I've been thinking about tips. Tips are one of the very few ways in which customers can (or are expected to) explicitly reward good service. Tips are more prevalent in some cultures than others. Here in the UK we only really tip service in a restaurant. We might tell the bar staff at our local to “get yourself one” occasionally, or round up in a taxi, but it's only waiting staff that we regularly give any meaningful amount of money to for service.
Just how significant is that? In many ways a more powerful reward for creating a great customer experience for the restaurant is the fact that, if I'm having a good time, I'm likely to stay longer and have a pudding, perhaps a dessert wine, a coffee, an armagnac...all of which, I imagine, are very high margin items. Incidentally they also bump up the bill, which makes the tip higher—a great example of aligning staff targets with organisation targets.
The reason tips are interesting is that they are on the spot rewards for the staff themselves for delivering good service. Tips (as opposed to a service charge) are a very good example of a performance-related bonus. A bonus, moreover, that is fair, transparent, and decided by the customer. Few schemes could claim so much. I'm no management expert, but I suspect that the instant nature of the reward is also important—in behaviourist terms that makes it more likely to reinforce the actions that led to it.
The big question is whether tips make a difference. I believe they do. In my experience the average standard of service, the feeling of being treated as a valued customer, is significantly higher in restaurants than it is, for instance, in retail. Perhaps it is time we got over our British discomfort with tipping and spread it throughout the service sector. What do you think?