Business of Life

Ideas, Information & Inspiration

The Importance Of Tipping And Being Tipped

5 mins
What You’ll Learn
  • Why it’s important to tip service workers
  • Gratuities don’t need to have boundaries
  • How service workers can earn more tips
by Marcus Life Learning Team

The Importance of Tipping Service Providers

Working in the service industry is hard. The wages are typically low, the work itself is demanding and the whole idea around tipping is a gray area for both the service industry worker and the customer.

We can’t solve the hard work part, but there are definitely techniques and, yes, tips, for making the process of rewarding good service easier for the customer, and for helping workers set themselves up for better tips.

Think it’s not worth it? Some quick math shows us otherwise: If we can help a worker pick up $10 per day more in tips from these techniques, they can earn roughly $3,000 annually in addition to their usual earnings.

Can’t We Eliminate Tipping With A Higher Minimum Wage?

I’m a capitalist. I believe that capitalism doesn’t have barriers and it can even live within an individual. Every individual has an opportunity to make more.

When we deal with minimum wage—discussions that are politically charged—I always fall back to the idea that it’s up to the business and the free enterprise market to determine what wages are. It is true that there’s a need for a basic minimum wage, but I never like it when the government tells private businesses what to do with their money. Rather than getting into this discussion, which leads to nothing but blood, I like to focus on what individuals can do as consumers to recognize and reward people for their good service. But more importantly, to consider what service industry providers—like parking attendants, baggage claim handlers, servers, bartenders and hairstylists— can do to earn more tips.

I want to provide tips both for consumers and for those providing the service, to improve both the execution of the service that you want to receive and the reward that you hope to receive when you provide that good service. That’s the general foundation.

Hair Dresser

7 Examples Of Service Workers To Tip

  • Restaurant wait staff
  • Bartenders
  • Hotel staff
  • Hair salon staff
  • Parking lot attendants
  • Counter salespeople
  • Airport skycaps

How To Recognize And Reward Great Service

One of the misconceptions that we want to shatter is that a gratuity has boundaries. The worker doesn’t have to be an hourly person. They don’t have to have brought you food. It can be when somebody does something for you and provides any type of service. Cleaning your hotel room. Carrying your bags. Doing something for you. The usher who helps you get to your seat at a dark Broadway show deserves a tip, right? Where is the border around providing the recognition? It’s not the amount of money that you give. It’s the acknowledgement.

What Happens if I Get Bad Service?

The idea of withholding tips as a form of punishment for bad service is outdated. Ask me what you do when you get bad service and my response is, “You should still give a tip but maybe you should give two tips.”

Tip one is the recognition of the situation, because you don’t know why you got bad service. Did that person have a bad day? You’re not walking in their shoes. The second tip is to have a little one-on-one. Offer a constructive comment—not in front of other people—but say, “Hey, look, you must be having a bad day. I want to go ahead and give you this tip. But just be aware that you’re in the business of making money off of your service.” You can give people constructive criticism without asking for the manager and complaining.

How Much to Tip?

The standard percentage for tipping for most services is 20%, but for some services, it may only require putting a dollar in a jar. Bottom line: When you go to a restaurant, when you get your car from the valet, when you pick up your dry cleaning, when you do anything from a service provider, just take an extra second and try to be slightly more generous than you were the day before.

I remember the first time I ever went to the airport. I didn’t know what a skycap was, and I was with my grandfather, we were getting out of the car, and the guy came with his cap on and he takes your bag and he asks you where you’re flying to and checks you into your seat. And I remember my grandpa gave the guy $100—and this was like in the 1980s—and the guy freaked out. And I asked my grandpa, “Why did you give that guy $100?” And he said, “Because I’m grateful that he was willing to help me with my bags, and he checked me in and now I don’t have to stand in line. I have my seat assignment and I’m all set. The guy took all the anxiety out of my trip and it was worth it for me to reward him for taking that extra minute.”

When I was first starting to travel for business, it didn’t dawn on me that I should be leaving a tip for the hotel workers who cleaned my room at the Hampton Inn, the Holiday Inn, or whatever motel I was staying at. But it did start to dawn on me when my room didn’t get cleaned right. And I knew the difference between when it got cleaned right and when it didn’t, and it differentiated my experience. And so I started to use a rule of thumb that I would always try to leave 5% at a minimum of whatever my rate was in the room—$5, $10, $20. I would always try to leave something even though I would never see the person or have any human interaction with them. I thought that it would maybe make their cleaning of the room for the next person even better.

One other note on this topic: Today, many of the digital cash registers offer pre-set tips starting as low as 15% or 18%. I’d argue that 20% should be the minimum. For those who want to leave less or more than 20%, the “custom” button should allow for any amount. I’ve found that some providers won’t accept a digital tip for more than $100. There shouldn’t be a limit.

Car Wash

3 Tips To Earn More Tips

Think Ahead
What extra service could you do to impress the customer?

Always Have Change
Be prepared if a customer asks if you can break a hundred so they can tip you. Load up on singles, fives, tens and twenties.

Go Digital
Load up your smartphone with apps to accept tips digitally through services like Apple Pay, Venmo and Zelle.

How Service Workers Can Earn Better Tips

Service providers need to know how they can grow their income without expecting their employer to drive their greatest chance of success.

When I was 12 years old, I worked all summer at my parents’ car dealership. My dad said to me, “I’m not going to pay you. You’re going to learn how to work for your money.” And I’d say, “Well, I am working; how come you’re not paying?” His reply was that the particular job he was putting me in was largely driven by a service-oriented experience. The customer comes here to pick up their car; you’re a car jockey, he explained. He said, “Over the summer, you’re going to learn what techniques you can have and what services you can provide to grow your tips.”

I developed techniques to provide good service. We lived in South Florida and it wouldn’t be exactly cold outside, so I would turn the air conditioning on to cool down the car. Next, I would find one of their preset radio stations and pick one, because most likely the mechanic had changed the station. I would make sure that the floor was clean, that there was no grease on the steering wheel or anything else.

Another thing I learned was that it’s important to always have change in case someone wants to tip you and asks you to break a big bill. I would carry singles, fives, tens and twenties. People who are trying to tip may request change, and you need to have it if you’re a service provider. You’ll make more money if you have money.

Technology has changed the game. It’s still important to have change in cash, but for those who prefer to pay digitally, every service industry person should load up every app to receive payments personally, whether that’s Apple pay or Venmo or whatever. So if somebody says, “I’d love to tip you, but I don’t have cash,” you can reply, “No problem. I accept any form of payment. Do you have Apple Pay? Do you have Venmo? I’ll accept it that way.”

  1. As a consumer, are you properly tipping as appreciation for exceptional service?
  2. As a service worker, are you incentivizing the customer to tip you?
Photo of Marcus Lemonis