Why tipping is the best investment ever

This post comes from Jim Wang at partner blog Bargaineering.

I’ve always found that tipping, by far, is the best investment you can ever make in almost any situation. Anyone who has ever bellied up to a bar knows that a dollar a drink is all it takes to get the speediest service on even the busiest of nights. Want a nicer hotel room? I’ll tell you about a risk-free technique you can use to score complimentary upgrades, if they’re available.

• Bing: Where tipping isn't customary

I’m not a master of etiquette, nor do I have extensive experience with the benefits of tipping, but I think the insights I am about to share can change, or reinforce, your thoughts on going above and beyond, financially.

Tipping creates a relationship

When you tip someone, you create a relationship with that service provider that puts you ahead of anyone else who hasn’t tipped. Whether it’s just a dollar at the bar, a few bucks for the attendant who brought your bags to the room, or a little bit more than 10% to 15% on the restaurant bill -- a tip puts you ahead.

I used to work as a banquet waiter and I would routinely work parties with a complimentary bar. Guests could go to the bar to grab a drink themselves, or their table’s waiter or waitress could get it on their behalf. That particular night (four- to five-hour party), I earned about $80 in tips -- the majority of which came from four people.

They weren’t the heaviest drinkers; they were simply the most generous. One guest gave me a $20 tip to start the night and while he never tipped again, I made sure to stop by his table every time I walked by. Another guest would ask for several drinks for his table, then tip me $5 each time. To this day I still remember one guest asking for five shots of sambuca and then giving me $10 for the trouble. In each case, I always made sure to go back to them and make sure they were taken care of.

On the flip side, we routinely go to a local pho restaurant that is incredibly affordable and remarkably quick. It’s so affordable, we always tip 20% or more simply because the bill is so low ($15 for dinner for two is about average). It’s to the point where many of the wait staff already know what we like to order, are extremely fast with service, and we can easily have lunch there in under half an hour (yes, while enjoying our food).

Relationships are rewarded

When you create that relationship, you are separated from the pack in the person’s mind. You’re not a friend, but you’re not a stranger either. So when it comes to picking which person to help out next, you always go to the person you’re more familiar with.

If someone is feeling especially charitable, they’re more likely to reward you for rewarding them. I do a fair bit of flying on Southwest Airlines and take advantage of their drink coupons, which they send along with their frequent-flier vouchers. Whenever I get a drink, I’ll hand over the voucher and a dollar tip. One time, the flight attendant, near the end of the flight, dropped off about 20 coupons as a thank-you (my wife was there, she can confirm this). The flight itself was five hours, we had at most three drinks apiece, so we got 20 drink vouchers for $6. I can’t think of a better return on investment.

Bribery isn’t a bad word

Finally, let’s not ignore the fact that what’s really happening is that you’re bribing someone to give you favorable treatment. Everyone who leaves a tip knows that it is both a reward and a teaser for the next time. Custom dictates 10% to 15% on a bill, but you leave 20% for great service from someone you like or someone you know.

You do that because you know you’ll be back and that the 20% is an investment on your next visit. You’ll get great service the next time you visit because you’ve rewarded great service in the past. I know that even at the end of the party, when I was exhausted and didn’t want to carry over a round of beers, I’d do it because a guest was particularly nice and generous to me (both are important).

That’s why “palming” a twenty to a gatekeeper can be so valuable. If you want a nicer hotel room, give the $20 trick a try. The $20 trick is used in a hotel where you put a $20 bill, folded inconspicuously, underneath your confirmation credit card as you slide it over to the front desk clerk. While you do this, ask if a complimentary upgrade is available. Usually, not always, your $20 is returned if no upgrades are available. On some occasions, they will keep the $20 even if there are no upgrades. Tipping doesn’t always result in a win, but more often than not it does.

If you think $20 for a room upgrade seems cheap, Tom Chiarella wrote in Esquire about “The $20 Theory of the Universe.” Tom goes traveling and, armed with a few twenties, finds out what he can get for it. He gets car detailing on the cheap, an upgraded seat (by paying another customer, not the airline), and a few other more unbelievable $20 buys. It’s a pretty entertaining read (along with “75 skills every man should master,” which I think is an even better article by Chiarella).

Hopefully I’ve either convinced you or reinforced the idea that tipping is a very good thing, and how a little can go a long way. What I’d like to learn from you is whether you have any tipping secrets or techniques that have worked well for you.

Related reading at Bargaineering:

• How to answer the 10 most common interview questions
• 2010 Roth IRA conversion rules
• 2010 federal income tax brackets