Gorgias’ $30 Million Series C and the Future of Customer Experience for Online Stores

Romain Lapeyre
Romain Lapeyre
Last updated on 
August 15, 2022
August 12, 2022
Gorgias’ $30 Million Series C and the Future of Customer Experience for Online Stores

I’m excited to announce that we have raised a $30 million Series C round led by Alex Bangash from Transpose Platform and Bram Sugarman from Shopify, with participation from insider Jason Lemkin from SaaStr and Rajeev Dham from Sapphire Ventures, CRV, and Alven.

From the start of Gorgias, our mission has been to empower all merchants to deliver an exceptional customer experience (CX). While this mission has always driven revenue for our merchants, we’re excited to focus further on the vast potential of CX-driven revenue with this round.

Right now, we’re helping more than 10,000 merchants serve more than 200 million customers — striving toward a future of ecommerce in which merchants of all sizes have a fighting chance to grow.

Customer experience has never been more important for growth. Between rising acquisition costs and the incoming recession, growing brands must deprioritize acquisition and look toward conversion and retention — two goals that depend on the experience you provide to customers. 

Our new funding will drive both of those goals forward, upgrading customer experience further through a mix of support automation and revenue-generating features. 

Here’s our vision for the future of ecommerce, and our plan to get there.

As acquisition costs skyrocket, you need to drive more revenue through existing customers

Most of the modern success stories in ecommerce hinge on the ability to acquire customers very efficiently. But that’s no longer the case.

DTC giants like AllBirds and Warby Parker blazed a path for other online-first brands to follow — a path paved with countless Facebook and Google ads. These ad marketplaces initially served as a near-unlimited well of new customers and revenue. Over the years, more and more brands began to tap into that well.

Today, online retail competition is at an all-time high, and it’s running the well dry. In an increasingly crowded marketplace, competition is inflating ad prices (more than five times higher) and further straining supply chains already worn down by COVID complications.

As you can see below (in the “marketing operations” rows), top DTC brands spend much more on marketing than their peers in CPG and soft goods, leaving them more exposed to these skyrocketing ad prices. 

Many brands won’t survive this margin squeeze, which creates a big opportunity for brands that prioritize revenue growth through their existing customers.

A detailed spreadsheet that shows CPG brands spend much less than DTC brands on marketing spend, and therefore don't have as tight of a margin squeeze.
Source: Yahoo Finance, Companies House, SEC (via Michelle Wiles)

A new playbook for an uncertain DTC landscape

To help online stores thrive, we have developed a new-and-improved DTC playbook focused on leveraging customer experience to drive revenue growth. It features 18 actionable tactics to grow your brand, even in the choppy waters of our current times, and shares lessons we’ve learned from working with more than 10,000 ecommerce brands. Together, the 18 tactics could lift your revenue up to 44%.

Here’s the short version: Instead of sending all of their money into the advertising wood chipper in search of new customers, brands need to dramatically improve the experience they provide to existing prospects and customers at every stage of the buying journey. This increases conversion rates (at a lower cost than acquisition) and drives retention as those customers return again and again.

That sounds abstract — most advice about customer experience is — but we have made our tactics as concrete as possible, so you can start applying them today. You can read the playbook here, and we will expand the project with even more detail and examples over the coming weeks.

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Proven customer experience fundamentals provide a foundation for the future

Our focus on ecommerce already sets our product apart from other customer service platforms. It also puts us in the prime position to imagine the future of customer experience for our industry. 

Our vision rests on a simple premise: Happy customers are the best fuel for growth, but most merchants don’t realize it (or don’t prioritize it enough).

If you want a steady supply of happy customers, you need to do five things:

  1. Properly resource your customer-facing teams
  2. Understand the fundamentals of an exceptional customer experience
  3. Prioritize the right areas for your customer-facing teams
  4. Build a process that allows you to execute those fundamentals consistently 
  5. Measure what’s working (and not working) to optimize your process

To usher in the future of ecommerce customer experience, we’re focused on making those five steps easier for online stores of all types and sizes. Because while they’re simple to write down, they’re much harder to get right consistently — especially when many merchants see customer support as a cost to minimize.

