Tipping vs Yelp

Tipping vs. Yelp:

A Carrot & Stick Mentality to Hospitality in the Digital Age

We all want good service when we dine, but
tipping is no longer an effective means for
ensuring it. !
!
This deck takes a quick look at the evolution
of tipping and the state of Yelp as it stands to
enforce better quality service.!

!

DAKOTA GREEN & KRISTIAN HENSCHEL

Believed to be an acronym for ‘To Insure
Promptness’, tipping is the earliest evidence
that service needed additional control. !
!

The meaning "give a gratuity to" is ﬁrst attested in 1706. !
Source


"As a result of management’s limited
ability to directly control the behaviors of
servers at the point of service, they
attempted to do so indirectly by
delegating control responsibilities to
customers who leave tips in accordance
with the quality of service they received…”!


“…Servers have a certain amount of
autonomy in tailoring their service to the
customer, but in turn, the customer
controls the situation through tipping.”!
- Zachary Brewster!
International Journal of Hospitality Management !


Today, American diners hand over
roughly $42 billion in tips a year. !
Source


But why do people tip?!


Perceived pressure from employees!
To encourage good service in the future!
Pressure from fellow patrons (social norms)!
A desire to show gratitude for superior service!

DAKOTA GREEN DAKOTA GREEN & KRISTIAN HENSCHEL(@k_henschel)
(@dktgrn) + KRISTIAN HENSCHEL

The problem with tipping:!

“I don’t tip. Fuck all that”!
See what Mr Pink has
to say about tipping


1

Tips are paid after the service has been provided,
so the quality can't be changed after the fact. !

2

People tip even when they aren't planning to
return to the restaurant so the intended
motivations for tipping can't be predicated
upon ensuring a good future experience. !
!


3

Tipping has evolved to be a set amount, which
undermines the notion of enticing superior service.


4

It’s common knowledge that many employers pay servers very
low wages (sometimes as low as $2.13 an hour) because they
expect staff wages to be supplemented by tips.!
Source


In this vein, tips are no longer optional…!

…they are how servers get paid in the US.!

Servers have now come to expect, and know they will
get tipped regardless of their effort or quality of service.!


So as this archaic, irrational system fails it’s intended
purpose and loses its inherent motivational qualities…!


…the digital age has given birth
to a new form of motivation. !


One of the biggest and
most popular restaurant
review sites in the US!

The site and app receive
108 million unique visitors
each month, using over 42
million reviews to evaluate
some 1.1 million
businesses!

Source


Yelp reports that roughly
45% of its web trafﬁc
comes from mobile
devices.!
!

Source


So, we know it’s ubiquitous and a very popular
tool for choosing restaurants, but just how
powerful is it? !
!


The
Power
of
Yelp

90%

Studies show that
of Yelp
users say that positive reviews affect
their buying choices!

Source


The
Power
of
Yelp

A 2012 study found that a half-star
difference in a restaurant's Yelp
rating made it 19% more likely that
a restaurant would be busy at peak
times!!
Source


The
Power
of
Yelp

And another study found a onestar increase can lead to a 5-9%
increase in revenue…!
!

Source


The
Power
of
Yelp

Yelp has even developed a system for restaurants to track
the estimated revenue Yelp has brought their business.!


So what are the repercussions of this power?!


It means restaurant owners have begun to fear Yelp for
its potential to make or break their business. !


!

And servers have begun to fear
Yelp for its ability to name and
shame their bad service, a
consequence far more
threatening than a bad day’s pay. !


Many restaurant owners
have ﬁred staff over bad
Yelp reviews. !
!


This is interesting because where tipping was
initially meant to reward the server & had no direct
implications on the restaurants reputation, Yelp
reviews appear to be a more effective means for
ensuring service in the form of a threat.!

Hypothesis!

!

YELP = FEAR !
!
!
!
!


Hypothesis!

!

YELP = FEAR !
!
!
!
!

…and fear is the new !
motivation for superior service!
!

Yelp has put the power balance
of ensuring better service back in
the hands of restaurant owners
and managers at the detriment of
their business. !

You might be thinking, “Great! The digital age has
given a voice to the people…Yelp is AWESOME!” !

But, Yelp represents another imperfect system because…!


1

#Reviewers grossly exaggerate !

One man wrote a shocking review
about a restaurant, claiming the
staff were rude an no apology was
given for his incident. Surprisingly
the restaurant owner replied to the
review, standing up for his staff and
the restaurant, and ﬁnishing his
passionate retort with “you are no
longer welcome here”. !
Read his passionate response here !


2

Likened to the maﬁa, Yelp has been
#accused of extorting business owners!

This disturbing article
describes how Yelp’s sales
team calls business owners
with the promise of removing
negative reviews and elevating
positive reviews if the business
agrees to purchase monthly
advertising.!


And if owners decline, many
start to see positive reviews
disappear and negative ones
appear within a few days. !


The internet is rampant with these claims. You
see it at yelp-sucks.com or the Facebook
page We Hate Yelp or, ironically, Yelp’s own page
for itself which boasts a three-star overall rating,
dragged down by furious small business owners
seeking retribution.!
!


The truth is, Yelp has still not
turned a proﬁt since it was
created. It relies solely on
aggressive advertising as its key
source of revenue. !
!


Source

A Freedom of Information request last
year released nearly 700 Federal Trade
Commission reports ﬁled against the
company, a good portion of which use
the words “extort” or “extortion.”!

Source


So what does this mean?!


As the digital age continues to strengthen
the circulation of information, it seems
review sites are here to stay, putting pressure
on restaurants to ensure superior service. !


However, review sites work on trust,
and as more and more frustrated
business owners speak out against
Yelp, its future remains in jeopardy,
especially with burgeoning competitors
such as Foursquare and Urbanspoon.!

Review sites need integrity,
transparency (particularly to
regulatory bodies such as the
Federal Trade Commission), and
most importantly, honesty from
their users. !
!

Conclusion !

So, before you tip…!

…think twice about what
you’re actually tipping for…!


…and spare a thought to the business owner
before writing damaging and overly exaggerated
reviews on a site that is corrupt and extorts its
benefactors for revenue.!
!

Thank You!!
!
If you enjoyed this presentation, !
Please tweet it!!

!
Follow us on Twitter:!
!
@k_henschel!
@dktgrn!

Tipping vs Yelp

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