Tipping vs Yelp

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Tipping Vs Yelp - A carrot & stick approach 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.

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  • Came across this interesting article : http://www.shiftgig.com/articles/when-terrible-customers-threatened-bad-yelp-review-restaurant-owner-took-stand "We do not negotiate with Yelpers"
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Tipping vs Yelp

  1. 1. Tipping vs. Yelp: A Carrot & Stick Mentality to Hospitality in the Digital Age
  2. 2. 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
  3. 3. 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 DAKOTA GREEN & KRISTIAN HENSCHEL
  4. 4. "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…”! DAKOTA GREEN & KRISTIAN HENSCHEL
  5. 5. “…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 ! DAKOTA GREEN & KRISTIAN HENSCHEL
  6. 6. Today, American diners hand over roughly $42 billion in tips a year. ! Source DAKOTA GREEN & KRISTIAN HENSCHEL
  7. 7. But why do people tip?! DAKOTA GREEN & KRISTIAN HENSCHEL
  8. 8. 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
  9. 9. The problem with tipping:! “I don’t tip. Fuck all that”! See what Mr Pink has to say about tipping DAKOTA GREEN & KRISTIAN HENSCHEL
  10. 10. 1 Tips are paid after the service has been provided, so the quality can't be changed after the fact. ! DAKOTA GREEN & KRISTIAN HENSCHEL
  11. 11. 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. ! ! DAKOTA GREEN & KRISTIAN HENSCHEL
  12. 12. 3 Tipping has evolved to be a set amount, which undermines the notion of enticing superior service. DAKOTA GREEN & KRISTIAN HENSCHEL
  13. 13. 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 DAKOTA GREEN & KRISTIAN HENSCHEL
  14. 14. In this vein, tips are no longer optional…! …they are how servers get paid in the US.! DAKOTA GREEN & KRISTIAN HENSCHEL
  15. 15. Servers have now come to expect, and know they will get tipped regardless of their effort or quality of service.! DAKOTA GREEN & KRISTIAN HENSCHEL
  16. 16. So as this archaic, irrational system fails it’s intended purpose and loses its inherent motivational qualities…! DAKOTA GREEN & KRISTIAN HENSCHEL
  17. 17. …the digital age has given birth to a new form of motivation. ! DAKOTA GREEN & KRISTIAN HENSCHEL
  18. 18. One of the biggest and most popular restaurant review sites in the US! DAKOTA GREEN & KRISTIAN HENSCHEL
  19. 19. The site and app receive 108 million unique visitors each month, using over 42 million reviews to evaluate some 1.1 million businesses! Source DAKOTA GREEN & KRISTIAN HENSCHEL
  20. 20. Yelp reports that roughly 45% of its web traffic comes from mobile devices.! ! Source DAKOTA GREEN & KRISTIAN HENSCHEL
  21. 21. So, we know it’s ubiquitous and a very popular tool for choosing restaurants, but just how powerful is it? ! ! DAKOTA GREEN & KRISTIAN HENSCHEL
  22. 22. The  Power  of  Yelp   90% Studies show that of Yelp users say that positive reviews affect their buying choices! Source DAKOTA GREEN & KRISTIAN HENSCHEL
  23. 23. 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 DAKOTA GREEN & KRISTIAN HENSCHEL
  24. 24. The  Power  of  Yelp   And another study found a onestar increase can lead to a 5-9% increase in revenue…! ! Source DAKOTA GREEN & KRISTIAN HENSCHEL
  25. 25. The  Power  of  Yelp   Yelp has even developed a system for restaurants to track the estimated revenue Yelp has brought their business.! DAKOTA GREEN & KRISTIAN HENSCHEL
  26. 26. So what are the repercussions of this power?! DAKOTA GREEN & KRISTIAN HENSCHEL
  27. 27. It means restaurant owners have begun to fear Yelp for its potential to make or break their business. ! DAKOTA GREEN & KRISTIAN HENSCHEL
  28. 28. ! 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. ! DAKOTA GREEN & KRISTIAN HENSCHEL
  29. 29. Many restaurant owners have fired staff over bad Yelp reviews. ! ! DAKOTA GREEN & KRISTIAN HENSCHEL
  30. 30. 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.! DAKOTA GREEN & KRISTIAN HENSCHEL
  31. 31. Hypothesis! ! YELP = FEAR ! ! ! ! ! DAKOTA GREEN & KRISTIAN HENSCHEL
  32. 32. Hypothesis! ! YELP = FEAR ! ! ! ! ! …and fear is the new ! motivation for superior service! ! DAKOTA GREEN & KRISTIAN HENSCHEL
  33. 33. 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. ! DAKOTA GREEN & KRISTIAN HENSCHEL
  34. 34. You might be thinking, “Great! The digital age has given a voice to the people…Yelp is AWESOME!” ! DAKOTA GREEN & KRISTIAN HENSCHEL
  35. 35. But, Yelp represents another imperfect system because…! DAKOTA GREEN & KRISTIAN HENSCHEL
  36. 36. 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 ! DAKOTA GREEN & KRISTIAN HENSCHEL
  37. 37. 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.! DAKOTA GREEN & KRISTIAN HENSCHEL
  38. 38. And if owners decline, many start to see positive reviews disappear and negative ones appear within a few days. ! DAKOTA GREEN & KRISTIAN HENSCHEL
  39. 39. 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.! ! DAKOTA GREEN & KRISTIAN HENSCHEL
  40. 40. DAKOTA GREEN & KRISTIAN HENSCHEL
  41. 41. 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. ! ! DAKOTA GREEN & KRISTIAN HENSCHEL Source  
  42. 42. 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 DAKOTA GREEN & KRISTIAN HENSCHEL
  43. 43. So what does this mean?! DAKOTA GREEN & KRISTIAN HENSCHEL
  44. 44. 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. ! DAKOTA GREEN & KRISTIAN HENSCHEL
  45. 45. 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.! DAKOTA GREEN & KRISTIAN HENSCHEL
  46. 46. Review sites need integrity, transparency (particularly to regulatory bodies such as the Federal Trade Commission), and most importantly, honesty from their users. ! ! DAKOTA GREEN & KRISTIAN HENSCHEL
  47. 47. Conclusion ! So, before you tip…! DAKOTA GREEN & KRISTIAN HENSCHEL
  48. 48. …think twice about what you’re actually tipping for…! DAKOTA GREEN & KRISTIAN HENSCHEL
  49. 49. …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.! ! DAKOTA GREEN & KRISTIAN HENSCHEL
  50. 50. Thank You!! ! If you enjoyed this presentation, ! Please tweet it!! ! Follow us on Twitter:! ! @k_henschel! @dktgrn!

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