Capacity, which taps AI to automate customer service response, raises $16M more

As pandemic headwinds beset brands, they’ve had to deal with increasing customer service challenges ranging from providing a consistent experience during digital transformations to scaling service teams in response to influxes in support requests. Businesses are under pressure to perform — a Harvard Business Review report found that customers who had the best past experiences with a brand spend 140% more compared with those who had the poorest. Moreover, nearly three out of five consumers say that good customer service is vital for them to feel loyalty toward a brand.

Disorganization behind the scenes threatens to exacerbate the challenges in customer service, however. Forty-two percent of service agents told Aspect in a recent survey that they’re unable to efficiently resolve customer issues due to disconnected systems, archaic user interfaces, and multiple applications. Improvements to these call center systems is a logical solution — doing so can theoretically boost the productivity of agents. However, so is adding a self-service option. A separate study from Accenture found that companies like utilities, which see many requests a day about the same topics, could realize $1 million to $3 million in annual savings from adding self-service.

Innovations in self-service software — including applied AI — are making them a more attractive solution to enterprises than they have been in the past. For example, Cleverly.ai — which Zendesk acquired in August — finds answers to customer’s questions by creating a knowledge layer on top of applications. Meanwhile, Directly taps algorithms trained by subject-matter experts to strategically answer customer issues in a range of different messaging channels. Another vendor is Capacity, whose software learns from knowledge and interactions within a business to build a knowledge base for help desks. Capacity today announced that it raised $27 million, expanding its series C round to $27 million and its total capital raised to $62 million.

Automating customer service

CEO David Karandish cofounded Capacity with Chris Sims in 2017 as a part of Equity.com’s incubator program. After the $900 million exit of Answers.com, which Karandish cofounded, Karandish says he wanted to start a company to “address challenges in communication, processes, and workflows.”

“In today’s modern work environment, people waste large chunks of time searching for information. Team members are fed up with wasting valuable time looking for the right document or answer to help them finish their tasks,” Karandish told VentureBeat via email. “This nuisance inspired [me] to build a platform that filled this gap. Capacity was created to connect entire tech stacks so people can instantly access the right information they need, wherever it may live within an organization’s knowledge base — recovering wasted time and giving teams the opportunity to do their best work.”

Capacity helps to organize a company’s knowledge with folders and a drag-and-drop system, letting users set access permissions by department, role, geolocation, team, website visitor, and more. Existing documents and spreadsheets are knowledge-mined, and companies can connect to directories for convenience using a console to filter, organize, and respond to inbound customer service inquiries. Whenever multiple answers to a question are found within the knowledge base, Capacity provides alerts to verify which answer is correct and attempts to discern whether it’s relevant to particular customer agents.

Agents can reply to, forward, or dismiss any questions Capacity can’t automatically answer via a live chat or a support ticket. Karandish says over time, fewer and fewer questions will require human-in-the-loop intervention.

“Capacity supports a variety of use cases both internally and externally,” Karandish explained. “Externally, customer experience teams can use Capacity to relieve their contact centers and customer support teams by deflecting calls and using FAQs through [a chatbot] … Capacity can also help sales and marketing teams by providing measurable feedback and impressing prospects … Internally, teams can use Capacity to [empower] HR teams by providing up-to-date access to protocols, policies and changing circumstances. The platform can also help with newly onboarded or training team members by surfacing answers to their questions in real-time as they are learning the ropes of the organization.”

Growing market

The use of AI in customer service is growing. According to a Tata Consultancy Services survey, almost one-third of businesses already use AI as part of their customer strategy. That’s in large part because of the potential cost savings. Juniper Research anticipates that by 2022, businesses could cut a whopping $8 billion in customer support expenses thanks to chatbot and natural language processing technologies alone.

But 87-employee Capacity, which claims that annual recurring revenue increased 124% year-over-year, believes its focus on internal employee in addition to customer service use cases differentiates it from the competition.

“As organizations move to adopt a flexible work style as the new norm, IT teams are facing the brunt of changes to meet each team member’s needs, whether at home or in-office. This means IT teams will have higher pressure to provide a consistent and quality work environment,” Karandish continued. “With support automation tools, some of these pressures on IT teams can be relieved by putting the right tools straight into the hands of team members.”

Capacity’s existing backers, including Rice Park Capital Management, angel investors, and customers, contributed to the extended series C round. Karandish says it’ll be put toward “supporting new team members, enhancing product capabilities, and optimizing Capacity’s … platform.”