Direct Farm Tactics #5: Boost Your Bottom Line with Tipping
In this episode of Direct Farm Tactics, Sebastian and Rachele will discuss Barn2Door's most recent feature roll out, custom tipping and how farmers can utilize it to increase your bottom line.
How Buyer Tips Lead to Lower Processing Fees
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Sebastian: 0:26
Hey everybody. Thanks for joining us today on the Direct Farm Tactic session here as you can see from the title today's episode is about tipping. My name is Sebastian. I am on the marketing team here and for today will be joining me to be discussing tipping.
Rachele: 0:39
Hey Sebastian, how are you doing?
Sebastian: 0:41
Not too bad. How about yourself?
Rachele: 0:42
Good. Happy to be here.
Sebastian: 0:44
For today's episode Rachele, we want to discuss how tipping could increase your bottom line.
Rachele: 0:50
Yes. I mean, when you think of tipping and you think of farming, it's not necessarily the first thing that comes to mind, but our society has kind of turned into. Just tipping in general. And so we wanted to offer and expand on our feature here at Barn2Door to include custom tipping which just went live February 1.
Sebastian: 1:12
Yeah, you're right. People don't really usually associate farming and tipping together. Usually tipping's associated with like services right either. Whether you're serving or whether you're a baristas,
Rachele: 1:22
Food delivery drivers. We tip our food delivery drivers. Yeah.
Sebastian: 1:26
But farmers too. They are also providing a service, they're feeding America. So why shouldn't they be able to accept a tip, right? I want to ask you Rachele, I guess, how does tipping even relate to processing fees in the first place? Why are farmers or anybody else that starts a business these days are charged a processing fee if they want to accept credit cards?
Rachele: 1:45
That's a great question. So like you just mentioned when companies or businesses accept credit cards, they need to use a merchant provider. So in our case we use Stripe. And so any kind of merchant provider that provides that service, they will charge a flat rate processing fee. Usually those rates can fluctuate between like 1.5% to 3% depending on I believe the credit card itself, but it's just something that happens when credit cards are used.
Sebastian: 2:15
That's crazy. So there's really no other way around it. All merchants will charge you a processing fee if you want to be able to accept a credit card.
Rachele: 2:21
Exactly. And you know, we're starting to kind of be a cashless society. So credit cards are so so important to operate and run a business these days. And so before we expanded on this feature here at Barn2Door, we were offering just a flat rate people could opt in to tipping farmers, 3% to cover processing fees. And so we decided, okay hey, people are opting in, people are covering this 3% tip that we were calling it and we're like, let's expand on it. So as a February 1, we rolled out advanced tipping. So now buyers can choose to tip farmers 3%, 5% 10% or a pre-configured amount. And since then we've been looking at the numbers. We love data here at Barn2Door and we've seen that almost 80% of farmers have opened up that feature. And it's really exciting to see that now they're not only covering that 3% processing fee, but are expanding on it and keeping that additional money.
Sebastian: 3:22
Wow. That's awesome. Rachele. The one thing I kind of want to ask, for someone running a business, you know, that isn't traditionally a place where they usually would accept tips, will my customers actually even tip?
Rachele: 3:33
The short answer is yes, absolutely. People love to show appreciation and gratitude for the services that they're receiving. And people love local food. They love supporting local farmers and businesses. And so if you're giving them the option, people will want to tip Farmers.
Sebastian: 3:50
Yeah, you're right. And ultimately at the end of the day, it's an option they don't have to, but there are some customers out there that may be really big supporters of your business and your brand and all the products that you provide, and they just want a place to be able to share that with you or show you that appreciation. And you're just giving them an outlet for that.
Rachele: 4:10
Exactly. Yeah.
Sebastian: 4:12
You know I guess the other thing is, won't I just come off as like really pushy. I don't want it to like, kind of be shoving a tip jar in their face and say like, Hey, tip me.
Rachele: 4:20
No, I mean like you said, on Barn2Door, it's a toggle that farmers can just turn on. And so they can choose to open up tipping to their buyers, but it's like you said, completely choice-based. So if buyers want to show that extra bit of gratitude, they can do so. And what's really cool about that, Sebastian is that we found so far that 25% of farmers on Barn2Door are already getting all of their credit card processing fees paid for by their loyal customers. So that's really awesome to see one in four farms. All processing fees totally covered. I had to repeat that cause that's really great information to know that if you do open tipping, you don't have to pay your processing fees.
Sebastian: 5:03
That's insane. So that's how you can get around that flat rate. Huh? I guess that's great all Rachele, but I want to ask, you know, how is this going to help farmers make more?
Rachele: 5:13
Yeah. I mean, I think there's three big things we can hit on there. So it's buyers can cover your fees. So if you're accepting tips and it's covering your merchant fees, your processing fees for credit cards, then you know, you're saving obviously hundreds of dollars I mean those can add up very easily. Secondly, if you offer a delivery service, It can make the delivery more profitable. And you can tip your delivery drivers or tip yourself if you're the one making those runs. And so that's also a way to kind of generate more cashflow into the business. And lastly, I think it's a good incentive for employees too. Knowing that if tips are coming in at the farmer's market or, you know, across your web store, through Barn2Door. You can incentivize employees by pooling all the tips together monthly, or however often you pay your employees and be able to give them extra cash.
Sebastian: 6:07
You know, like you said, Rachele, I definitely would agree. I think when you're selling a large subscription all upfront or you're selling a quarter cow or a half cow, those are big ticket items, you know, 3% off of that can add up to be a lot of money.
Rachele: 6:20
Yeah, it definitely can and it's off of every single transaction, regardless if it's a quarter, half whole, or maybe it's your egg subscription. It doesn't matter. They will take that 3%. So again, having tips, cover those fees and maybe you're making some extra money on top of that. I mean, it's a win-win.
Sebastian: 6:40
Absolutely, so Rachele, to recap, we covered a lot of reasons today. Why our farmers want to include tipping as a feature if they haven't or they're looking to include tipping, but don't know where to go. What are the reasons why we should utilize tipping?
Rachele: 6:54
The first is allow your customers to appreciate you for, all the hard work, the second is, you know, buyers can cover your fees. So credit card transactions, like I said, hover around that 3%. So, tips allow farmers to offset those costs and improve their profit margin. Third you can make delivery more profitable if a delivery service is, what you currently offer your farm. So, customers, like I said, go back to tipping delivery drivers. So you're delivering their food. So might as well except a tip for that as well. And lastly, just incentivize employees, it's a great way to encourage your farm employees, to engage with your buyers and really provide that great wholesome experience.
Sebastian: 7:37
If our listeners wanted to find out more about this feature, do you know where they can read about it or?
Rachele: 7:42
Yes so they can check out Barn2Door.com/resources we have a couple of blogs that we've released in relation to this feature. We also encourage people to come join connect. It's our live sessions that we host every single week. So if you have questions or if you want to connect with other farmers to learn how maybe their tips and tricks on how they're covering processing fees or maybe even using that extra money to pay their delivery drivers. Farmers can come join us.
Sebastian: 8:10
Awesome. Well, thank you so much again, Rachele, for coming onto the podcast today and talking to us more about tipping and how to increase the bottom line for our farmers here at Barn2Door.
Rachele: 8:18
Of course. Thanks Sebastian.