Below, we’ll talk more about our efforts to simplify the process of applying the fundamentals of customer experience. But first, let’s break down those fundamentals.

Here are our six core beliefs about building an exceptional customer experience, based on our research and our work upgrading over 10,000 online stores:

1) Customer feedback is your greatest resource for shaping your product and customer experience 

Customer feedback is valuable: They’re literally telling you what they need from you to become a new or loyal customer. If you don’t collect and leverage this gift — and it is a gift — you’re missing out on opportunities to improve before the same issues affect a broader segment of your customers.

But when your customers go out of their way to share feedback with you about something going wrong, it may already be too late to retain them. That’s why you need to be proactive. 

Though there are other ways to collect customer feedback, your customer support agents spend their days speaking to the people buying your products, at every stage of your funnel. Train them to ask for feedback proactively and develop a system to collect and act upon that feedback.

A chat window where a customer tells the agent that the main reason for an exchange was due to damage during shipping, which the agent passes to the rest of the team.
Source: Gorgias

2) Your brand’s differentiator is what you stand for — your products and CX should convey those values

With 1.75 million merchants on Shopify and 9 million online stores worldwide, customers are surrounded with options. You know the difference between your product and your competitors’ at a deep level, but many customers don’t see a big difference between your brand and your competition. These days, most customers rely on your brand to reel them in from the sea of options. 

Your values matter to your customers. The way you conduct business matters to them. And the customer experience they have (or hear about) matters, too.

All of this comes together to establish your brand in the eyes of your customers. Your supply chain, product quality, website, customer interactions, purchasing conditions, and more are all signals — either positive or negative. Make sure the brand you put out into the world aligns with your customers’ expectations.

3) Long-term value comes from repeat customers

According to an internal analysis Gorgias ran, repeat customers generate three times more revenue than first-time customers. Plus, the average online apparel shopper isn’t profitable until they make their fourth purchase. Given that ad costs are reaching an all-time high, brands are under a lot of pressure to convince customers to return.

A ine graph showing the dramatic rise in cost of Facebook (250%) and Google (100%) ads since 2020.
Source: The New Consumer

Any sustainable ecommerce business model in 2022 must increase focus on retention. Unfortunately, most DTC websites and strategies aim to acquire customers, not retain them. 

Stores focused on their financial health are nevertheless shifting their focus toward their existing customer bases. For example, a merchant using Gorgias, Dr. Squatch, has built a team this year to focus on retention, uniting marketing, web development, and support team members to bolster retention along the entire customer journey.

4) Every customer conversation is an opportunity to drive revenue

Many merchants see customer support as a cost to minimize when it’s really a growth opportunity to invest in. Customer support agents don’t just answer customer questions. They are the face of your brand and the first impression your current and future customers have — both revenue-generating activities.

Your support team also drives sales every day by handling objections and hesitations that would otherwise prevent shoppers from placing orders. Research shows that customers who ask questions on site are 30% more likely to make a purchase.

To fully realize the potential your support team has to drive revenue for your online store, you need to start by acknowledging their impact on revenue — either positive or negative — and properly resource the department. Then, you need to develop systems to empower them to sell. That’s where we can help.

After all, customer experience is a tide that lifts all ships.

A river where boats to represent conversion, average order volume, repeat purchase rate, and lifetime value go up when customer experience improves.
Source: Gorgias

5) You need to drive value at every part of the customer journey to maximize revenue growth

The purchase is not the whole store. Neither is the product. Instead, all of the interactions a customer has had with your brand and product come together to determine how they feel when they think of you and your offering.

The quality of your product is, of course, paramount. But two additional variables you control are the volume and quality of interactions with customers.

There are a few ways to increase the volume of interactions customers have with your brand:

  • Leverage brand promoters and customer communities
  • Start a pre-sale live chat with lingering customers to address any concerns 
  • Solicit feedback and social proof, which you can display on your product pages

And as you increase the volume of interactions, continue striving to make them positive, strengthening the relationship. Be available to help, respond fast, solve their problems, make them feel special, and reward their loyalty. 

That’s how you gain new customers and keep them for good.

