The Cashless Trend Has Salons Reexamining their Tip Processes

Even before the COVID-19 pandemic, cash had a bad rap. Cumbersome and inconvenient, most salon clients rely on their credit and debit cards for their purchases. Now that the pandemic has raised additional concerns about the spread of germs through the handling of currency, more and more people are pulling out the plastic.

This overall cashless trend has salons carefully studying their tipping procedures. While clients, owners and service providers all want to avoid the cash tip, owners don’t like processing tips through a credit card because they incur processing fees on money the business never sees. Plus, they also have to devise a strategy for paying out those tips, either through payroll or by playing banker and cashing them out on a daily or weekly basis.

Lori Adler, vice president of salon operations for the Alline Salon Group with more than 390 locations, was already exploring alternative tipping processes when she met Terry McKim and David Tashjian, founders of the Tippy tip management platform, at an industry show last January. “We had just started looking for a partner to support us with managing tips so I was intrigued, but when the whole pandemic forced salons to close a few months later and examine their operations, we got very serious about implementing operating systems that were as cashless and touchless as possible,” Adler says.

Tippy is a digital tipping solution, built specifically for the beauty industry, that offers a cashless tipping option through its App. Here’s how it works: At checkout, clients simply swipe their credit cards on an iPad and select their preferred tip amount. The app even does the math for the clients, calculating specific tip percentages and offering clients a choice on how much they want to tip. Clients can even personalize their tip with words of thanks to their service provider. Through the Tippy mobile App, service providers can track their tips, set financial goals, and watch tips grow throughout the day. Their tips are deposited into their bank accounts the following business day.

The Alline Salon Group implemented Tippy while they were shut down, which helped them open up cashless. “We also worked with our credit card providers to get signatures and pins waived for credit and debit cards, so we could make checkout as touchless as possible,” Adler adds. “The timing of bringing on Tippy was really important to us, as we were trying to create the safest environment for our guests and our team members.”

The response from the Alline Salon teams was overwhelmingly positive. “Tippy has gotten high marks from both our team members and our clients,” Adler reports. “It has such a user-friendly feel to it. When the client tips their service provider, it creates a cash register noise on the service provider’s phone and the comments clients leave foster a strong relationship between clients and their service providers.”

Knowing though that any change can elicit resistance, the Alline management team worked closely with Tippy to develop a positive experience for team members who were getting accustomed to the new tip process.  With 100 cannisters of hand sanitizer to sell to clients, they are giving employees $1 spiff tip for every bottle of retail hand sanitizer sold on top of the regular retail commission, and the contest tips are paid weekly through Tippy. Individuals with the highest number of retail hand sanitizers per week get an additional winning $50 tip from Tippy.

With Tippy’s help, Alline also implemented an eight-week tip competition. Individuals with the highest number of tips each week get an additional $50 winning tip from Tippy and the salon team with the highest number of Tippy tips per week gets a $50 cash prize to use toward a team lunch, party or prize.

In addition, the names of the retail winners and individual tip contest winners are entered into a drawing to share their best practices with Educator Michael Cole on the Alline Exclusive Webinar Training.

“While most retail contests have a very clear objective to make more money for the company, this one spotlights the relationship between tips and creating an experience for our guests, as well creating a positive experience for our team members as they embrace a new device and new salon process,” says Adler.

Tippy was one company that carefully thought through the impact of the pandemic and the subsequent shutdown on their salon customers and quickly created new features that helped salons with this new reality.  

While salons were closed, Tippy scrambled to support temporarily unemployed service providers during the challenging time. The company rolled out Tipit Fwd, a virtual tip jar that offered a simple way for salon clients to reach out to their favorite service professionals with both tips and encouraging messages. “In just one day, we saw what was truly phenomenal—our site was as overwhelmed as were we,” Tashjian says. “From the tips to the encouraging messages, it was a simple thing we could do to bring smiles and hope to so many, and it was the hope that mattered the most at the time.”

