Hot towel service or a simple trim?

Fifteen minutes with a pair of clippers, a mirror check, and out the door for the price of a sandwich. Or: lying back on a reclined chair, eyes covered, a hot towel over the face, a straight razor worked slowly along the jaw, warm oil worked into the beard, a shoulder press at the end, someone offering you a coffee while you wait for the chair — forty-five minutes, and a bill that can run to three or four times the first one.

Ask either customer what they walked out with and they will say the same thing: a trimmed beard. The outcome looks identical in the mirror.

Which is exactly the question worth sitting with: two businesses can produce the same physical result and be running two entirely different businesses — one selling a service, the other selling an experience — and the gap between them is where most of the money, and most of the confusion, actually lives.

A blade is a commodity. A ritual is not.

Joseph Pine and James Gilmore made the case for this thirty years ago in The Experience Economy: the same raw material is worth more at every stage you stage it. Coffee beans are worth cents. Ground and brewed, they are worth a little more. Served across a counter, more again. Staged as a ritual — the right light, the right pacing, a barista who treats the pour as a small performance — and the same beans become something people queue for and pay ten times over.

Starbucks, and later Costa, built an entire business on exactly this move, in a category that looked hopelessly commoditised. Neither sells better coffee beans than the shop next door. What they sell is personalisation — a name on the cup, a dozen ways to customise the same drink — plus comfortable seating, WiFi, and unspoken permission to treat the table as an office for the afternoon. The coffee is almost incidental. What people are actually paying for is somewhere to be.

The barbershop chair works the same way. The blade and the fifteen minutes of labour are commodity inputs — almost any competent barber can supply them, which is exactly why that chair competes on price against every other quick-cut shop in the neighbourhood.

The hot towel, the pacing, the small theatre of it, the perfume choice, the fact that the barber is not glancing at the next client while working on you — none of that changes the trim. It changes what is being sold. It moves the same raw material from a service, which is competent, replaceable and constantly compared, to an experience, which is remembered and compared to nothing else, because nothing else feels quite like it.

Selling the ritual, delivering the trim

The dangerous case sits in neither extreme. It is the shop that charges the ritual price — calls it a “membership”, a “grooming lounge”, a “signature service” — while what actually happens in the chair is the fifteen-minute version with a candle lit next to it.

The customer pays the experience price and receives the commodity, and cannot quite say why they will not book a fourth time. They just quietly stop. Nobody complains about a rushed trim. They complain silently, with their calendar.

The opposite mistake is just as expensive and far less discussed. A shop that already does the hot towel, the pacing, the genuine care — and prices and markets itself as a trim, because that is the category it thinks it competes in — is fighting for customers on the one dimension, price, where it has handed itself the least ammunition, while leaving unclaimed the one dimension, an experience nobody else nearby is staging, where it could set its own price entirely. That is not humility. It is money left in the chair.

Is there a hot towel service in your business? How about in private banking?

All or most funds and trades are now available to anyone – online platforms, digital apps, banks and investment houses – all have access and to most traded shares and investment opportunities. Nobody wants to pay a premium for the trade itself; the trade is a commodity, executed correctly in milliseconds either way.

What your private bank actually sells is the layer built around it: a banker who calls before the client has to ask, who has read the family’s situation closely enough to flag an opportunity nobody requested, who is reachable easily because a genuine relationship does not check office hours. Two clients can hold the exact same portfolio and pay entirely different margins, because one of them is paying for execution and the other is paying for advice and a seamless experience.

The moment a private bank starts behaving like the retail platform underneath it — responsive only when asked, generic in its advice, invisible between meetings — clients notice however good the returns.

How about your hot towel service in premium travel?

Most airlines have decent premium cabins and the “hard product” (i.e. seat configuration and the media, etc) can be relatively the same. However, not all airlines make the client really look forward to the experience in long trips. Clients sometimes look at the airline as a means to end: They need to get from point A to point B and the airline is a way to get there.

However, if you compare some of the top airlines like Singapore airline or Qatar to most of their western competitors you will find that the experience they provide is completely different – sometimes the hard product is also better but in addition, you can always count on the smile and service orientation of the attendant, the flexibility around the meals, the perfection around the adjacent elements like the food, the cleanliness of the plane, the amenity kit – the way the service works, remembering a name by the second sitting, and there is even a hot towel literally involved.

None of it moves the aircraft any quicker. All of it is the reason there is huge loyalty effect and higher demand which can translate to one ticket costing a lot more, for an outcome that on paper is exactly the same: arriving.

Airlines are, in effect, running the barbershop’s two chairs at 35,000 feet — one selling transport, the other selling the experience of being transported — and a good part of the industry’s profitability depends on how well it keeps telling the two apart.

Three questions are worth asking, whether you are a barbershop, a bank or an airline:

What are you actually charging for? Is the customer paying for the outcome, or for the way you made them feel as you arrived at it? If the answer isn’t obvious to the person behind the till, it certainly isn’t obvious to the customer.

Does the price match the delivery? A premium name on a commodity service is the fastest way to train a loyal customer into a price-shopper.

Where is the upgrade nobody is offering? Most businesses already own the raw ingredients of a genuine experience — time, skill, space — and are pricing them as if they were still selling the commodity version.

Dr Philios Andreou Sphika is the Deputy CEO and President of the Other Markets Unit, including Thailand and Asia, at BTS Group, a leading global strategy execution consulting firm specialising in the people side of strategy. For executives who are interested in connecting, Dr Philios can be reached at philios.andreou@bts.com or visit his LinkedIn profile.