A timeline that shows while people think CX is only impactful between the first purchase and a 30 day post-purchase, it's actually important throughout the entire customer journey, from before brand awareness to after multiple repeat purchases.
Source: Gorgias

6) Everyone in your company should obsess over improving the product and the customer experience

For all of the reasons mentioned above, and more, customer experience should be a top priority for your online store, right alongside your product experience. Don’t limit customer experience to your customer support team — the obsession over customer conversations and experiences should span the entire company. 

That’s part of the reason Gorgias offers unlimited seats: so everyone can gain insight from support tickets.

You already know your business’ success depends on your team. So hire people who are just as driven to improve your brand and customer experience as they are to deliver better products to market. As we mentioned before, your brand is a composite of all the ways your customers experience your company, and it’s only as strong as the weakest element.

Our success depends on our customers’ success

While there is still a long road ahead of us, our progress up until this point has been very promising. We have defined a better way to measure the level of customer experience and are working hard to help our merchants raise it.

Our North Star metric hinges on the customer experience our merchants provide

As a data-driven company, we track everything and use those metrics to guide decision making across the Gorgias team. The most important metric we track is the Support Performance Score across all our merchants. 

A graphic with stopwatches and thumbs up and down and a big, bold SUPPORT PERFORMANCE SCORE sign.
Source: Gorgias

The score is based on your first response time (FRT) and average resolution time, with different speeds corresponding to a scale from one to five for the Support Performance Score. For example, to score a 5 out of 5, you need to get your response time under 10 minutes and your resolution time under an hour.

If our company mission is to improve ecommerce customer experience, industry-wide, the entire team needs to align around a consistent definition of what makes an experience exceptional. That way, we’re all aiming at the same target.

The Support Performance Score accomplishes this by quantifying and benchmarking the most important elements of best-in-class customer service — all in one standardized metric. It will eventually include CSAT, as well.

If a feature or idea won’t move the needle on this North Star metric, it’s probably not aligned with our mission, nor an effective use of our resources.

The gaps we still need to cover to keep improving

Of course, the biggest impact we can have over our merchants’ Support Performance Scores is to continue improving our core product:

  • We are working on improving our product’s statistics and reporting features. We plan to make these features more robust and easier for our merchants to use (and share with your manager).
  • We are taking steps to make the platform even faster. We understand speed is often the most important element of customer conversations, and we never want to be the reason these interactions last longer than needed.
  • We are building further integrations with your favorite tools and channels. Though we integrate with 85+ top channels and apps, there are still valuable opportunities for collaboration that we are pursuing. (WhatsApp is incoming in 2022!) 

This round of funding will empower our merchants to usher in the (more profitable) future of customer experience

The $30 million we raised will support three main priorities that further our mission of radically improving customer experience in the ecommerce industry:

We will improve our merchants’ customer experience to drive retention and repeat purchases among their existing customers 

Key metric: Our merchants’ Support Performance Scores

To provide the type of experience that keeps customers returning and purchasing, again and again, you need to show up wherever your customers are and provide fast, friendly help.

Most merchants are aware of what they need to do, but struggle to achieve their goals without straining their support team. Those using a customer service platform like Gorgias are already ahead of the game in terms of speed and quality of support, but few are using the platform to its full potential. 

There are critical features we know help support agents save time, like:

  • Comprehensive ticket views with historical information
  • Auto-tagging and advanced systems for routing and triage 
  • Deep integration with a wide range of popular ecommerce apps

And we’ll continue to upgrade these features and integrated apps to keep agents as happy as the customers they’re helping — all while ensuring Gorgias has the most stable user experience possible. Check out our product roadmap here.

Gorgias' product board account, which shows our product roadmap in Q3 2022 and beyond.
Source: Gorgias on Productboard

As a complement to our planned improvements, we recently launched our Gorgias Academy, which will train agents on using a platform like Gorgias to provide an exceptional customer experience, and a dedicated Gorgias Community, where agents on our platform can get help and trade insights. We also recently revamped our help center to further support this goal.

These efforts will help agents serve more customers quickly, raising their teams’ Support Performance Scores and, in turn, reducing our churn rate and raising our net recurring revenue.

We will automate repetitive customer interactions to leave more time for important conversations

Key metric: Percentage of automated customer interactions through Gorgias 

Our current Automation Add-on is moving ecommerce customer self-service leaps and bounds forward, and it’s just the beginning of our work in this area.

