Chat Up Your Customers

Adding live text chat to your e-commerce site can reduce support costs and boost sales.
Compared with the bustle of a brick-and-mortar retail store, the Web page of an online merchant seems silent and impersonal. Convenient, yes, and great for comparison shopping, but what about human interaction? Is there anybody out there?

Maybe there should be -- and live chat could offer the answer. The technology enables an e-commerce site's customer representatives to interact with its visitors, similarly to how offline retail clerks help shoppers peruse store racks. Ideally, that interaction can boost sales, reduce abandonment, and improve customer satisfaction.

"If a store is devoid of shopping clerks, you probably wouldn't want to buy very much," said Steve Uhring, vice president of sales for LiveOffice, a leading vendor in the chat market.

While the term incorporates a variety of implementations, live chat typically revolves around Web-based pop-up windows offering a real-time, text conversation between a visitor and a customer service representative. The result aims to translate to the e-tail space the plusses of having a clerk available in a brick-and-mortar store.

To that end, a major selling point for live chat is that e-tailers can step in at critical moments during the online sales process to address questions or make recommendations. For example, if a shopper appears to be abandoning a shopping cart, a merchant can use live chat to approach them and close the sale. If a surfer is looking for a winter coat, a sales agent can try to upsell them a high-quality down parka.

By some accounts, chat also can be considerably cheaper than other means of customer interaction. LivePerson, one of the major players in the space, estimates that chat costs merchants an average of $1.20 per sales transaction, versus phone's $6.80 and e-mail's $2.40.

One reason that chat can be cheaper than other channels is that sales agent can typically handle four to seven chats simultaneously, said LiveOffice's Uhring.

"We have seen some better applications for chat where there's actually been some return investment proven," said Gartner analyst Esteban Kolsky. He added that chat has established itself as being particularly cost-effective in particular industries or in specific areas within larger e-tail sites.

"The people that report return on [chat] investment are the ones who manage to find the specific situation that requires it, not the ones who implement it throughout their entire Web site," Kolsky said. One success for the technology, he added, has been financial services firms that use chat to help customers open accounts.

However, Kolsky disputes LivePerson's figures, saying that chat more often averages $3 to $4 per transaction if a merchant uses an external chat provider. But this still remains a better deal than the $7.50 per transaction e-tailers would pay if they hosted chat internally, he said.

If Kolsky's calculations are correct, it's fortunate then that today's leading chat vendors are Application Service Providers (ASP), who host the technology externally: e-tailers simply install the chat interface on their sites, without needing to set up a server. (Online merchants do need to provide their own sales agents, however.)

Chat Vendors: Profiles of Two Leading Providers

Launched in 1998, New York-based LivePerson went public in April of 2000. The company targets a range of customers with a product line that spans a small business-focused tool -- LivePerson Pro -- to offerings tailored to large enterprises.

LivePerson's chat service goes beyond offering one-to-one text communications. By monitoring shopping behavior in real-time, the product helps sellers identify moments when they should get involved in a visitor's browsing or purchasing process -- for instance, when a buyer appears at risk of abandoning a shopping cart, or otherwise just needs a nudge to close the sale.

This "business intelligence" feature, said Kevin Taggart, LivePerson's vice president of sales, "can react to any number of scenarios of visitor behavior that come up ... the system can pinpoint a high-value or 'at-risk' prospect ... invite them [to a chat] and deliver them to a sales agent without [the agent] having to do anything at all."

The rules-based engine underlying LivePerson's intelligent chat can prove especially useful in enabling agents to focus only high-end customers, freeing sales agents from spending time with lower-value shoppers.

"If a shopper is comparing three $8 products, you don't want to send them to an expensive sales agent," Taggart said.

Additionally, LivePerson Pro offers secure chat, canned answers (for frequently-asked questions,) and co-browsing -- which allows customer reps to push recommended Web pages to a shopper's browser. The product also shows which search engine keywords current visitors entered prior to arriving, which can help agents segment and prioritize customers.

Continued on Page Two.

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