Deal Radar 2010: HyperQuality ,Seattle, Washington

When you make a customer service call and hear, “This call may be recorded for quality assurance,” that may be HyperQuality. The company listens to customer service calls and digs for patterns, trends, red flags, and important business intelligence that can affect company performance. It also specializes in working with clients who have outsourced to determine whether the decision has hurt or helped sales and retention, and to improve service if necessary.

The Seattle-based company was founded in 2003 by Howard Lee, a former Disney Direct senior vice president. The CEO is Chris Coles, who sees customer service as a business function not unlike IT or HR. To him, it’s a fact-driven and data-driven function that should be used to give customers the right amount of service in order to drive their buying behavior.

HyperQuality’s business intelligence services, delivered through its SaaS tool ClearMetrix, are designed to help companies determine the exact balancing point between too much and not enough customer service. Because the post-recession economy has most experts believing that consumer spending will stay flat for a long time, HyperQuality believes that it is essential for companies to compete with customer service in mind – particularly those in commodity-type markets such as phone companies, cable, travel, and so forth.

HyperQuality began as a monitoring company that didn’t provide any real business intelligence; it merely helped companies to monitor and coach their customer service agents on how to adhere to a script, deal with a cranky customer, or upsell. The real beachhead to expansion was the realization that buried in those customer service calls was a “gold mine” of data that could be applied to improve a company performance both at the top- and bottom-lines.

HyperQuality’s turning point was the development of its ClearMetrix technology, a business intelligence tool that brings relevant data from the customer service contact center to a client’s senior executives. ClearMetrix’s features include evaluations performed by HyperQuality or the client, a library of quality assurance forms, remote call auditing, and remote coaching for customer service agents, among others. The data collected by ClearMetrix can be explained in reports discussing agent evaluation and evaluation trends, center trends, user frequency, and so forth.

The TAM for HyperQuality is any company with one or more contact centers, whether they be captive, outsourced, or offshore, and primarily centers that are used by enterprise and mid-market companies. Any company that has an in-bound phone, email, or chat customer service department is part of HyperQuality’s target market.

Ultimately though, it is impossible to know how many contact centers exist in the world because so many are captive, or in-house. It’s a bit like trying to count the number of HR departments in the world – a customer contact center is an internal function that can be classified in a variety of different ways (hiring, benefits, training, etc). Some analysts have estimated the global number of contact centers in the 60,000-plus range. IDC reports indicate that the total size of the quality assurance part of the contact center market is in the $20 billion range. However, HyperQuality’s TAM is slightly larger as it plays in the both the quality assurance and the business intelligence segments.

Captive contact centers at enterprise companies are the top targets and where HyperQuality has the most robust client base. Those tend to be in telecom, cable, travel, for-profit education, catalog retail, utilities, and financial services, particularly mortgage and home warranty companies.

The company began on a shoestring budget but is now primarily VC funded and has raised a total of $15.5 million: a $5.5 million Series A from Miramar Venture Partners, Rustic Canyon, and Divergence Ventures in 2005; and a $10 million Series B led by Ignition Partners with participation from Miramar Venture Partners, Rustic Canyon, and Divergent Ventures in late 2006. There are no plans to raise more money at present. Numbers for 2009 are not yet available, but net operating revenues were $5.4 million for 2006, $7.8 million for 2007, and $9.8 million for 2008.

HyperQuality has evaluated over 7 million customer service calls. The company listens to and “grades” or data-mines a customer service call about every 15 seconds 24 hours a day, seven days a week. Past and present clients include Carlson Leisure Travel, AOL, TimeWarner Cable, Allconnect, Becker, Guthy-Renker, Sage Telecom Inc., SkyMall, and Travelocity.

Competitors include Clarabridge, which makes text analytics software that be used as a self-service product or scaled to the enterprise level; and Keynote (formerly known as Vividence), which measures how a company’s Web site, applications and perform on browsers, networks, and mobile devices.

At this point, HyperQuality is focused on growth, not an exit. Part of this growth is likely to come from satisfying regulatory requirements. Given that more regulation is expected in the financial, healthcare, and insurance industries, HyperQuality believes that more calls in these fields will need to be recorded for legal purposes.

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Deal Radar 2009: MAIA Intelligence
Deal Radar 2010: Medallia

This segment is a part in the series : Deal Radar 2010