Get Satisfaction Snags $6M to Crowdsource Customer Support—To Other Customers

9/14/10Follow @wroush

You may have heard of Valleywag, the tech gossip site owned by Gawker Media. But you’ve probably never heard of Valleyschwag—a short-lived startup where subscribers could sign up to receive monthly grab-bags full of surplus promotional goodies.

Late one night in 2006, the Valleyschwag team updated its website with a new feature, sent out an e-mail to all of its customers, and went to bed. “Unfortunately, there was a typo in the link we sent out, and hundreds of Europeans waking up as we were going to bed tried to access the site and couldn’t,” says Thor Muller, one of Valleyschwag’s founders. “They tried to talk to each other in the comment section of our blog, and one person figured out what the typo was. So by the time we woke up, hundreds, if not thousands of people had already seen the solution.”

It was an amazing example of customers collaborating to solve a problem without the company even being involved—and it gave Muller and his co-founders the idea for a totally different business. Today that business is called Get Satisfaction, and this week the San Francisco startup is finally collecting its first big pot of venture money.

The $6 million Series A round, being announced today, was a long time coming: Muller, Get Satisfaction’s chief technology officer, says the recession upended earlier fundraising plans (of which more below). San Francisco’s Azure Capital Partners led the round, with seed-round funders O’Reilly AlphaTech Ventures and First Round Capital also participating. With thousands of clients already using Get Satisfaction’s platform to communicate with their customers, and to help customers communicate with each other, the startup is hoping it’s now on its way to dominating a market that’s been labeled “social customer relationship management,” or social CRM.

Definitions of social CRM are fuzzy and rapidly changing, but at its heart, it’s about software that helps companies get more systematic about the way they engage with customers. Many Get Satisfaction clients use the company’s Web-based platform to help their customers answer each other’s technical questions, thereby reducing the costs of customer support. But these online communities also turn out to be good places to collect customer feedback, which can be funneled into product design or marketing efforts. In fact, the comments left by many Get Satisfaction users, and the data they reveal in the process about their needs, wants, and preferences, is the kind of stuff many consumer-facing companies happily pay market researchers to collect.

“Where Get Satisfaction came from, and where it is distinctly placed right now, is online customer service and support communities,” says Cameron Lester, Azure’s founding partner, who is joining the company’s board as a result of the investment. “But although they have great customers who use it predominantly for that, they also use it to get advice about product usage, and to develop new product ideas. When you look at customers like Procter & Gamble and Mint.com and Zappos and Nike and British Telecom and Motorola…what Get Satisfaction is doing is helping these companies get into a dialogue with their users in a non-offensive, engaging way.”

One big factor that sets Get Satisfaction apart from other providers of customer-support software is the fact that it’s creating a single, cohesive community of consumers.Once you’ve registered as a participant in a customer support forum at one Get Satisfaction client, your identity follows you to every other Get Satisfaction client. That means the startup has a comparatively deep understanding of the people who use its clients’ support forums.

“Companies have their customer databases, which tend to be pretty shallow and out of date, and tied mainly to transaction histories,” says Muller. “On the other end of the spectrum, we [are tracking] social identities, where customers will be very forthcoming and will share their interests in various social spaces. What we can do is tie together that social identity with customer records, and that creates new opportunities for the marriage of social data—what people are doing, what they care about—back into the world view of the company.”

Through software connectors, Get Satisfaction can channel the feedback and reputation data left by forum users into existing systems such as classical CRM software (e.g. Salesforce) or help-desk systems (e.g. Zendesk). “We aim to be a connective tissue between the outside social space, where conversations are happening freely but need to become somewhat more structured to reach productive outcomes inside companies,” says Muller.

One Get Satisfaction client in the news recently is Flipboard, the Palo Alto, CA, startup whose iPad app lets users browse Twitter and Facebook feeds in a friendly, magazine-style format. The app became so popular after its launch in late July that the company had trouble accommodating the crush of new users. Flipboard’s Get Satisfaction forum became the startup’s main vehicle for communicating information about the software updates and invitation procedures it devised to fix the problem. Since then, the forum has also become a clearinghouse for feature suggestions from Flipboard users (the most-requested feature, right now, is the ability to access RSS feeds from within the app).

Of course, there are limits to the idea of crowdsourcing customer support to customers themselves. During Flipboard’s July crisis, for example, there was little that forum users could tell one another about the situation (I was one of them, so I know). For the first few days, the only truly useful bits of information were the occasional updates posted by actual Flipboard employees.

“It’s like with any channel of communication—it’s only as good as the use you make of it,” Muller says of Get Satisfaction’s system. “I know that as a small company, when you’re trying to put out fires, it can be a devil’s bargain—do you work on fixing the product, or do you communicate? What we would hope is that a little bit of communication can go a long way. Our challenge is helping companies make the most of that. If the end result is that a company is becoming less active and less engaged with their customers, then we have failed.”

In the life cycle of an Internet startup, the third year is unusually late to be collecting a Series A round. Muller says two big factors made Get Satisfaction a late bloomer on the venture scene.

The first was the economy. “We raised our original seed money back in 2007 and we expected to raise a large Series A within a year or so after that, but that was right around the time of the economic collapse,” he says. “So, like a lot of companies, we got creative, and we got laser-focused on monetizing and putting out a business model.” One big move was to bring in Wendy Lea, a former principal at management and governance consulting firm The Chatham Group, as CEO; another was the decision to focus on the social CRM market. “2008 and 2009 were a trial by fire,” says Muller. “But they say the best companies are the ones that come out of recessions. I can say that we emerged stronger for it.”

The other factor that paved the way for the Series A round was the explosion in social media activity, by both consumers and companies. “The market kind of evolved to suit us,” says Muller. “We couldn’t have predicted the rise of Twitter and Facebook, but the fact that they have become the centerpoints of the new economy has been great for us. It’s now a mainstream phenomenon for companies to want to be social online, whereas when we started, it was kind of a leap. People told us that they didn’t think mainstream businesses would ever want to air their dirty laundry in public. The maturation of the market created great timing for us for raising a great round.”

Lester says the Get Satisfaction investment was a natural for Azure, which has a history of investing in major consumer-oriented Web plays—its portfolio company BillMeLater, acquired by eBay in 2008 for $1 billion, was one of the most lucrative exits in venture capital history.

“We love companies that are early in an exciting space and have great leadership and clear momentum,” Lester says. “Those are three things that Get Satisfaction has that were obvious from the minute we met them. The space is still in its infant stage, and people are still defining their positions, so we see this as a big opportunity.” And if Get Satisfaction ever needs help defining its position, it has a pretty good place to turn: its own community of customers.

Compare this story to:

Get Satisfaction Celebrates Third Anniversary with $6 Million in Funding (Mashable)
Get Satisfaction Raises $6 Million For Customer Support Forums (TechCrunch)
VCs seek satisfaction: Customer service startup Get Satisfaction raises $6M (VentureBeat)
Get Satisfaction Raises $6 Million (San Francisco Business Times)

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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