Harvard Spinout Qstream Grabs $15M for App to Coach Sales Reps

The methods of honing the skills of sales people are getting more sophisticated, as companies turn to mobile technologies, data analytics, and even neuroscience to coax the best performance possible from their sales teams.

Investors see promise here: Qstream announced today it closed a $15 million Series B funding round led by Polaris Partners.

Qstream’s mobile app helps sales reps learn new tactics and practice their approach, understand new products being rolled out by their company, and receive training on new technologies. The Burlington, MA-based company’s technology is based on Harvard Medical School research into learning retention and ways to “rewire” a person’s brain to achieve desired behavior change, says Qstream co-founder and CEO Duncan Lennox.

“Organizations need to fundamentally change culturally from being focused on efficiency, where things stay the same, to being highly adaptable,” Lennox (pictured above) says.

Here’s an example of how Qstream’s product works. The app might show a video clip of a hypothetical meeting with a prospective customer, and then ask the sales employee a multiple choice question about what the next step in the conversation should be to try and close the deal. If the user makes the wrong choice, the app will explain—using text, images, and/or video—why that isn’t the preferred approach. Sales employees can accumulate points for correct responses and compete with co-workers, Lennox says.

The idea is to deliver quick bursts of information in an interactive format—and at the right time—to increase the odds that the knowledge will stick in the user’s brain. Qstream’s approach is based on two concepts called the “spacing effect” and the “testing effect.” The former is the idea that presenting the same information over regularly spaced intervals of time can improve knowledge retention. The latter refers to the idea that quizzing a person and forcing them to retrieve information is a more effective means of creating a “memory hook,” as Lennox puts it.

Qstream’s knowledge delivery methods were developed and studied by Price Kerfoot, a urologist and an associate surgery professor at Harvard Medical School. He has primarily tested the approach in medical education, but “it could be applied to almost anything,” Lennox says.

Lennox and Qstream co-founder Barry Paul decided to target sales teams. The company spun out of Harvard in 2008 and launched its first product in 2011, Lennox says.

The company says if sales employees use its app just three minutes per day, they can measurably improve their performance on metrics such as sales quotas. The app can also help reduce sales staff turnover by “keeping people engaged and making them feel valued and helping them develop professionally,” Lennox contends.

In addition, Qstream provides data analytics tools to sales managers and executives. Those tools help companies coach their sales teams better and accurately track where employees are struggling.

“What we’re trying to do is move sales management away from a lot of gut feelings about the capabilities of their sales force, into actual data of what they know and don’t know,” Lennox says.

More than 300 clients, mostly large enterprise companies, see value in Qstream’s products and services. Its customers include Pfizer, Mastercard, and LinkedIn.

“We’re helping them measure, manage, and drive effectiveness of their sales people,” Lennox says.

It’s a growing software sector. Companies related to Qstream include Brainshark, Seismic, Lessonly, and InsideSales.com, which Polaris also backed. Qstream also seems to have some things in common with Cogito, whose behavioral analytics software aims to coach call center workers on their interactions with customers, thereby improving performance and reducing employee turnover.

Lennox says one of the trends driving the demand for companies like Qstream is when businesses are deciding whether to purchase a product or service, they can do a lot of research online.

“That has made it harder than ever for the sales rep to get time with the prospect, and when they do get that time, it’s a small amount,” Lennox says. The sales rep “better be able to add value. If they can only rattle off the product features and benefits,” they’re wasting the prospective customer’s time, he says.

He adds, “We’re coming in and saying, ‘We’ll make sure when you connect with that prospect, that you know what to say.’”

Qstream has 110 employees, and could add more than 50 people in the next year, he says.

Polaris partner Gary Swart will join Qstream’s board as part of the funding round. In addition to Polaris, the round included contributions from earlier Qstream backers Frontline Ventures, Launchpad Venture Group, and Excel Venture Management. Qstream has raised $23 million total from investors.

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