I want to make one thing clear: We’re not trying to automate every single customer conversation. Instead, our goal is to automate the most repetitive and pesky customer questions so support agents can spend more time on conversations that raise their teams’ Support Performance Scores and drive revenue.

For example, our intent detection feature automatically tags and sorts tickets to help you prioritize high-value tickets — tickets like Luke’s, who is more likely to make a purchase if he quickly gets the sizing information he requested.

Gorgias' intent detection can understand whether customers are asking about a stock request, a shipping policy, or one of many other categories. It can also tag tickets that urgently need human help vs. tickets that are lower priority.
Source: Gorgias

There are three concrete steps we’re taking to increase adoption of automation and subscription to the Automation Add-on:

  • Increase automation Rule usage to save agents’ time and merchants’ money, allowing them to provide a more robust customer experience with the same headcount
  • Provide more intuitive self-help features for shoppers via self-service flows and help centers, preventing agent headaches by deflecting the most tedious and frustrating tickets
  • Develop new features for the Automation Add-on to encourage more customers to subscribe, including additional self-service flows and managed rules

As more merchants subscribe to the add-on, it will raise our average Support Performance Score and average annual contract value. Robust automation features will also help us attract larger customers, raising annual contract value further.

More importantly, Automation Add-on adoption will ensure our merchants’ customers get the answers they need at the speed they demand. For example, the add-on can give customers up-to-date order tracking information from right within your store’s live chat widget:

Three live chat windows, which show Gorgias' self-service flow where customers can track the status of their orders without having to speak to an agent.
Source: Gorgias

We will identify high-value and high-intent potential customers to generate more revenue from customer conversations

Key metric: Average revenue lift from customer support

Many ecommerce business owners see customer support as a “necessary evil” that eats up valuable resources they would rather spend elsewhere. This thinking stems from the damaging industry assumption that customer experience is not a revenue-driving department.

I am here to tell you that this is absolutely false. We have seen many Gorgias customers generate significant revenue through support, in some cases raising revenue by more than 10%. And that’s only counting top-line, support-driven revenue — which excludes the impact of customer experience on metrics like customer lifetime value, repeat purchase rate, and word-of-mouth referrals.

Often, when support teams fail to generate revenue, it’s because leaders assume they can’t. The support teams were under-resourced and focused on the wrong priorities. 

We’re setting out to change that, and I’m happy to announce that we have begun work on a Revenue Add-on (and accompanying resources) to help support teams reach their full potential in driving business value. 

Gorgias' revenue statistics dashboard shows changes in tickets created, tickets converted, conversion ratio, and total sales from support.
Source: Gorgias

Here are three ways Gorgias’ upcoming Revenue Add-on is going to help you increase customer conversion through your support team:

  • Segmenting your customer base and tickets to identify your highest-value customers and conversations
  • Highlighting those high-value opportunities for agents to help with triage and ensure they always get the necessary thoughtful attention
  • Creating proactive customer service opportunities online that mirror and complement in-store interactions, nudging customers over the finish line more often

These features are still in the development stages. We will continue to update our customers and audience as we make progress with them.

By making customer experience an even more vital part of our merchants’ organizations and helping them generate substantial top-line revenue, we will drive further adoption of the Gorgias platform and aim at impacting 800 million shoppers. 

The future of ecommerce customer experience is already in motion — join us on the journey

Gorgias has grown tremendously in the past few years and changed the way online stores interact with their customers. 

But the biggest changes are yet to come, which is why we’re grateful to have the runway provided by this $30 million round from Shopify and TI Platform. Our focus on customer retention, revenue generation, and automation will define our roadmap going forward.

We want to reach a future where happy customers are the norm in online shopping. Where loyal fans fuel growth for merchants. And where merchants understand the revenue potential of their customer-facing teams, who are driving a fifth or sixth or tenth purchase.

Because happy customers are the best fuel for growth. And given the macroeconomic climate and rising acquisition costs, they’ve never been more important.

To join us on this journey, subscribe to our newsletter and join the Gorgias Community to get all of these updates in real time. 

And if you’re not a Gorgias customer yet, you can book a demo here to learn more.

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