I recently came across a story on the front page of the New York Times Metro section that in my humble opinion epitomizes everything that has gone wrong in customer/vendor relationships. This is the story of a customer named Humberto Taveras who dined at Soprano’s, an Italian/American grill in Lake George, NY. At the end of the meal, according to the diner’s owner, Mr Taveras didn’t ante up the mandatory tip of $13.73. The result, Mr. Taveras was arrested, fingerprinted and photographed for a mug shot at the local police station. In his defense, Mr. Taveras claimed that he had left a tip. The diner owner, to justify this rather bizarre turn of events, was quoted in the paper, saying: ”This is for the hard-working people who work for me, not for me.”
I was outraged when I read this story. The diner owner went way too far in my opinion. Demanding a mandatory gratuity is an oxymoron in my opinion. There is no such a thing. If it is a gratuity, then it is voluntary. Only the customer may decide, solely at his discretion, if he or she is willing to provide a thank you in the form of monetary compensation. If the fee is mandatory, it should be in the price of the food sold and not added on top of it. Restaurant food prices are higher than those of at a self service establishment. The premium price reflects the extra service provided. If these prices are insufficient then raise them; but do not impose mandatory gratuities.
The origin of tipping is rather interesting. It started in the very busy British pubs in the early 19th century. When customers ordered their beers, they paid a small fee to the waitresses prior to receiving their drinks. The acronym stood for “To Insure Promptness”, hence the name TIP. It was the customer’s way of ensuring proper service and it was at their discretion. Over time, ruthless proprietors who wanted to skim off their employees started to depend on those tips, or gratuity payments, to justify a reduction in employee salaries. The measure was geared to reduce employers’ costs and to squeeze the employees. Against their will, employees became dependent on the tips and from this the smartest scheme in the world evolved to raise prices without notifying customers.
These practices are nothing but deceptive and unfair. They do not represent true relationships with customers. The practice takes customers for granted and abuses their trust by forcing them to pay more without employers having the courage to actually add it to the price. Over time, some businesses took this practice to new heights. Several years ago, London hotels were caught charging 12% service charges on room reservations. Future guests were basically charged in advance for the “excellent service they would be provided”. Even before enjoying the service, customers were forced to fork over the gratuity. Let’s consider it an advance appreciation. In sane cultures it would be considered outrageous. During the tough economic times suffered by the hotel industry after September 11, 2001, some resorts invented new charges, such as a resort charge. Those charges included the use of the swimming pool, for example. Well, if you patronize a resort, the swimming pool is a given the same as a bed. I guess that was not that clear to those resort owners. This move was another cowardly attempt to skim off the customers without truly reflecting the charge in the room rate.
What would happen if every business would take up this “great” practice? Customers would have to walk around with large wads of single dollars, euros, or other assorted currencies and tip everyone. The UPS driver should be paid or your shipment will be delayed or lost, the waste management engineer should be paid or your garbage will not be removed. How about the retail associate at Macy’s, they too should be paid. Flight attendants? They can surely use the extra money. The parking attendant should get some gratuity for keeping our car from being scratched. (things can happen you know…) How about your children’s teachers? The mayor? IRS agents? The Plumber? Where should it stop. Would anyone do their job because that is what we pay them for? If gratuity becomes mandatory, then what is the purpose of the price we pay for the goods and service?
When I discussed this issue with a friend, he did not “get” my point. The tipping practice is so ingrained that he questioned if it is even possible to change it. My response was: This will truly be great. Imagine the first restaurant promising “No tipping. Everything Included in One Price.” I think that this would be an amazing differentiator. No more guessing games. No more dirty looks from the waiters. No more deceptive pricing schemes. Just plain, simple, good service for the price I pay. No hidden charges, no bad taste in the mouth. Simple and clean.
I was appalled by the Soprano’s owner claim that he called the police to protect his workers. He called the police to protect his low pay to employees practices. The only thing he was protecting is his scheme to pay less to his employees and transfer more fees to his customers in a deceptive way. Tipping, and especially a mandatory gratuity (did I mention that I hate the term), is a way of hiding costs and increasing margins at the customer’s expense. It is the fine print of the food industry. They represent deceptive pricing practices and an unfair relationship with customers. The fact that many customers have gotten used to it does not make it right. The fact that many customers cooperate with it, does not make it an honest practice. It definitely does not give the right to a restaurant owner to call the police on a customer who paid for the food he ate based on the price he was given.
These practices exist in every industry in different manifestations. Companies act in cowardly ways to try and hide costs to customers, only to raise and add new ones when it is convenient to them. Reflect the true price or cost up front and you will win the customer’s trust. Pull one of those tricks, and you have no right to expect relationships, longevity, and return customers. Nothing annoys the customer more than such dishonest practices.
If you are looking for a differentiator, stop hiding the truth from customers. Practice honesty as a strategic and competitive advantage. If you are looking for a lasting profitable relationship, start practicing honesty. Relationships cannot and will not be based on deceptive practices. And one last request. If you decided to cheat your customer anyway, don’t call the police. Consider it a trick that did not work. There is a limit to how much you can abuse your customer.
Lior Arussy is the president of Strativity Group, Inc. and the author of The Experience! (CMPBooks 2002) He can be reached at lior@strativitygroup.com