Example: The Human Brain and $15 versus $150 haircuts

In exploring how one of my clients could differentiate themselves in a market that is generally commoditized, this question came to me.  How is it that one hair stylist can charge $15 and another $150 for a haircut?  How is a 10x factor in cost reasonable?  What is so different about these two?

Photo Credit: Luca Doninni Barber's Ecstasy

As a marketer, I began to identify key differentiators and benefits that set these two "hair services" apart.  One could consider that styling, location, time spent, customer service, entertainment factor, quality, reputation, and luxury appeal separate the two services and enable one "haircut provider" to charge ten times more.  As a psychology enthusiast, I know that we are all driven by the way the brain works.  According to the NeuroLeadership Institute, our social behavior is governed by an overarching organizing principle of minimizing threat and maximizing reward.  So, let's look at how each of these differentiators minimizes threat and maximizes reward.

1. Styling - Having the right style, the latest style, the sexiest style.  This can make someone feel relatively more important than others.  It can also garner more compliments and make the person feel better about themselves.  Being a hair stylist who can create or copy the latest "Hollywood hairdo" is worth paying extra for because it "makes me look and feel like" a movie star.  All of these things are highly rewarding to the brain.  A threat would be "being out of style."

2. Location - High end hair salons are often in trendy or high net-income areas.  Being able to say, "I had it done at XYZ Salon in Trendytown" feels good.  It separates you from others who didn't go there.  People will pay more to say you had it done at a certain place or in a certain location.  Even if they don't brag about it, they just feel better knowing that they went somewhere special versus the same shopping center as the Wal-Mart.

3. Time spent - Higher end "hair cuts" tend to be booked in hour increments instead of a 15 or 30 min barber shop.  Of course, if we are talking color, it's much longer.  In any event, there is a value in spending more time with a customer.  Being with someone builds up your relationship with them - the brain senses this as more rewarding.  If you have a first-time client for 15 minutes, you don't get to know them, you don't get to connect with them, and you don't get to share with them.  Smart stylists will even make the first haircut extra-long to "maximize the relatedness" to that new customer.  Related-ness is rewarding to the brain - we are more attracted to people we share more in common with and repelled by those we don't.

4. Customer service - Higher end salons can provide better customer service.  They offer beverages, they know you personally, they invite you to events, and they talk to you about life's problems.  These are all more rewarding to the human brain - we feel more secure, safer, and special.

5. Entertainment factor - Higher end stylists keep you engaged and entertained while working with you.  They don't just work with a shut mouth.  They ask you about your family, the drama in your life, they share funny stories, they engage with you.  You aren't bored, you are entertained.  Again, this reinforces pleasant times, safety, enjoyment.  A hairstylist may not be the best at cutting hair, but if you leave their feeling happy and entertained and joyful of the experience, you are going back...it's too rewarding to feel that entertained and have that much fun.

6. Quality - This one is simple.  They cannot do a bad job.  The cut must look good.  It must be complete.  It must not have errors.  If it does, it is a threat to someone's personal identity.  One botched hair cut or color means a customer is never coming back...and likely complaining to 10 people about you.

7. Reputation - The reputation is built on doing a good job and also doing it for certain people.  Again, status falls into play...it is rewarding to go to the same stylist as a famous or wealthy person...or to go "where the rich go."  It makes you feel special.

9. Luxury appeal - Everyone wants to be "behind the velvet rope" and feel special.  They want to be unique.  They want to be better than others.  They want to be able to afford the best or most expensive of something.  It makes them feel safe, secure, and powerful.  The brain releases chemicals that make people feel positive about what they can afford.

Each one of these differentiators reinforces a very strong element of human behavior and rewards the brain...to the tune of 10x more money.