In case you missed the announcement last week, I’m happy to share the news that STELLAService has raised an additional $5 million in funding to keep you in the know when it comes to companies with great (and not so great) customer service.
The funding was co-led by Battery Ventures and DFJ Gotham Ventures and also included RRE Ventures, Forerunner Ventures, and angels Jay Weintraub and Will Thomas. We’re thrilled to have such a terrific, top-tier group of investors behind us.
It’s been an amazing eight months since we announced our first round of funding. Our team has worked around the clock to produce customer service ratings and data on thousands of companies, and we hope you’ve been able to benefit from the guidance and direction our customer service analysts (i.e. “mystery shoppers on steroids”) have allowed us to provide. Our data and insights have been featured in nearly every major media outlet, from Forbes to NBC, in an effort to get the message out around the service performance of America’s leading companies – we believe every online consumer will benefit as a result.
Meanwhile, the most customer-focused businesses are proudly displaying the STELLAService seal, which has rapidly become the Web’s most trusted signal of sites with great service. From larger businesses like 1800Contacts to smaller, up-and-coming stores like Stock ‘N Go, companies are deriving significant value in displaying the seal as it remains the only objective, meaningful signal that separates their businesses from the herd of competitors who don’t go the extra mile for customers (it should be noted that more than half of the retailers we evaluate do not make the cut to display this award).
We’re only at the tip of the iceberg when it comes to the information and data we plan to make available on the service quality of each company. This new round of funding will help us accelerate the launch of some exciting new features and products that will give you an even closer, more detailed view of the service performance of each business. Stay tuned on our blog, Twitter and Facebook page for the latest.
Everything we do at STELLA is based around our mission to create a world with better customer service. It’s a simple mission, as good customer service is something all of us need and deserve. I’m proud to be working with such an awesome team, and none of us could be more excited to continue full-steam-ahead on this enormous opportunity.
Onward and upward!
Watching out for consumers, Asa asks STELLAService about buying a Halloween costume online and how to identify the best sites when it comes to customer service.
Check out our previous post if you’re still in the market for a Halloween costume and don’t have time to get to a store…just a couple days left, so make sure you purchase from the best!
For all of the simple and elegant ways Apple makes our lives easier as consumers, the world’s largest tech company seems to be going out of its way to confuse shoppers when it comes to buying an iPhone online.
There are currently numerous online retailers that sell the original iPhone 4 (or at least it looked that way at first glance). With the iPhone 4S going on sale this Friday (and pre-orders already breaking records), we wanted to find out firsthand which retailers serve as the best destination for purchasing an iPhone over the Web.
Given Apple’s recent crack-down on brick-and-mortar stores not officially authorized to sell Apple products, as well as reports of fake iPhones hitting the online market, we think it’s even more important to provide consumers with better guidance on this critical buying decision.
Surprisingly, the root of the confusion around buying an iPhone online lies with Apple. The company makes it abundantly clear which online retailers are “Authorized Resellers” for Apple’s most popular items, such as the iPod and iPad, but there is somehow one product category conspicuously missing from the Authorized Reseller chart: iPhone.
Instead of debating why the iPhone column is missing (which we obviously could do all day), we figured we would take it upon ourselves at STELLAService to see if we could fill in the chart for you.
First, we evaluated Apple’s Authorized Resellers list (shown above). None of the Authorized Resellers actually sell the iPhone 4 over the Web (we define “selling over the Web” as being able to purchase the phone and having it shipped to you). At first glance, it looked like Amazon.com, Target.com and Frys.com sold the iPhone, but a deeper dive into each site confirmed that they do not.
Amazon.com: iPhone’s are only sold through marketplace sellers, not Amazon.com.
Target.com: iPhone’s are only sold through physical store locations, not via the Internet.
Frys.com: iPhone’s are only sold through physical store locations, not via the Internet.
Next, we checked stores from the Internet Retailer’s Top 100 list that appeared to sell iPhones but were not listed on Apple’s Authorized Reseller list. We uncovered seven additional online stores that initially seemed to sell iPhones, but further investigation highlighted wrinkles with each site.
