylists will still be earning tips anyway. 

Ultimately, you have to decide which tipping method is best for your business model, your customers, and your workforce. Solving for each of these factors may not seem easy, but it is doable when choosing a process that’s fast, reliable, and easy to use. 

Why Finding the Right Tipping Method Is Crucial in 2023 & Beyond

Fine-tuning your tipping strategy is more crucial than ever with a continuously tight labor market made up of new worker demands for faster pay, increased flexibility, and more control. Your workforce wants faster access to their earnings, and you want a way to keep customers coming back and business running smoothly. With Tippy x Branch, you can optimize the tipping process for customers, your business, and your workforce through a number of different digital tip payout methods such as QR codes, kiosks, NFC tags, and more. Plus, businesses who use Tippy & Branch have increased their tip earnings by up to 23%. 

Switch to a fast and simple digital tip payout process that leads to both higher earnings and greater customer satisfaction. 

Learn more about how to get started with Tippy and Branch’s integrated solution here!

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