Rating Customer-Service Performance Makes Marketers, Consumers and Investors Happy
With South by Southwest — clangorous and turgid as a prom-night after-party — raging 1,800 miles away, Jordy Leiser and I rode a squeaky, crowded commuter train to Fairfield, Conn. Mr. Leiser, a strawberry blond 27-year-old entrepreneur, wouldn’t have been out of place were he scarfing down brisket and manically checking in at hotspots around Austin, rather than traveling with me to an annoyingly barbecue-free town on an annoyingly cold March day. But Mr. Leiser doesn’t run that kind of company.
StellaService rates the customer-service performance of online retailers and has won buy-in from the likes of Zappos, Diapers.com and 1-800-Flowers, each of whom agreed to run the company’s seal on that precious parcel of pixels that is their websites. Compared to many startups these days, it’s a grown-up idea, built on the identification of a market need, deep research and testing and support from real companies with real revenue. Success hinges on adoption from retailers’ brand teams that are making decisions based on real results, like the seal’s impact on conversion. These retailers are hungry for credibility and credentials and see value in making the populace more comfortable with online shopping — a key to expanding e-commerce, expected to grow 10% annually in the U.S., hitting $279 billion in 2015. That’s probably why Mr. Leiser and his co-founder, John Ernsberger, are now celebrating a round of seed funding, $2 million in total, from Battery Ventures, DFJ Gotham Ventures, RRE Ventures, Consigliere and a couple of angel investors.
Jordy Leiser and John Ernsberger are attracting the business of heavy-hitters such as Zappos and Diapers.com. Why some multibillion-dollar retailers agreed to support an upstart business launched by two guys with no track record says a lot about two things: the strength of the idea itself and the changes hitting the online-retailing business.
Marc Lore, CEO of Quidsi, parent of online baby-care giant Diapers.com, explains it by using the three pillars of retail: prices, selection and service.
“There’s a big trend toward price transparency on the internet, with one company matching another one’s price more easily than in the past because of technology,” said Mr. Lore, before moving onto selection. “Retailers are adding thousands of SKU’s every year. Eventually there will be complete ubiquity in product assortment among competitors. So everyone has what I’m looking for and the price is the same across the sites. Why buy it from one over the other? Service, except you don’t have any benchmark for determining what company has better service than another.”
And that’s where, he says, StellaService comes in.
At the bottom of its webpages, next to other seals (in industry parlance, trust marks) from Inc, VeriSign, eBay and BizRate, Diapers.com wears the StellaService seal indicating it’s in the elite, or highest, category. It earned that by performing exceedingly well on 300 metrics that Messrs. Leiser and Ernsberger identified in 2009 while researching business ideas in Lewisburg, Pa., home to their alma mater, Bucknell. The college friends had returned to Lewisburg after a short, unsatisfying stint in the banking world to take advantage of cheap rent and the productivity benefits of living in an isolated college town where you no longer know anyone.
They began noodling around with different applications of transparency that could benefit people in all kinds of roles, from investor to consumer. Once they got down to customer service, they realized there wasn’t much out there to let shoppers know what kind of experience they could expect from any given retailer.
Actually, there is plenty out there if you want user-generated ratings of shopping services. “The crowdsourcing idea is very important because you want to know what the community thinks,” Mr. Leiser said. “But they capture a very small percentage of the market, often only the extreme experiences.” In other words, they snare the opinions of those who have had either very good or very bad experiences, not the middle ground.
What Mr. Leiser had in mind is, as he put it, a “truly objective process” undertaken by trained evaluators. So Diapers.com’s score is based on inputs that come from a platoon of mystery shoppers who parse retailers’ websites and pester their help lines, ordering and returning enough real products and registering complaints and requests to really put any company customer-service apparatus through the ringer.