Newegg.com: sells a limited selection of “no contract” phones.
Etronics.com: sells a limited selection of “no contract” iPhone 3G’s (yet all are out of stock).
Walmart.com: iPhone’s are only sold through physical store locations, not via the Internet.
Sears.com: iPhone’s are only sold through marketplace sellers.
Buy.com: iPhone’s are only sold through marketplace sellers.
O.co (AKA Overstock.com): sells a limited number of “no-contract” iPhone 3Gs (refurbished)
BestBuy.com: a genuine online reseller of the iPhone…? Not so fast – see below.
Finally, we looked at BestBuy.com, which claims to be an Authorized Reseller of Apple products.
This is where things really get confusing.
Despite a clear message on BestBuy.com that the iPhone 4 (and iPhone 4S) are available for sale through the site as an “Authorized Reseller” of Apple products, Apple’s site does not recognize BestBuy.com as an Authorized Reseller. You could argue that Best Buy is a big enough brand that it does not require cross-referencing on Apple’s site, but if that’s the case, why is Amazon.com, the world’s largest Internet retailer, listed on Apple’s site?
Making matters more complex, not all iPhones 4 models are available for purchase (with shipping and delivery) through BestBuy.com. Can you have it shipped (free shipping), or do you have to pick it up in-store (IN STORE ONLY)?
Online shoppers wishing to purchase any AT&T iPhone will find a disappointing message when they reach the end of their checkout process (see below).
Policies, offerings and reseller arrangements seem to be changing by the hour as the release of the iPhone 4S approaches. With so many online retailers quasi-selling the iPhone (or reselling it through a marketplace seller), it’s no wonder consumers are confused, and in some cases getting scammed as they look to the Web to get their hands on a new iPhone.
Consumers are left with three big and obvious questions:
Ultimately, it appears the only online retailers truly “authorized” to sell iPhones through their sites are: Apple.com, BestBuy.com (sort-of), Att.com, Verizon.com and Sprint.com.
Now that we know (or at least we think we know as of 10/11) who the authorized iPhone sellers are online, we’ve decided to rigorously evaluate each site to uncover which online business is the most customer-friendly. STELLAService assessed each site’s policies, features and quality of live customer support to help consumers make a more informed online buying decision. With pricing for the new iPhone standardized across all retailers, the overall customer experience should be the deciding factor in choosing where to buy your iPhone.
Stay tuned, as we plan to share the full results of our study tomorrow!
I recently sat down with Columbia University’s Dave Lerner to talk about how and why John and I started STELLAService. We also touched on life as an entrepreneur in New York City, raising venture capital and what it really takes to evaluate the customer service quality of thousands of online retailers.
Check it out on the Huffington Post, or just watch below:
The first letter grade posted on a restaurant window by the New York City Department of Health went up July 28th – an “A” grade for a Deli in Long Island City, Queens. The unveiling marked the beginning of a plan to make consumers aware of how closely restaurants are abiding by health code standards.
The grading system (which has been used in Los Angeles for several years) will evaluate every restaurant in the five boroughs and provide each a letter grade. Restaurants are graded by city officials on the conditions of their kitchens and storage and dining areas, and given a score relating to the number of violations found (the inspections are conducted without warning obviously). Score ranges equate to letter grades (A, B, and C) which must be displayed by restaurants or fines can be imposed. Just like in school, an A is a good grade, and a C means time to hit the books (or grab a broom).
When asked why the new grading system was being put in place, the Health Department stated it was to “…help consumers make informed choices about where to eat out”, and that “consumer awareness creates a powerful new incentive for restaurants to maintain the highest food safety standards”. Seems like a no-brainer to us, providing consumers with unbiased, expert-based ratings on the cleanliness of all restaurants. We’re certainly in favor of having an easy way to determine if a restaurant is playing by the health code rules.
Transparency is what stands out with this new program – the more consumers know about the service levels, quality, cleanliness of potential retailers or restaurants, the better off everyone is. Businesses are rewarded for providing great service (or a clean restaurant), and consumers are more aware of what to expect. The only catch? It’s still buyer beware for street carts, as mobile food vendors won’t be rated this time around.
