Tipping has been and is still a controversial topic for many people and companies. Employers are now only required to pay tipped workers a wage that equals the federal minimum wage when the average tip amount is taken into account.
Tipping has been and is still a controversial topic for many people and companies. The practice of the consumer giving gratuity in addition to the money that the employee gets from their employer has a surprisingly long and complex history.
The tradition of tipping originated in the Medieval Period with servants receiving extra money from presiding nobles within the master-serf relationship. Wealthy Americans discovered the tradition while on vacation in Europe and brought the tradition to the United States where it quickly became a hated custom and was branded as “un-American and undemocratic”.
After much debate and pushback, the custom of tipping gained popularity as restaurateurs realized that it offered unique benefits. Tipping both subsidized employees’ pay with extra money provided directly by guests and allowed owners to keep their costs down significantly.
Fast forward to today: employers are now only required to pay tipped workers a wage that equals the federal minimum wage when the average tip amount is taken into account. In the United States, only seven states mandate that all workers, regardless of tips, are paid the full state minimum wage.
Stats on tipping:
The restaurant industry is synonymous with tipping. However, just like in other historical industries, it is common to tip other service providers. Employees within the hospitality, spa, transportation, residential cleaning, and hair salon industries all commonly receive customer tips as part of their jobs.
Although tipping rates are not universal across the country, the standard tipping percentage for service is 15%. The Northeast has the highest average tipping percentages with New Hampshire leading the charts at 20.47%.
Text messaging’s impact on the service industry:
Many service industries, other than restaurants, are adopting the use of SMS text messaging to increase tips for their employees and generate more revenue. Texts provide an easy way to send an automatic and customized message to customers requesting a tip.
The average person checks their phone 160 times a day. Text messaging is one of the most common ways Americans use their smartphones. In fact, 97% of smartphone owners use texting as the main feature.
Text messaging is also one of the most effective marketing tools to reach customers. Texts have a 98% open rate compared to email marketing that has, on average, a 20% open rate.
Allset, a software company, has designed a text messaging experience specifically for increasing tips for service businesses. Their technology helps increase revenue by sending customized and personalized text messages requesting a tip to customers once a job is completed.
“We believe service businesses deserve tools that help their workers and company earn more.” Says CEO Justin Clegg. “Solid communication and marketing are foundational for businesses to generate revenue. Through Allset’s communication platform businesses are generating tips of $35 on average, and increasing tips received by 300%.”
According to a poll by American Painting Contractor, 52% of painting business owners said they receive tips, and 48% said they did not.
Allset has helped the painting industry earn more tips with a conversion rate of 9% and an average tip-per-job of $107. They feel this is just the beginning.
Why tipping matters:
Although tipping is not mandatory in the US, it is a way to show gratitude, increase income, help increase positive emotions, and reduce stress according to an article published by the Association for Psychological Science.
One question many customers ask is “should I tip my service provider?”. Allset is helping eliminate confusion in a non-intrusive way with automated text messaging.