I haven’t thought about hairdressers for many years. When I was younger and my hair was a thick late 1980s quiff I went through the ‘barber on the corner’ stage. Then I graduated to a proper hair salon (mainly because I could get my hair done by a cheerful girl rather than having to have the same conversation every month about politicians with the grumpy old barber). Now I have a pair of clippers and indulge in a swift number two haircut once a fortnight at the kitchen sink.

It’s easy to dismiss hairdressers. And yet walk down any street in any town or city and there are more hair salons than there are fast food takeaways. For some, having their hair styled, coloured, straightened or curled is an experience to be savoured and could even venture into ‘treat’ territory. But with so many salons on offer how on earth do they differentiate themselves enough to be profitable – or is it just that there are more than enough customers to go round?

I became a little more interested in hairdressers when my wife came home with a booklet from her favourite salon. I idly flipped through it and found myself extremely impressed by what the owner had done to the customer experience. Especially how he was constantly looking to sell add-on business. The most experienced employees are called ‘Senior Art Directors’ and their services come at a premium. Everyone buying the basic service, say, a cut and blow dry, will be offered a £15 upgrade to a ‘Bliss’ treatment. This is a head and neck massage with exotic oils and a hair treatment with scented conditioner. There’s even a £20 ‘Exotic’ upgrade with more indulgent lotions.

What Callum Grant hairdressers has done is turned a relatively mundane ‘treat’ into one that has ventured into the pampering domain of a health spa. Even in a recession people are, apparently, easily convinced to spend the extra on the upgrade. Get each client to spend that extra every few weeks and this modest marketing effort turns into a healthy extra profit margin.

“Granted term assurance does not have the tangible immediacy of a good pampering”

Of course there is nothing new in adding value in this way. In the protection market we have tried similar approaches. Granted term assurance does not have the tangible immediacy of a good pampering. It has to be sold rather than bought, but it does offer good value for money. So why shouldn’t we offer extra benefits to attract customers. Some companies offer a counselling and emotional support service through providers like Red Arc. Others offer access to a worldwide network of Best Doctors. Ten years ago such add-ons would have been dismissed as gimmicks. But now with more claimants benefitting from, and in some cases becoming staunch advocates of such add-ons, they have become accepted. Many advisers use such services to justify one provider’s term assurance over another.

But whilst hairdressers can charge an extra £20 for their add-ons, and easyJet can charge £16 for ‘speedy boarding’ – we cannot charge an explicit extra for our added value services. Imagine adding on even £5 a month to the cost of term assurance. You would drop to the bottom of the Exchange comparison service and no one would give you any business. Protection added value services have to be ‘free’. Or at least the cost, if any, has to be included in the rate and the product price as a whole has to be ‘there or there about’ whether they include extras or not.

It can be quite a task to convince people of the need for protection, especially in a recession. And no amount of marketing will ever turn it into an aspirational product. And the same goes for the desirability of any add-ons. But I would like to think that one day the added value services that some companies are offering on their protection products will become important, if not desirable enough, to be able to command their own price premium.

First published on IFA online