Digital payments and reporting software can help you handle tips and increase transparency for employees

Once upon a time, handling tips at your beauty business was as simple as could be. With just a few providers at a single location, making sure each of your stylists got their fair share of tips was a cinch. But as your business has grown in size, it’s also grown in complexity. Now that you’re running more than one shop at once, it’s tougher than ever to make sure all your employees get their fair share of gratuities. Thankfully, with the right tools, tip management gets a lot easier — and even provides critical business data. 

The benefits of tip management

The first and most crucial element of effective tip management is ensuring your employees all receive their fair share. Although everything in your salon or med spa contributes to the client experience, your employees play a huge part in keeping clients coming back for more. When those clients decide to show their appreciation, it’s critical your providers feel it. But tip management has many other uses. 

Measuring client satisfaction

Tipping data is one of the best ways to measure client satisfaction in aggregate. According to Boulevard research, higher average tips are a key indicator of client loyalty. Clients who plan to return tip 19.3% on average compared to 17.8% from clients who don’t. Above-average tippers are also 15% more likely to return to the same stylist. By looking at your tipping data and comparing it to industry benchmarks, you can gauge how happy clients are with the work your providers are doing. Then, as you work to elevate the client experience at your locations, you can use tip averages as a proxy for measuring the improvement.

Gauging employee performance

Want insight into how your providers are performing? You could send out a survey to your clients, but the truth is they’re already telling you with their tips. By breaking out tip data by individual providers, you can examine each of your employee’s gratuity averages. Those with higher averages are likely your top performers, whereas those with lower averages may need support.

Rewarding top performers can incentivize others to improve their work, but providing your employees with resources and time to develop new skills can raise results across the board. And keep an eye on those tip numbers to see just how effective that development is.

Building employee trust

The more precise your understanding of tips at your business, the more easily you can share that understanding with your employees. Why is that valuable? Because the more transparent you are with your employees, the more invested they’ll be in your business’ success. Employee engagement begins with trust, and data shows it leads to 21% more profitability. So, if you want your employees to do their best, be transparent about tipping trends and let them know where they stand.

Best practices for tip management

Encourage cashless tipping

When it comes to tips, taking cash out of the equation may be the single most effective way to get more accurate info more consistently and quickly. Cash tips are often less convenient for clients, and they’re an uncomfortably public affair. Many people feel pressured when they’re made to pay with cash. That’s part of why a majority of consumers tip at least 11% more when they tip digitally instead of with cash. 

Boulevard’s gratuity feature takes the guesswork (and math!) out of tipping by automatically providing clients with 3 tip percentage options at checkout. Making the tipping process easier doesn’t just help clients, though; businesses that use the gratuity feature have seen a 24% increase in overall gratuity from clients.

With cashless tipping, you don’t have to worry about any of this. A digital point of sale can prompt clients for a cashless tip during checkout, making it incredibly easy for them to choose the amount they’d like to pay. As soon as they do, that payment data can flow right into your database. It’s instant, accurate, fair, and, best of all, measurable.

Generate reports

As the old adage goes, what gets measured gets managed. With all your tipping data in a single location, it becomes much easier to slice and dice it for insights into your business’s health. Using your reporting software, you can examine tipping across all locations, at individual ones, or for individual employees. This lets you identify strengths and weaknesses at every level of the organization, strategize about how to improve, and measure the results over time.

Rather than manually generate these reports, consider using software that automatically generates the same report. Doing so on a monthly basis can help you monitor day-to-day tipping practices and identify trends.

Automate payouts

Tips are a handy data point for your business, but at the end of the day, they’re chiefly a way for clients to show your providers how much they appreciate their hard work. The less friction you have between a client offering up a tip and their provider pocketing that cash, the better. That’s why it’s essential that gratuity payments go out as soon as they can, even if they don’t perfectly align with the timeline you use for standard wage payments.

Operating multiple locations brings plenty of new challenges, but tips don’t need to be one of them. By mastering your tip management process, you can keep clients, employees, and your bottom line smiling.