New research from Capterra finds that tip fatigue — exhaustion caused by the pressure to tip more money to a widening array of workers — is a serious problem affecting most consumers who use checkout tablets at restaurants and other businesses. In the past year, over half of surveyed consumers have felt confused or manipulated by tip screens, and 70% feel they’re being asked to tip too often.
This should give pause to any business that uses checkout tablets. Business leaders need to know when it’s appropriate to ask customers for tips, and how much, or risk alienating customers who are fed up with the constant nudging.
The results of Capterra’s 2023 Tipping Fatigue survey show how tip screens have impacted the customer experience in and outside the restaurant industry, and how businesses should navigate tech-enabled tipping.
Tip Fatigue is Alienating your Best Customers
As tablet-based POS systems have soared in popularity in recent years, consumers are being hit with larger and more frequent tip requests. Over a quarter of surveyed consumers are now tipping at a higher percentage than they were last year, and the majority are fed up with how often they’re being prompted to tip. Consumers are also alarmed by the appearance of tip screens in unlikely new places — in the past year, 53% encountered a tip screen at a business that didn’t previously ask for tips.
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This shift has added stress to the checkout experience at retail stores, auto shops, ticket desks and even self-checkout kiosks. In addition to feeling manipulated and confused by tip screens, 75% of surveyed consumers say they are not always sure where their tip money is going.
Consumers are feeling pressured by businesses to adapt to a new status quo for tipping — one in which customers are expected to tip generously for little to no service, service that has not traditionally been tipped or service handled completely by machines.
Unfortunately for businesses, tip fatigue is hitting their biggest tippers hardest. Compared to their lower-earning counterparts, surveyed consumers earning $100,000 per year or more are both more likely to tip 20% at restaurants and more likely to be impacted by tip fatigue. They report higher rates of feeling manipulated into tipping more than they intended, being pressured to tip for poor service and being asked for tips too often.
Tip fatigue is a serious issue that could have disastrous implications for small and midsize businesses. Against the backdrop of persistent inflation, pushing for more tips can come off as opportunistic and may lead consumers to leave fewer tips, smaller tips or to stop tipping altogether. In the worst-case scenario, customers might abandon a business that they felt was inappropriately asking for tips.
Should Your Business Ask for Tips?
There’s an easy rule of thumb to follow when considering whether your business should expect customers to tip: unless you provide the highest levels of customer service in your industry, don’t. Most consumers are not willing to tip more money for less service simply because businesses ask them to.
For instance, most consumers are willing to tip at restaurants for table service and food delivery. It’s a different story for restaurants offering counter service, a drive-thru window or contactless takeout pickup: Only 43% of surveyed consumers are willing to tip at counter-service restaurants, while 28% will tip for takeout and 8% will tip the drive-thru operator.
We measured consumers’ tolerance for tipping at other types of businesses by asking if they’d accept a mandatory gratuity or service fee in lieu of a tip at a variety of businesses. The outcome is grim for businesses outside the restaurant industry: While 55% of consumers would accept mandatory gratuity at table-service restaurants, 15% or fewer would accept such a fee for a hair salon, cleaning service, auto repair shop or retail store.
Here’s a quick guide to determining whether and how it’s appropriate for your business to include a tip screen on its checkout tablet.
Is your business within the restaurant industry?
- If the answer is yes and you provide table service or delivery, you can include a tip screen.
- If the answer is yes and you provide lower tiers of service, such as counter service, you can include a tip screen. However, you should budget for the possibility that fewer than half of your customers will tip.
- If the answer is no but your type of business has historically accepted cash tips (e.g., hair salons, taxi services), you can include a tip screen.
- If the answer is no and your business falls outside of historically tipped categories, you should not present a tip screen. This includes retail stores.
Tip screens at self-checkout kiosks constitute a gray area. If your business is in a historically tipped category and uses self-checkout kiosks (e.g., a takeout restaurant), it’s okay to include a tip screen. But you shouldn’t leave customers guessing as to whether they’re tipping a person or the machine — you’ll need to make it clear that tips indeed go to the workers behind the scenes.
This should go without saying, but if your business does not belong to a historically-tipped category — or does not actually employ any tipped workers — you should not include a tip screen.
The Right Way to Use Tip Screens for your Business
Keep your minimum tip suggestions reasonable.
When checking out on a tablet, customers can generally choose between three to four suggested tip buttons (which typically range from 15% to 25%), a “custom tip” button and a “no tip” button. This creates a stressful opt-out situation if the customer feels the minimum tip is too high. Additionally, consumers are wary that the industry-standard minimum tip has increased over the past year (to 15%, generally), and may continue to rise if businesses want it to.
On most tablet-based point-of-sale systems, you can customize the tip percentages your customers choose from on the tip screen. You should resist the temptation to bump up the minimum suggested tip just because you can; rather, consider whether the service you provide is worthy of bigger tips, as well as how your customers react to the tip prompts you’re already using. It may be more appropriate for your business to suggest a minimum tip below 15%.
Give customers privacy when tipping.
While it’s true that people tend to tip when they’re being watched — by friends, fellow customers, or workers — it’s not exactly a pleasant experience. Our study shows that customers are just as likely to tip while being watched (and potentially judged) as they are when given privacy at checkout.
It’s easy to give customers some peace and quiet with the tip screen. Workers can simply turn away from the tablet to attend to something else or leave the tablet with customers at their table for a few minutes.
Tell customers where their tips are going.
Customers want to know where their tips end up, but with tip screens, that’s not always clear (especially when using a self-checkout kiosk). Help customers connect the dots between the screen and the hardworking employee(s) who’ll receive their tips by putting messaging in the checkout area. A simple sign reading “100% of tips go directly to our staff” humanizes the tip screen experience.
Despite businesses’ efforts to change tipping etiquette, most consumers’ idea of who deserves a tip and how much they should tip has not changed. Any further attempts to bump up industry-standard tip percentages and expand the list of tippable services will only exacerbate consumers’ tip fatigue. To avoid losing customers, businesses need to scrutinize their checkout experience and rethink whether they should include a tip screen.
Methodology
Capterra’s 2023 Tipping Fatigue Survey was conducted in June of 2023 among 782 U.S. consumers to learn more about how tipping culture and tip screens on tablets and mobile devices are changing consumers’ approach to tipping at restaurants and other businesses. Respondents are regular users of tip screens on tablets or mobile devices at restaurants: they have all used a tip screen in the past month, and on average use tip screens at checkout at least once per week.
Molly Burke is a Senior Analyst at Capterra, covering retail and restaurants with a focus on emerging technology. Capterra, the world’s largest software marketplace, is dedicated to conducting research for growing businesses and connecting them with the right software and services.
