Please consider tipping the Spritlzer Report this morning. As little as $1 will buy little Mohamed a month's supply of milk!
The Software Slyly Turning Us Into Bigger Tippers
Adjusting the user interface on tip screens can have a powerful influence on our generosity
By Imani Moise, WSJ
June 4, 2023 12:01 am ET
Business owners—helped by more versatile software—are resetting our social norms and habits around tipping.
Tip screens, popping up at a wider range of businesses from cafes to fast-food chains, have turned gratuities into a multiple-choice test. In addition to letting business owners choose which tip suggestions to present to customers, point-of-sale (POS) devices offer businesses many options. Owners can show tips in dollar amounts versus percentages, choose whether suggested tip amounts are calculated before or after tax, or decide whether the tips are based off the full or discounted value of a transaction.
By tinkering with the default options and settings in point-of-sale screens, businesses can nudge their customers to give bigger tips, software designers and behavioral economists say.
The range of options has also short-circuited the normal decision-making process. Not leaving a tip used to be a passive decision. Now prompts on screens have turned it into an active choice.
“It’s very different than just having a tipping jar where people come up with whatever they find in their purse,” said Anja Schanbacher, a marketing professor at Drury University who studies financial decision making.
So far, it seems to be a successful strategy for business owners. A 2017 Cornell University study found that larger suggested tip sizes increased how much customers tipped while having little impact on customer satisfaction, spending or retention. Setting suggestions meaningfully above the social norm, or higher than 25%, caused fewer people to tip, but increased overall tip revenue since customers who decided to tip gave more.
Hardware has also helped in the process as tablets slowly began to replace cash registers over the past decade. From there, software offered by fintech companies such as Toast, Clover and Square became more popular with small-business owners. Adoption of the sleek checkout devices accelerated during the pandemic to streamline payments.
The point-of-sale companies market their tip features as a way to boost tips and keep employees happy, but researchers and business owners say the technology risks rubbing customers the wrong way.
Fieldtrip, a fast casual restaurant in Manhattan, gave customers the option to tap to tip when it opened in 2019. Last year, Chef JJ Johnson began to get monthly emails and Instagram messages from customers complaining about tips. Customers were tapping through the process so quickly they said they didn’t realize they were tipping, he said.
“No offense to us as people, but we all don’t read all the time. Sometimes you just click the button and keep on going,” he said.
In response, he swapped out the machines that swivel back and forth between the customer and cashier for a system with dual screens, so customers could see their totals add up in real time. He has seen fewer complaints since making the switch.
Tweaking settings to lead people to make decisions they wouldn’t have made otherwise is an example of what developers call “dark design,” architecture that exploits human nature for the designers’ benefit, said Olivier St-Cyr an associate professor of information at the University of Toronto who studies user-experience design. People have a strong tendency to stick to default options both because it is easier and because they assume the default is the social norm.
The screens also trigger our desire to be perceived as generous, especially when asked to make a choice in front of the person receiving the tip and other customers standing in line. For example, in a tipping prompt with three choices, users are least likely to choose the lowest amount regardless of the number on the screen to avoid looking cheap, St-Cyr said.
A study by Ofer Azar, a business professor at Israel’s Ben-Gurion University of Negev who has researched the economics of tipping in the U.S. for 20 years, suggests the standard tip at restaurants gradually moved from 10% to 20% over the past century because people’s desire to appear generous gradually led to a shift in the social norms.
The new technology can accelerate that process, said Julie Jensen, a UX design consultant who has worked for companies such as Amazon and Capital One. Even though she knows how the systems work, she can’t help getting nudged to tip more than she would normally intend.
“It irritates me…but I’m also a good tipper,” she said.
Toast, one of the software providers, gives businesses the option to decide whether to calculate a tip before or after tax. By default, the calculations exclude discounts, according to its online user manual.
The policy ensures that staff is tipped for the value of the service, the manual says.
Some people are starting to get fed up with digital prompts to leave tips as high as 30%. In public comments on a Federal Trade Commission proposal to regulate “junk fees,” many people called for the consumer watchdog to intervene on tipping practice.
Tipping more generously was a good practice during the pandemic to support businesses that struggled during lockdowns, but now it is time to return to normal, said Elaine Swann, an etiquette coach. She advises that anyone feeling frustrated or financially stretched by tipping pressure should set their own standard and get comfortable with awkward interactions.
“Know that etiquette dictates that you do not have to leave a tip” just because you are asked to, she said.
Write to Imani Moise at imani.moise@wsj.com