The Recurring Customer’s Impact on the Tip
The Nintendo was a boon to home entertainment, back in the day. In later years gaming systems became extreme in capability and content. In those days, it was possible to buy a game, take it home, and play it again and again. The idea of paying a monthly subscription to play that game was not yet a thing, and has everything to do with the recurring customer’s impact on the tip.
The recurring customer is a much sought after commodity. Every business benefits from repeat business. When a product or service is in demand, repeat customers are a given. It’s a different story once demand has been met by supply, and the product or service is no longer sought after.
A business would then need to create a new product or service, and hope for customers to return. If the original product or service is uncommonly unique, it would be unusual for recurring purchases. If a product or service is of top quality, waiting for customers to buy a replacement, could be impractical and costly, depending on how much quality is built into the original.
Starting Point
A good, general example of this concept is the automotive industry. At the beginning of this industry, replacement parts were rarer than rare. As the industry evolved, replacement or after market parts, became more readily available. Automobiles became marginally more expensive, and using after market parts became more common. And just like that, the recurring customer concept hit the ground running.
Delivery apps are also experimenting with the recurring customer concept, and the desire to implement the concept. In 2019 Doordash had already begun it’s dashpass program, which is a pay by the month service. In return for the monthly fee, there are things like 0$ deliver fees, and lower service fees, etc.
This particular recurring customer model, has had an impact on tips. Any restaurant or brand that has a dedicated delivery crew, charges a delivery fee. Usually between four and five dollars. It is called a delivery fee, but it is divided between the merchant and the courier/driver. 60/40 typically.
The delivery driver gets the smaller percentage of that fee. 0$ delivery fees impact tips because of a common perception that drivers are paid through the program. The monthly fee covers a service, and the driver is a part of that service.
The driver is a separate service provider, in addition to the service provided by the app. The driver is providing the transport services, and has a contract with the app for a basic fee.
Tips are the actual money a driver makes. Basic fees are calculated in the algorithm, and are mileage based, so they are low. They do go up as mileage increases, but so does expense. Through the course of thousands of deliveries, I personally have observed that far away deliveries, more often than not, tip above average.
The recurring customer’s impact on the tip is an opinion article derived from the many couriers and drivers I’ve worked with on crews and out on the road. Common experiences that create a viewpoint from the anonymous courier.
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