I recently spent a little time in south Florida. It's a beautiful area and at this time of year, one last reminder that summer isn't quite over.
When I travel, one of my favorite activities is finding new places to enjoy a meal, and in south Florida, there is no shortage of new opportunities. Beyond the atmosphere and quality of food, I think - hands down - the most important part of the dining experience is the waiter/waitress. They can turn marginal food and/or atmosphere into an exceptional experience. They can also turn the best quality of food and most interesting atmosphere into an extremely disappointing experience. Easily, they hold the key to feeling like you received either exceptional or horrible value for the dollars spent (regardless of a $20 or $100 meal).
In a lot of ways, I think you could look at waiters/waitresses as entrepreneurs. At least they're entrepreneurs in the sense that they (should) get paid for the value they deliver.
I have been known to be very selective (being kind to myself here) about where I choose to have a meal. After all, I look at dining as an experience and not simply a functional endeavor to fill my stomach. I appreciate the experience and am willing to be very generous with the tip in rewarding the experience.
Creating a model for mediocrity
While traveling, I sought out restaurants that had great menus in great settings, hoping for an exceptional overall experience. Each time, I had great food and the settings were beautiful. Unfortunately, I was repeatedly disappointed by the service I received from the wait staff. They were uninterested and inattentive every step of the way. They weren't bad, but they were definitely mediocre at best. It didn't take me long to figure out why.
This was the first area I have ever visited where SOP is for the tip to already be built into the bill. Sure, I have seen it before for large parties, but never for a table of one or two. Already built into the check, whether I felt it was warranted or not, was an 18% tip.
I was beyond offended, not at the amount, but at the fact that the restaurant had decided in advance how much I would value the service. This is a bad model for several reasons, all which come back to the same point:
This model basically provides permission for the wait staff to be mediocre.
That mediocre service was bad for me (the client) because my expectations for my dining experience came nowhere close to being met. It's bad for the owners because their brand takes a big hit. And, it's bad for the wait staff because, at least in my case, they missed out on an opportunity to earn even more money.
It's a sad business model for any service industry to take away the incentive to provide the best experience possible.
It was so ridiculous, I actually asked, somewhat rhetorically, "Where else could that happen?!" And, then I answered my own question.
Carrier commissions create a model for mediocrity
Sadly, this is the very model that exists in our own insurance industry. With their pre-set commission schedules, insurance carriers determine in advance how much a broker is going to be paid. Taken away is the incentive to deliver a truly valuable experience.
- The client loses because they miss out on an opportunity to benefit from the potential value a broker could deliver.
- The agency loses because their brand is lost in the "sea of sameness" that has become our industry.
- And, the producer loses because they miss out on a chance to earn truly exceptional money.
I bet a lot of business owners look at their insurance brokers the same way I did my dining experience. I bet if they understood the compensation model, they would be equally offended that they don't have any input into the compensation they pay their broker. I bet they are also missing out on untold value that the broker is capable of delivering, but doesn't because he is already guaranteed a generous payment for a level of service that has to just "not suck".
Sure, some business owners may be "10% tippers", only wanting to pay for you to get the order correct and delivered somewhat timely (I don't know about you, but I wouldn't choose to work with these businesses).
But, I know there are "25% tippers" out there willing to pay for an exceptional experience and one that has a meaningful impact on their business.
How are you operating? Would you be better off negotiating your own compensation with your clients based on the value you deliver? Or, are you hiding behind the "built in tip (standard commission schedules)" and using it as a permission slip to deliver mediocre value?
Don't be mediocre and don't accept a permission slip that perpetuates mediocrity. If you do, everyone loses.
Photo by © Gajus