​Naked insight: business lessons from a Japanese bath house

As a small-business owner, I have found business insights or 'light bulb' moments can arrive anytime: lining up at the supermarket check-out, driving and listening to the radio or – rewardingly - when you are experiencing something new for the first time.

Insight hits with a flash. You walk away feeling enlightened, empowered, with a different mindset. I had such a moment on a recent trip to Japan when I visited a local bath house.

" The business side of a bath house is fascinating."
Peter Hanami,Author & consultant

In fact, I had many such moments. History is full of stories of inspiration hitting in the bath but at this bath house it was not just the bathing – it was the whole elaborate ritual (and commercial) experience which provided insight into what makes a successful business model.

Japan has many public bath houses and they can be classified into two main types, onsens, which derive their water from a natural source, and sentos, which use regular heated water. In Japan, it is common for people of all ages to visit a bath house, as a way to relax or unwind after a busy day or as a leisurely day out.

At the start of the 19th century many homes in Japan didn't have baths and a whole industry of providing bathing services began and it has grown into a lucrative business. Although many modern houses now have baths, people still like to visit a bath house with a natural spring. It is an experience and many say the water has a different quality on their skin.

Venturing to use a bath house for the first time is a unique experience and one that takes patience, curiosity and perseverance. There are very precise rules and etiquette. When taking a Japanese bath you wash before you enter the bath.

The business side of a bath house is fascinating. When you pay at many bath houses, the transaction is processed by a vending machine. Inserting notes and pushing a few buttons, your admission tickets are delivered along with your change (And the machines always work).

This automation is replicated throughout the bath house with vending machines for drinks, snacks and restaurant meals.

That was one insight: automated processes can provide seamless convenience for customers.

With a vending machine, you can create a receipt, buy multiple tickets at a discounted rate and reduce the need to wait and carry money.

As my Japanese father-in-law often says when using vending machines, “totemo benri desu" - they are very convenient!"

That's another obvious but often forgotten insight: How can you enhance and add value to your customer's experience?

Something which strikes you immediately when you visit a bath house is how happy the customers are. No glum faces here. The same feeling is often found when visiting a bustling sushi shop.

As a customer you can't ignore this positive atmosphere which slowly becomes contagious.

Business insight: what are the touch points in your business that can make your customers happy and really satisfied?

With all this automation I bet you're wondering why do they need staff at all? Well, believe it or not, there are still plenty of staff on hand within a bath house. Staff are busy at the front reception desk watching customers using the vending machines, roaming the rooms and in a variety of other positions throughout.

Click image to zoom Tap image to zoom

Photo credit: Mihai-Bogdan Lazar /

Business insight: Having visible staff provides a reassurance to customers that 'help and service' is just a few steps away.

Cleanliness is an important value in Japanese culture and at a typical bath house the floors, walls, facilities and baths are immaculately maintained. Staff constantly roam and mop up any spills, silently and quickly with no fuss.

Insight: A clean environment conveys to customers an attention to detail that words can't.

My impression is running a bath house seems like a very complex business, as they must create an intimate place that allows people to relax. No easy feat! How can you do this when people have such busy lives, limited time and pay a modest price for the service?

My sense is the key to a successful bath house is ambience, how you set the mood.

Insight: How can you set the mood and ambience for your customers?

On a typical afternoon a bath house can attract many customers. Yet as the number of new customers increase, the flow and movement is still calm, orderly and in most part, silent. How do they do this?

Insight: Good systems can control the flow and interaction of customers. What systems do you have in place for really busy periods and how do your customers feel?

When you visit a bath house you quickly learn there are no written rules on the walls of what 'to do' and what 'not to do' but everyone seems to know what to do. If you're a new customer, you just watch what others do and copy. How do you use a vending machine to pay, how do you operate a massage chair, how do you put away your shoes? In Japan, this system, like so much else, just works.

But that's another insight: Is your way of operating easy to follow? How do new customers learn your procedures? Do you have a way to let your existing customers educate your new customers?

After leaving the changing room during my recent visit, I grabbed a cushion and sat down on the reed flooring in the cool down room. My father-in-law gave me a small bottle of chilled milk. It is customary to have a cold drink after a bath to replenish lost nutrients and fresh milk is a popular way to do this. Bath houses provide a range of unrelated services that all contribute to the overall customer experience including massage chairs, complimentary toiletries, restaurants, cooling down rooms, massage therapists, steam rooms and even shoe horns.

Business insight: What additional products or services could enhance your product or service?

Bathing is ancient custom in Japan that provides a chance to take a few hours out of your day to really relax. The natural heat from the bath relieves the built up stress stored in muscles and allows your body to recharge. The real way to discover the impact a bath has had, is the new feeling you leave with. For many Japanese customers a bath is a time to reflect and in my case, a chance to gain some new business insights.

 Peter Hanami is an author and consultant on doing business in Japan. He did once run a bath house.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

editor's picks

14 Apr 2015

Happy cows = happy staff

Anouk De Blieck | General Manager, Human Resources, ANZ

Happy cows make great pictures. They're also more productive. But there's a fascinating extra dimension to animal welfare: farm staff are happier. And that's a virtuous circle as it leads to higher engagement by the employees, who in turn look after their animals better – from both a welfare and productivity perspective.

04 Mar 2015

The recipe for an international restaurant business empire

Peter Wilmoth | Feature writer

In the tightly-controlled rhythm of lunch service at his restaurant glass brasserie in Sydney's Hilton Hotel, chef and entrepreneur Luke Mangan keeps an eye on how the intricate but hopefully almost invisible operation is unfolding.

05 Jan 2015

The muesli bowl of Asia

Peter Wilmoth | Feature writer

It is 21 years since Carolyn Creswell was an 18 year old babysitter working for a couple who wanted to sell their small muesli business. She and a partner could only scrape together $2000 – which the owners initially knocked back. Today Carolyn is on the BRW Young Rich list.