The Effects of Tip Recommendations on Customer Tipping, Satisfaction, Repatronage, and Spending

Damon Alexander (), Christopher Boone () and Michael Lynnb ()
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Damon Alexander: Washio, Santa Monica, California 90402;
Christopher Boone: School of Hotel Administration, Cornell University, Ithaca, New York 14853
Michael Lynnb: School of Hotel Administration, Cornell University, Ithaca, New York 14853
Authors registered in the RePEc Author Service: Michael Lynn

Management Science, 2021, vol. 67, issue 1, 146-165

Abstract: A field experiment involving 94,571 orders from 24,637 customers of an app-based laundry pick-up, cleaning, and delivery service examined the effects of various randomly assigned tip recommendations on consumers’ tip amounts, satisfaction ratings, frequency of return, and bill size. We find that tip recommendations affect tip amounts, but not customer satisfaction, patronage frequency, or bill size, which implies that neither the processes underlying the tip-recommendation effects on tipping nor consumer tipping itself affect these other consumer outcomes. From a practical perspective, these results and conclusions inform efforts to increase or decrease tipping. Recommending larger tip amounts, at least within the $2–$10 or 5%–25% ranges studied here, appears to be a safe means of increasing the amounts customers leave. More generally, altering customers’ tipping behavior will not itself adversely affect those customers’ subsequent satisfaction, repatronage, or spending, as long as the means used to alter tipping do not directly affect these other outcomes.

Keywords: tipping; customer satisfaction; customer retention; customer spending; tip recommendations (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:67:y:2021:i:1:p:146-165

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