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Hey there, Gorgias

Hey there, Gorgias

The hyper-personalized product-led growth levers that drove the all-in-one customer service tool's growth to 9,000 customers and a $300 million valuation

July 26, 2022
7
Min Read time
Hey there, Gorgias
Hey there, Gorgias

Hey there, Gorgias

The hyper-personalized product-led growth levers that drove the all-in-one customer service tool's growth to 9,000 customers and a $300 million valuation

July 26, 2022
7
Min Read time

Table of contents

In 1750 BCE, a man living in the city of Ur in Sumeria was upset. He’d just received a shipment containing the wrong grade of copper ore from a merchant.

“How have you treated me?” Nanni wrote on the nearly 3,800-year-old tablet. “You have withheld my money bag from me in enemy territory; it is now up to you to restore [my money] to me.”

Asking for a refund in ancient Sumeria wasn’t easy. Our man had to carve out this message on a clay tablet over hours and days, and then there was the small matter of delivering it to a merchant residing in enemy territory.

We’ll never know if he got his refund or if the message even reached its intended recipient.

Two millenia later, the same challenges remain. There will always be unhappy customers who demand refunds.

But unlike Nanni, they grew up with Twitter.

Social media leaves little room for delayed gratification. Everyone wants that package shipped today. Customers expect businesses to respond quickly, resolve their issues and leave them feeling satisfied at the end of it all.

Businesses that don’t deliver great customer service lose out on loyal customers and the opportunity to grow.

Imagine the merchant going back, resolving Nanni’s issue, and getting him to buy a ton of silver on top of his copper.

Gorgias, founded in 2015 is making that a reality.

👬The meet-cute

In 2015, Alex Plugaru was working on an extension to help customer service teams send faster emails via templates. Romain Lapeyre had just moved from Paris to SF looking for a great idea he could scale.

Romain was the adventurous sort - he’d fallen in love with tech, and, seeing the success of his HEC alumni he wanted to grow his own company.

He’d arrived in the Bay area to network and get some advice on the next steps - when a friend introduced him to Alex.

A month and a half later, they’d applied for YCombinator as co-founders of Gorgias.

⬆️ From little engine to growth machine

Alex and Romain were doing well. They’d earned a few thousand dollars in revenue with their browser extension, and had bagged $120,000 in pre-seed money from French accelerator NUMA and the Techstars startup program in New York.

But something was troubling them both.

While working on new features and iterations for their extension, the co-founders quickly realized that existing customer support tools were outdated with limited integrations available on the market.

The changes they wanted to make meant building a much more complex product - requiring resources they didn’t really have at that point. It was a tough choice.

"We were afraid of making the move," Lapeyre acknowledged. “But [Moisey Uretqsky, co-founder of DigitalOcean] and a stellar product guy, advised us to go all in and to not constraint ourselves to a peripheral product such as a plugin or an extension.”

Today, Gorgias is a multi-channel helpdesk software that helps e-commerce businesses deliver an exceptional customer experience. The startup uses machine learning and semantic analysis to reduce the workload of customer agents by 20-30% and even convinces clients to purchase additional products or services.

Last year, at the peak of their support volume (the five-day period from Thanksgiving to Cyber Monday), their merchants answered 2.5 million tickets. During that same time, their client’s support teams drove $25.6 million in sales.

Customers say the platform has literally changed their lives!

🏔️ The long hike to product-market fit

Lapeyre and Pugaru now had a product they could get behind. In 2016 they moved to San Francisco and managed to raise a seed round of $1.5M from Amplify Partners, CRV, Kima Ventures and a few other investors.

But it was a long journey to product-market fit.

“To use a hiking metaphor, it was like walking under the rain for a long time, but all we were thinking about wasn’t how hard it was but that we had to keep moving forward. We knew where we’re going, we've never had doubts about our product. We just decided to persevere.” said Lapeyre.

In 2017, almost a year after moving to SF they started to see traction with Shopify merchants. They built an integration with Shopify and that’s when things started to really take off. New customers were being added every month just from Shopify. So they decided to get laser-focused and only market to e-commerce businesses on Shopify making between 100k$ to 200k$ GMV. That’s when they hit the 1 million milestone in ARR.