Adler says that generous spirit continued to uplift Alline stylists as they returned to work. “We heard multiple stories of clients being very generous in their tips when they came back for their first service, leaving $100 or $200 tips,” she says. “One stylist even had a client who tipped every stylist in that location $50 to show her appreciation.”

Recently, Tippy launched the Tippy Card, allowing tips to be added to a debit card immediately so service providers don’t have to wait until the next business day to access their tips. “It works like a Mastercard debit card and team members love the option of choosing whether their tips get loaded onto the card immediately or deposited on the next business day into their bank accounts,” Adler says.

While there are other tip card solutions out there, none provide the personalized tipping experience for both the customers and the stylists, along with the added benefits for the salon.

Eric Plunkett, owner of Scissors & Scotch, a barbershop and bar with two locations in Des Moines, Iowa, brought Tippy onboard before the pandemic. “Honestly, we recognized that it would help us provide a good customer service experience, which is important to us,” Plunkett says. “But I also recognized that we were paying a ton of money on credit card fees on money (the tips) that isn’t the barbershop’s, and it was a pain point.”

When a salon uses Tippy, the credit card fees are passed onto the client in a small transaction fee. Both Adler and Plunkett say most clients don’t notice or mind the transaction fee, and for those that do there has been minimal pushback. But for a salon or barbershop owner, all those small transaction fees on the tips add up to a large bill annually. “We were closely looking at the processing fees we were paying on tips, and knew we couldn’t keep doing that,” Plunkett says. “I had already started talking to my team about the fact we’d have to might have to pass the burden of fees on to them, when Tippy offered us the perfect solution.”

Scissors & Scotch is a unique business concept where clients walk in, are greeted by the receptionist and head to the lounge area for a drink before enjoying their service. “We serve an assortment of expensive whiskeys and scotch, local craft beers, wines—a full bar. It’s a place where our clients will come on a regular basis for a drink after work, and the atmosphere is relaxing—more like a coffee shop than a traditional bar,” Plunkett says. “And sometimes, wives will enjoy a cocktail in the lounge while their husbands have a haircut or a hot shave.”

While guests of the barbershop receive a complimentary drink with each service, guests without appointments are in the habit of purchasing drinks, too. Plunkett says the barbershop uses Tippy for tips for the bartenders as well as the barbers and stylists.

“While there is an extra step at checkout since clients swipe their card a second time for the tip, clients really like it,” Plunkett says. “When we were shut down because of COVID-19, many clients asked how they could help their barber or stylist. We send out an email about how they could tip through the TipIt Fwd program and we got a crazy amount of response with some very generous tips—one client tipped $1,000.”

Even before COVID-19, Tippy users tended to notice an uptick in tips. Because the app calculates percentages and recommends tip amounts and because clients quickly realize their service providers immediately see how much they tip, human behavior drives clients to tip higher. Most services at Scissors & Scotch run between $30 and $40, and Plunkett says since implementing Tippy, clients are tipping between 25 to 30 percent.

For a recent Culture Reset development day for the team, Rachel Plunkett, Eric’s wife and his Scissors & Scotch co-owner, calculated the total amount of tips paid to employees from January to June 2019 to and compared it to the same period for 2020.  During that period of time, Scissors and Scotch employees collected $66,154 in 2019 versus $110,137 in 2020, even though the business had the same number of employees. While the generosity of clients post-Pandemic was a factor in increasing tips, the higher amount in 2020 also included six weeks where the salon was closed, and the only tips were donated ones.

“Basically, we’re the poster children for demonstrating that bringing in Tippy drives a jump in tips,” Plunkett says.

But one of the biggest benefits of using Tippy according to Plunkett is not having to handle all that cash. “Before, we’d send a manager to the bank at least once a week to get cash to pay out our tips,” Plunkett says. “And, all owners know how time-consuming and inconvenient that is, but walking around with seven grand in your pocket can be tempting to anyone.”

Get Tippy for 30 Days Completely Risk Free, plus shipping. When you decide to keep Tippy, it’s only $200 your first year. Offer includes one kiosk and is valid through August 31, 2020. To find out more, visit meettippy.com/request-info/.