When Tipping Becomes a Customer Experience Problem

"If nearly half of your customers were irritated by a business practice, would you treat it as urgent? Customer satisfaction is a key driver of financial performance, yet many companies in service sectors ignore a growing source of frustration: tipping. Once confined to hospitality, requests for gratuities now appear in unexpected places -airlines, medical offices, auto repair shops, logistics providers, even butcher counters and impound lots. Digital payment systems, the gig economy, and the Covid-19 pandemic have accelerated this trend."

"Mark Bender is assistant professor of marketing at University of Tampa. Marco Bertini is a professor in marketing at Esade, Universitat Ramon Llull, in Barcelona. He is also senior adviser to Globalpraxis, a consultancy specialized in accelerating organic growth. Oded Koenigsberg is professor of marketing and deputy dean at London Business School. He is co-author (with Marco Bertini) of "The Ends Game: How Smart Companies Stop Selling Products and Start Delivering Value" (MIT Press, 2020) Rob Waiser is assistant professor of marketing at University of Kansas."

Tipping has expanded from hospitality into airlines, medical offices, auto repair shops, logistics providers, butcher counters, impound lots, and other unexpected service contexts. The spread of tipping is driven by digital payment systems, the gig economy, and the Covid-19 pandemic. A substantial share of customers feel irritated by these gratuity requests. Customer satisfaction strongly influences financial performance, so growing frustration over tipping represents a meaningful business risk. Companies in service sectors that ignore the tipping trend may face declining customer goodwill and potential negative impacts on revenue and loyalty.

Read at Harvard Business Review