Read more here about the ratings.
As we’re all aware by now, advertisements don’t exist to tell the full story about the quality or “real value” of a product – they exist to sell. The lack of transparency in this case is known as asymmetric information. Simply put, people make purchases without knowing everything about the product or the company that sells it – advertisements help us justify our purchases in a world of asymmetric information.
Enter Michael Spence, a world-renowned economist and recipient of the 2001 Nobel Memorial Prize in Economic Sciences. He was one of the first to formalize the argument for signaling, a common solution to the problem of asymmetric information. In economic terms, signaling is defined as the idea that one party (termed the agent) conveys some meaningful information about itself to another party (the principal). When you combine this idea with the notion that people don’t have time to do much of their own research, you can understand why a signal has to be just that – a mark that encodes a deeper, more meaningful message about something. People need to see it and immediately get it.
What comes to mind when you see these signals?
All of these organizations provide a clear signal that help you (the consumer) deal with information asymmetries. Specifically, these signals enhance the transparency around energy efficiency, environmental protection, and Web security. Ultimately these signals give you confidence that the company or product displaying it has been validated by a third-party which has done the research for you about a potential consumer question or concern. Consequently, these signals have proven to increase trust, comfort, and most importantly sales for businesses in situation where they need or want to convey something important…so important that it requires an independent third-party to verify it.
STELLAService solves one of the longest-standing and most painful and frustrating information asymmetries – customer service quality. How can you know anything about the customer service you’re likely to receive from a company if you’ve never purchased from it before? STELLAService is THE SIGNAL that puts this issue to rest. When you see the STELLA’ seal on the Web, you can rest assured that you will be taken care of as a valued customer by the company displaying the seal.
While the Web sometimes increases information asymmetries by widening the physical gap between consumers and merchants, it’s also an amazing tool for the pursuit of something seemingly impossible…perfect information. We’re thrilled to do our part in providing more transparency in the online marketplace, and who knows, STELLA might just be that signal that gives you the confidence to buy those sweet new kicks you’ve been eyeing!
A recent consumer survey produced by global research firm Ovum/Datamonitor concluded that great online customer service is worth approximately $17.3 billion per year in the U.S. When taking into account all consumer categories (i.e. healthcare, financial services, consumers goods, etc.), the survey found that great customer service is valued at over $267.8 billion per year.
A copy of the press release announcing these results can be viewed on our PressLift, and you can also download a copy of the report: “The Value of Great Customer Service: The Economic Impact For Online Retail and Other Consumer Categories” from our Web site.
These figures are not only staggering in terms of their size, but I think reveal an enormous opportunity that exists for all retailers to capture more business by providing great service. As the options for online shopping have grown exponentially, it often seems that customer service has drifted down the priority list as businesses compete for online presence. These survey results reveal this approach to be costly; consumers are willing to pay a premium online if it means their purchase comes with great customer support.
Those online retailers already known for providing great customer service are in perfect position to capture more of their market. As STELLAService analyzes and recognizes companies that are best-in-class when it comes to helping their customers, the online shopper becomes more empowered, knowing where to go on the web for first-rate customer service.
When people talk about the “wisdom of the crowd”, they are usually referring to the aggregation of information in groups that results in accurate conclusions or decisions. Made especially popular by James Surowiecki’s The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, the theory has supplied us with some entertaining anecdotes about the accuracy of crowd-driven calculations (Surowiecki tells a story about how a large crowd was accurately able to guess the weight of an ox when the crowd’s individual guesses were averaged). As it happens, I tend to enjoy reading these stories to uncover where and when the wisdom of the crowd can bring truth – or wisdom – to strange or otherwise unsuspecting situations.
