StellaService has raised $11 million in fresh funding for its Stella Connect platform. The company helps customer support teams analyze and improve performance in real time. The round was led by Harbert Growth Partners. Customer service company Zendesk also made a strategic investment in StellaService. The company’s previous investors also particpated.
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The company’s road to this round wasn’t the same as any other Series A startup, StellaService CEO and co-founder Jordy Leiser told Crunchbase News. In fact, StellaService was founded by Leiser and John Ernsberger in 2009.
The company originally used “mystery shoppers” to test and evaluate the products and customer service performance of companies, and packaged its analysis and proprietary data to sell to corporate clients interested in improving their services. StellaService raised almost $40 million from investors like Norwest Venture Partners, Comcast, and Battery Ventures for that product.
Although the company was providing value, both its data-focused business model and the fact that it focused exclusively on the retail segment limited its scalability, Leiser said.
Further, three years ago the team started allocating more resources and talent to a research project now known as Stella Connect. It was created in reaction to feedback from corporate customers who were using StellaService’s data to highlight and share the performance of individual team members.
That team grew much larger and with the support of its investors, the company did what Leiser called a “Hard Pivot” and sold the legacy business to PowerReviews.
“Most investors, I think, would never have gone for this,” Leiser said. “They had to effectively diminish their position in the original business and make huge concessions in the cap table for this pivot.”
With the new API-powered platform, customer service representatives receive immediate feedback from customers through a digestible, social media-like user interface.
“The way that the modern worker, especially in the younger generation which has now taken over the front line, likes to work and be managed is through real-time engagement, real-time coaching, and real-time constructive criticism,” Leiser said.
The customer response rate for StellaConnect customers is between 30 and 50 percent compared to most surveys which receive about a 2 to 10 percent response rate. Leiser attributed that willingness to provide feedback to the humanizing elements in survey requests which include a photo and personal bio of the customer service representative.
“There’s something hard-wired in us as humans to want to engage when it’s about a human,” he said.
Many of the legacy business customers are using the platform, but the company has expanded into other verticals from automobile to financial services and is targeting mid-market and enterprise clients. The company isn’t sharing specific revenue metrics, but its customer base is “in the hundreds” and its typical contract sizes range from roughly $10,000 to low six-figures, Leiser said.
The capital from the PowerReviews deal in addition to the $11 million in fresh funding will be funneled toward the go-to market strategy for Stella Connect. A strategic partnership with Zendesk will accelerate the businesses’ go-to market in a partnership-friendly customer service market.
“Now we are funded with exclusive capital and focus to go after just StellaConnect,” he said. “It’s not just like three years in and a nice $11 million round of funding… it just completes this pivot.”
The funding comes as both a relief for founders, understandably, and a tool that will help propel the company’s efforts forward – encouraging news for any startup.
Illustration Credit: Li-Anne Dias