tipping vs yelp

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Tipping vs. Yelp : A Carrot & Stick Mentality to Hospitality in the Digital Age

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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.  !

DAKOTA GREEN & KRISTIAN HENSCHEL

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…”!

DAKOTA GREEN & KRISTIAN HENSCHEL

“…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

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

DAKOTA GREEN & KRISTIAN HENSCHEL

Source

But why do people tip?!

DAKOTA GREEN & KRISTIAN HENSCHEL

Pressure from fellow patrons (social norms)!

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

Perceived pressure from employees!

A desire to show gratitude for superior service!

To encourage good service in the future!

DAKOTA GREEN & KRISTIAN HENSCHEL

See what Mr Pink has to say about tipping

The problem with tipping:!

DAKOTA GREEN & KRISTIAN HENSCHEL

“I don’t tip. Fuck all that”!

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

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DAKOTA GREEN & KRISTIAN HENSCHEL

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. !

!

2

DAKOTA GREEN & KRISTIAN HENSCHEL

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

3

DAKOTA GREEN & KRISTIAN HENSCHEL

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.!

4

DAKOTA GREEN & KRISTIAN HENSCHEL

Source

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

In this vein, tips are no longer optional…!

DAKOTA GREEN & KRISTIAN HENSCHEL

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

DAKOTA GREEN & KRISTIAN HENSCHEL

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

DAKOTA GREEN & KRISTIAN HENSCHEL

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

DAKOTA GREEN & KRISTIAN HENSCHEL

One of the biggest and most popular restaurant

review sites in the US!

DAKOTA GREEN & KRISTIAN HENSCHEL

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

some 1.1 million businesses!

DAKOTA GREEN & KRISTIAN HENSCHEL

Source

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

DAKOTA GREEN & KRISTIAN HENSCHEL

Source

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

powerful is it? !!

DAKOTA GREEN & KRISTIAN HENSCHEL

Studies show that 90% of Yelp users say that positive reviews affect their buying choices!

DAKOTA GREEN & KRISTIAN HENSCHEL

The  Power  of  Yelp  

Source

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!!

DAKOTA GREEN & KRISTIAN HENSCHEL

The  Power  of  Yelp  

Source

And another study found a one-star increase can lead to a 5-9%

increase in revenue…!!

DAKOTA GREEN & KRISTIAN HENSCHEL

The  Power  of  Yelp  

Source

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

DAKOTA GREEN & KRISTIAN HENSCHEL

The  Power  of  Yelp  

So what are the repercussions of this power?!

DAKOTA GREEN & KRISTIAN HENSCHEL

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

DAKOTA GREEN & KRISTIAN HENSCHEL

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

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

DAKOTA GREEN & KRISTIAN HENSCHEL

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

Hypothesis!

YELP = FEAR !!!!!!

DAKOTA GREEN & KRISTIAN HENSCHEL

Hypothesis!

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

!!

YELP = FEAR !!!!!!

DAKOTA GREEN & KRISTIAN HENSCHEL

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

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

DAKOTA GREEN & KRISTIAN HENSCHEL

But, Yelp represents another imperfect system because…!

DAKOTA GREEN & KRISTIAN HENSCHEL

#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 !

1

DAKOTA GREEN & KRISTIAN HENSCHEL

Likened to the mafia, Yelp has been #accused of extorting business owners!2

DAKOTA GREEN & KRISTIAN HENSCHEL

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. !

DAKOTA GREEN & KRISTIAN HENSCHEL

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

DAKOTA GREEN & KRISTIAN HENSCHEL

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  

DAKOTA GREEN & KRISTIAN HENSCHEL

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.”!

DAKOTA GREEN & KRISTIAN HENSCHEL

Source

So what does this mean?!

DAKOTA GREEN & KRISTIAN HENSCHEL

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

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

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

So, before you tip…!

Conclusion !

DAKOTA GREEN & KRISTIAN HENSCHEL

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

DAKOTA GREEN & KRISTIAN HENSCHEL

…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

Thank You!!!

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

!Follow us on Twitter:!

!@k_henschel!

@dktgrn!