January 9, 2010 4 Comments
Every coffee shop and bar you visit you usually notice one uniting element: a tip jar. Some are overfilled with bills while others have a few measly quarters. At times it makes you wonder. Why the inequality? What can a business do to improve? What lessons can we learn?
I step back and think: why do people tip?
- Good service.
- Customer loyalty.
- You see other tips/peer pressure.
- Person in front of you just left a tip.
- You get some change back, you don’t want it.
- Quality of product(more you pay for your coffee, the more you will tip).
I’ve listed these in order of importance. How can we optimize? Good customer service is hard, and customer loyalty takes time. The third point is by far the lowest hanging fruit. If I can’t see the tips/opaque then I will assume that no one else has tipped, if I do see the tips/transparent and there are a lot then there is communal pressure for me to leave something as well. The tipjar should be transparent. What if I just opened, how do I get better tips from my early customers? Bootstrap your business with money in the tipjar, even if it’s your own.
Wikipedia is a good example of a successful tipjar. They raised a lot of money in their annual fundraiser, by employing two strategies: being transparent about their overall fundraising progress, as well as people’s individual contributions(point 4 above).
This idea of course extends far beyond tips. If you have a story to tell (business, religion, history, fable) be transparent about the support, and create even artificial support if necessary to get started.