Western Brands Could Learn From 'Softscaling'

by Aaron Baar, Nov 1, 2012, 4:46 PM

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In these increasingly volatile economic times, companies need to find a balance between optimizing their services through automated systems and maintaining (or, when possible, growing) their personal relationships with consumers. A new study from the Massachusetts Institute of Technology’s Sloan School of Management suggests the best way to find the balance is a practice the authors call “softscaling.”

“To survive today, businesses actually need to be more – not less – connected to their customers,” says Peter Weill, chair of MIT’s Center for Information Systems Research, and one of the study’s authors. “’[Softscaling] is a powerful right brain/left brain approach with the empathetic use of data being the connection between the two sides.”

For the research study, Weill (along with Ritu Agarwal, a University of Maryland professor) looked at the top five performing companies in India and found they all use some version of softscaling (though they may have referred to the practice as something different.) Some of the companies, like Tata Motors, blend their optimization and data analytics with real-world experience, where plant workers and engineers headed to local tea shops to discuss the company’s products with consumers. The company has since increased the amount of those conversations by using digital communication technologies as well, Weill says. 

Another company, HDFC, uses optimization tools to offer mortgage products to consumers, but it enables its local officers to grant exceptions and waivers in many cases. The result is an extremely low default rate of 0.9% and a loyal customer base, Weill says. 

Remarkably, very few Western companies have adopted the softscaling approach, he says. “If you exhibit emotion, it’s often seen as a weakness [in the Western business world],” Weill tells Marketing Daily. “I think we’ve gone too far in that direction. The automated voice systems are an example of that.”

One western company that has been managing softscaling in its operations is financial services company USAA. The company, which serves veterans and their families, has organized its products around life events, giving it more of a connection to what its customers might want rather than having them go through a laundry list of options that are not relevant for their needs.

Weill suggests other companies find similar ways to apply customer needs to their business models, particularly as they look for more technological solutions for customer service issues. “The secret to an emotional interface on an app is to do a few things really well, and if it gets too complicated, you need to talk directly to a person,” he says. “And we need to be much tougher about only automating the things that need to be automated.”

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