Recalling his journey from 0 to $1M ARR, Aasif Osmany, Head of Sales, notes:

“When you are selling and trying to find a product-market fit, you need to be laser-focused on one market. Because [our] criterion was so strict…I knew how they needed to be sold, what they expected from us, how to onboard them, and most importantly how to turn this into a scalable process. Be cautious of giant deals that want to steal your focus and attention, the time will come for those kinds of deals — master your market first!”

7 years in and Gorgias has truly mastered their market. It’s now the #1 rated helpdesk for e-commerce merchants.

Their client lists include some of the top direct-to-customer brands including Steve Madden, Electrolux, Fjällräven, Vita Coco, Nomad, and Marine Layer. In December 2020, they raised a Series B round of $25M led by Sapphire Ventures, with participation from SaaStr, Alven, Amplify Partners, CRV, and Greycroft at a valuation of $300 million.

With over 9,000+ customers and 200 staff spread over five countries; Gorgias makes well over $25M in ARR.

# of support requests on Gorgias in the run-up to their Series B round 📈

So how did they get here?

There are different points in time when you can decide to build this machine to try to grow and accelerate. Most companies, when they get to one million, two million, three million and on, they don’t really have the machine, yet.” - Romain Lapeyre – CEO @ Gorgias

This is the journey they took to build that machine.

Take this show on the road! 🚗

Now that they’d found their niche with Shopify customers - Romain doubled down on sales. At the time, Gorgias had a handful of customers, about 100K in ARR, and had just made their fourth hire: Aasif Osmany, head of Sales.

Together Lapeyre and Osmany developed sales pitches and conducted demo after demo for prospects. Just a few weeks after Osmany came on board, they’d built out a robust sales process and begun analyzing sales data from their CRM with just fifty customers.

They quickly realized that trade shows were giving them the best ROI.

Trade show customers had an average deal size of $5,000 (compared to the $2,000 average from other marketing avenues) and their NPS was much higher - which meant they’d tell their friends.

“We have a little part of our machine, we know that if we go to similar trade shows, we’re going to make 4x return on investment.” - Romain Lapeyre – CEO @ Gorgias

So they doubled down on this niche - long-term customers with higher ACV who would talk about them to their friends.

Who would say no to that?

Know everything about your customer… 📜

Once they’d tapped into which channels worked best - Gorgias focused on learning everything they could about their customers. They didn’t just know their customers. They had a 360-degree view of them.

This hyper-targeted approach meant that they were able to tailor everything for a prospect right from identification to the onboarding process.

They used Segment to build a unified profile of customers and identify prospects likely to convert quickly by looking for signals like new hires and even conversations on Facebook groups. The most effective signal for them was when businesses installed competitor apps. That’s when they knew they were ready to buy.

And when your buyer is ready - what do you do?

You double 👏🏽 down 👏🏽

Gorgias personalizing the customer experience 👩🏻‍💻

They continued to personalize the experience once a customer had signed up - taking customers through an onboarding process that included in-app nudges tailored to nudge integrations to apps they were already using.

Say, for example, a customer was using Shopify and Recharge - they’d suggest add-ons and integrations for these apps during the onboarding. Lapeyre and Osmany developed 20 combinations of different onboarding procedures, all adapted to the customer.

The result? In a single year, they managed to increase their close rate from 15% to a whopping 50%.

Lead magnets 🧲 Gorgias drives acquisition with mini-apps like an ROI calculator, SKU Generator, Return & Refund templates, and more - capturing “sentiment-market fit” where these apps drive organic traffic from adjacent personas & capture leads at the same time.

Gorgias lead magnets 🧲

Add to these practical resources, Gorgias layered in customer education - bringing in-depth customer stories to an extensive blog.

Tailored onboarding flows 👋

Gorgias realized that the best way to engage customers was inside the product—after they had already invested some time exploring the interface.

Sign up for any plan and you’ll receive a 7-day trial with all features enabled. 🍫

This meant anyone who signed up was able to explore exactly how the product could work for them.

Gorgias’ pricing tiers today 💸

On the back end, Gorgias listed out everything they knew about the customer in their Segment database - from what they’re doing outside the company to their interactions within Gorgias. And if a customer went cold after the trial - Lapeyre and his team knew exactly where they’d dropped off. Instead of sending a generic email - they were able to bring them back with a follow-up that was contextual to where they were in the product.

“…you want to put your team inside the app. You don’t want to be sending emails like, “Hey, book a call with me.” If they are inside the app, the conversion is going to be higher.”

