With $15M From Norwest, Battery, DFJ & More, StellaService Is Building An Independent Ranking System For Customer Service

TechCrunch Feb 27, 2013 Back to press

StellaService, a startup that measures and benchmarks the customer service performance of online businesses, announced this morning that it has raised $15 million in series B financing. The round was led by Norwest Venture Partners, with contributions from the startup’s existing investors, including Battery Ventures, DFJ Gotham Ventures, RRE Ventures and Forerunner Ventures and brings the startup’s total to $22 million.

For those unfamiliar, StellaService aims to help shoppers identify which online businesses have the best (and worst) customer service and, in turn, to assist merchants in improving their current offerings. The company has developed a nationwide network of anonymous, embedded (and paid) mystery shoppers to help evaluate the quality of customer service across online commerce. StellaService also does some shopping of its own, paying companies for the products they offer to consumers and employing its own team of analysts to measure quality both of the product itself and the service they provide.

The company evaluates the quality of customer service as the “sum of all interactions between shoppers and online retailers that contribute to the overall customer experience,” assessing both the service and the system, focusing particularly on “usability, features and policy,” “shipping, delivery and returns” and “customer support.” Once the team has run its own tests, it combines its own findings with those of its “mystery shoppers” to create a rating for each business, which range from “elite” and “excellent” to, well, not-so-excellent.

The startup’s evaluation process differs for each category, and in a way, may appear to be somewhat subjective. But the StellaService founders tell us that its evaluation process is audited annually by KPMG, and it does no accept payments from companies for ratings — and, again, it uses its own funds to purchase the products that it evaluates.

The companies that receive top ratings, like “elite” or “excellent,” for example, (which are less than 50 percent of the thousands of companies it has rated, the founders tell us) are then eligible to receive StellaService’s “seal of approval,” which they can then display on their websites. For a fee, brands can take advantage of StellaService’s seal and get access to the data compiled by its team.

In essence, the startup wants to be the largest independent auditor of customer service companies (calling, ordering, returning, tweeting, etc.) and, in turn, provide what it believes to be the “only independent trustmark” that identifies best-in-class customer support.

Since its inception, brands like 1800Flowers, Zappos Wine.com, GNC and Gilt Groupe have won the company’s seal of approval and, since we covered the startup’s $5 million series A raise at the end of 2011, the startup has added a number of well-known brands to the list, including Eddie Bauer, One Kings Lane and Totsy, to name a few.

Over the last year, the company has built and developed Stella Metrics, a data platform dedicated to monitoring and benchmarking every touch point of the online customer experience, which, up to this point, has only been deployed to a few charter partners, including some of the largest U.S. retailers, the founders tell us.

To date, the company has produced 3.9 million data points on the service performance of these online retailers and launched a number of case studies (with 15 additional retailers) that showed significant increase in sales achieved by displaying the StellaService seal, company co-founder and CEO Jordy Leiser tells us.

With 12 months of building and iterating behind it, today the company is officially making its SaaS platform to the masses. The idea is to give any retailer or online store an objective window through which to view not only their own service performance, but that of competitors at well. So, for example, Target can now get a glimpse into how their CSRs handle a particular question compared to, say, Walmart — and vice versa.

As of today, StellaService has about 700 seal partners (those who pay to display that they have “elite” or “excellent” rankings, only 5 percent of brands qualify for “elite,” he says), but the company evaluates thousands of brands, even if they don’t participate directly in the service. The startup’s newest round of capital was raised in an effort to help finish the development of Stella Metrics and push it out nationally.

“We’ve seen a huge shift in the way retailers see and think about customer service and its impact on business results now that they’re armed with a new level of data and insight,” says Leiser. “With our new momentum and fresh fuel, we’re focused on building a massive, meaningful business, and with that goal in mind, we’re investing heavily in our research and client services teams to help retailers quickly understand a data set that has never been available before.”

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