However, there are specific elements required to form a “wise crowd”, as Surowiecki calls it, and when it comes to the very business with which I’m engaged (measuring the service quality of Internet retailers), I think there’s a lot of confusion and misconception about the use of (and value from) community-driven seller ratings, which many people confuse as a perfect application of the wisdom of the crowd theory. To determine whether or not these seller ratings are indeed giving us the wisdom of the crowd, there are three criteria that must be met (according to Surowiecki):
Question: are online seller ratings like the ones on BizRate or Amazon’s marketplace truly driven by a genuine wisdom of the crowd? We weren’t sure, so we turned to people that know more about this stuff than we do…MIT. In an MIT Technology Review article entitled ”Can You Trust Crowd Wisdom?“, Vassilis Kostakos, an adjunct assistant professor at Carnegie Mellon, confirms with his team that the rating systems commonly used by online consumers can “easily be swayed by a small group of highly active users.” The article goes on to say that rating systems can paint a distorted picture if a small number of users do most of the voting. And sure enough, after looking at millions of votes across Amazon’s community ratings system (albeit for products, not sellers), he came to the conclusion that “a small number of users accounted for a large number of ratings….and only 5 percent of active Amazon users cast votes on more than 10 products. A handful of users voted hundreds of items.” Even with the incorporation of mechanisms designed to control the quality of ratings – such as allowing users to vote on the helpfulness of other users’ reviews – there are significant dangers in placing your complete trust in the accuracy of these ratings.
Based on Dr. Kostakos’ findings and looking back to Surowiecki’s criteria for identifying a truly wise crowd, it appears that community-driven seller ratings aren’t quite as wise as people probably think:
Even though it’s clear that community-driven seller ratings fail to qualify as a representation of the wisdom of the crowd, can they still be helpful and provide some useful information? Yes, they’re obviously better than nothing. But standing alone, do they provide enough information for online consumers to feel completely comfortable that they’re making the best possible purchasing decision? Not at all.
What’s the solution? A dual-rating system, which has been successfully pioneered by Metacritic.com and Gamespot.com in which the community and the objective, third party experts have their say. 
Whether evaluating the merits or quality of a camera, a restaurant, a video game or an Internet retailer, consumers increasingly want more information, and from more sources. While movie go-ers are interested in what the “crowd” thinks of the Alice in Wonderland in IMAX 3D, they are also interested in what the critics, or the experts, say. The ”expert” rating allows consumers to combat the potential biases, extremes and inconsistencies of user-driven ratings and provides the perfect point of comparison for someone who remains understandably skeptical from the community’s opinion.
It might be possible for the real wisdom of the crowd to be reflected through a user-driven rating if the crowd were somehow able to meet the above-mentioned criteria, but the ultimate problem facing consumers is that they would still have no way of knowing if the difficult “wisdom of the crowd criteria” had been met or not…and the only way to reassure them that the ratings can be trusted is by the presence of a completely independent, unbiased and professional rating right there next to it. I think Niki Kittur, an assistant professor at CMU who studies user collaboration on Wikipedia, summed it up nicely: ”There are both intentional and unintentional sources of bias” in user-driven rating systems. “In the end, what we really need [are] tools and transparency.”
More information from more independent sources drives transparency. So when it comes to measuring the service quality of an online retailer, you’ll now have one more “tool”, or information set to further enhance transparency: our STELLA Ratings.
I’ve been thinking a lot about the size, power and influence of Twitter, especially as it relates to communicating a good or bad customer experience. Consider the facts:
With a direct connection to hundreds of millions of consumers, 24/hours a day, these famous (and not so famous) people provide an unmatched, credible and independent angle for information about companies and “real” experiences as a customer. Twitter’s most effective use for consumers is to obtain information they cannot otherwise get (or devote time to getting).
Consumers buy (especially online) based on three variables:
Customer service is the one variable that consumers cannot immediately see or measure, and it therefore creates a significant information asymmetry between the merchant and the consumer. Twitter helps to close this gap by providing a way for consumers to share customer experiences and information through a credible network of people whose opinions we “trust”.
(Random thought: Do you think this means that celebrities now factor in the number of Twitter followers they have when negotiating sponsorship deals? Does Miley Cyrus have a clause in her contract with Disney that pays her based on her popularity on Twitter?)
At the end of the day, STELLAService, just like Twitter, will provide the two things online consumers need: credible customer experience information; and transparency.