This helped every Gorgias team member provide an unparalleled quality of customer experience and led to 95% of their customers reaching activation after they paid.

Rapid GTM Experimentation 👩‍🔬

After closing the seed funding of close to $3.5M from SaaStr, CRV, and Amplify partners among others, Gorgias aimed to crack the next stage of growth through rapid experimentation of features and sales tactics.

They’d compile a list of ideas along with expected output and score these according to expected revenue.

As an example: An idea being floated was a demo-fast lane that allows prospects to jump on a live demo with an AE immediately after they sign up. If they expected around $50k in revenue for this idea - the operations team would scope out how long this would take to build and then prioritize based on ARR per day of work.

At the end of every quarter, they would look at each idea and how it performed and decide whether to keep it or not.

When used correctly, you should be able to track important factors such as time to close per channel, the close rate on incentive deals vs no incentive, time to close based on each pain point, the average value of a demo with X number of agents

Actual footage of Gorgias’ growth team driving GTM experiments

These experiments helped them stay creative and constantly work to refine and optimize their product.

Today Gorgias lets its customers have a say by publishing their experiments on their website - allowing users to vote for features and integrations they’d like them to build.

Loving this piece? We’d love for you to share this story with someone who’d love it just as much 🙌🏼

Building a referral flywheel ⚙️

Gorgias scored their users on a 5-point customer success score and set milestones in the customer journey to nudge customers to key success points.

Not only did this set measurable improvement targets for customer-facing teams, but it also enabled them to identify promoter users who would shout the Gorgias name from the rooftops.

Building a flywheel effect between the customer-facing teams and acquisition teams - they identified key success moments in a customer journey and nudged them to refer others to the platform using incentives in the form of referral bonuses.

Offering a bonus anywhere between $120 to $3000 in cash or credit for each successful referral; they also have an affiliate program for agencies, who get $100-300 in gift cards and rewards every time a client books a demo.

Work Smarter, Not Harder 🎭

Much of the success of Gorgias' early growth was driven by an Event-Based Marketing Strategy (EBM).

An “event” is a detectable user action in the digital network realm that sends a signal of an elevated likelihood that a customer would be interested in, or can benefit from, the Gorgias platform and services.

EBM marries user actions with the intent to provide more detailed and targeted evidence of a user's needs. EBM was Gorgias’ secret sauce in growing to a customer base of nearly 5,000 clients worldwide.

EBM monitors a few actions like:
• A user visiting the Gorgias website and how long they stayed on certain pages.
• A user installing a competitor's product.

These actions help the Gorgias team segment users based on intent and suggest the best way to reach out to leads. Using Hubspot & Zapier, Gorgias strategizes its outreach plan. The data collected from scraping user actions' helps Gorgias hyper-personalize its messages, leading to impactful conversions.

Solving for recurring revenue 🔁

In 2020, when Maxime Sutra joined Gorgias as Growth Lead, their paid efforts were barely generating any recurring revenue at all. That’s because they had a difficult audience to identify.

Shopify merchants aren’t a top priority for most data providers - and to complicate things further Gorgias had to reach out to a very specific subset of e-commerce platform employees - either founders or customer support execs.

Maxime fixed this by using Clearbit to create hyper-targeted segments for social media advertising and built an internal growth engine that linked back to the data they had on customers. This helped them target e-commerce merchants in the right roles and create segments based on retailer size and industry. His team then pushed different types of leads on different buyers testing to see whether free trials worked better than sales demos.

One of their most successful ad campaigns was a campaign that offered to buy out a lead’s contract with a Gorgias competitor. Ads were built to target leads that used a specific competitor - highlighting pain points and reasons why they should switch.

The result? In just 11 months, Maxime built up paid channels to a whopping 3233% to produce $2M ARR, in the run-up to their Series B raise of $25M by the end of the year.

What’s next for Gorgias?🔮

In 2021, Gorgias helped 8,000 brands support over 290 million shoppers, with users generating a combined $1.1 billion from their customer support functions.

They now have an app store that boasts over 80 integrations. And the recently added SMS support and contact forms in chat boxes make life even easier for CS reps.

Reducing customer success teams’ workload while helping generate revenue is a strong and convincing value proposition for any e-commerce business - and Gorgias’ $25 million ARR just four years after landing in Silicon Valley is a clear indication that they’re well on their way to realizing their mission to empower e-commerce businesses to deliver a top-notch customer experience.

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