October 31, 2003, 12:00 AM

SPONSORED SUPPLEMENT: Online customer support: Lower costs, higher quality

How engaging customers in live chat buffs up the bottom line

One of the greatest challenges in online retailing is getting browsers to convert to buyers. Retailers who achieve a conversion rate of 3% are considered leaders in the industry. Much talk has been expended at conferences and money invested in finding ways to nudge that rate higher.

After all, as speaker after speaker at the Shop.org conference in September urged, “Do the math.” If a site converts 2% of visitors to buyers and they spend $1 million a month, increasing that conversion rate 0.2 percentage points to 2.2 % would add $100,000 to the top line. And if incremental revenue carries a margin of 33%, a retailer selling $12 million online now could add nearly $400,000 to the bottom line in the first year that it improves conversions.

With potential returns like that, many retailers are starting to ask: How? New York-based LivePerson Inc. thinks it has the answer: Engage the shopper. “Retailers spend a lot of time getting people to come to the site, but they don’t spend a lot of resources gearing their organization to interact with customers once they’re at the site,” says Tony Pante, senior vice president, product and marketing strategy, for LivePerson.

Making a web site truly interactive

Of course, engaging customers is easier said than done. Having envisioned the web as a low-cost, self-service alternative to traditional forms of retailing, many retailers didn’t build into their first generation sites tools that can engage customers or that can replicate the human interaction of other sales media. As the web has developed as a retail channel, merchants have tried many approaches to interacting with customers, but most have fallen short. E-mail has been almost laughably inadequate, with 25% of retailers in a test by the Customer Respect Group never responding to e-mail inquiries at all and 23% taking more than 48 hours. Not exactly the stuff of impulse sales.

Providing 800 numbers has been only slightly better because they require many customers to get offline before they call. Even providing a live chat option requires the customer to take a step and so puts the initiative in the hands of the shopper, not in the hands of the retailer.

And so LivePerson has rolled out its LivePerson Sales Edition product to engage shoppers in live chat-without requiring the customer to do anything and before a shopper gets frustrated at a site and leaves. It works by monitoring customer behavior on a web site and then stepping in if the customer appears to be undecided or having trouble. “We target the key behaviors, such as a customer taking a long time on a promotion page, backing out of a shopping cart, or comparing products,” Pante says, “then we offer an invitation to chat.”

In implementing the online sales tool, LivePerson works with the retailer to establish business rules under which agents will engage customers in live chat, setting a time limit, for instance, on how long a person sits on a page without taking an action before launching a chat session. The retailer and LivePerson then test the rules to make sure they make sense and they engage the right number of people. LivePerson also runs an analysis of site traffic and activity and reports by day and time of day to determine when it makes the most sense to have live chat agents on duty.

Agents then attempt to replicate a sales interaction as it would occur in a store, greeting the customer, providing relevant information, answering questions, pushing out appropriate information and page links, asking qualifying questions, providing stories about successful uses of the products and smiling via an upbeat tone and the use of emoticons.

Good transaction

LivePerson has already installed Sales Edition at 30 online sellers, including at such industry leaders as Hewlett-Packard, Microsoft, Pitney Bowes and Dell. Up to 14% of customers who receive an invitation to chat accept it. 25% of those who accept the invitation are qualified buyers. The technology has proven more effective than outbound and inbound telemarketing, Pante reports. Outbound telemarketers average 0.8 sales per hour; inbound telemarketers, 1.4 per hour. Proactive live chat agents average 1.9 to 2.5 sales per hour. “We’re starting to see some good traction,” Pante says. “Compared to telesales, live chat is a more effective way to achieve revenue growth.”

LivePerson provides its service on a hosted basis. It undertakes a 90-day proof of concept with each customer that costs $39,000. The average customer pays $12,000 a month for the service with price depending on volume. To be cost effective, sellers with monthly recurring revenue, such as cell phone providers, should have 500,000 visitors a month and a product costing at least $25 a month, Pante says. Traditional retailers doing one-off sales need 400,000 visitors a month and an average ticket of $100 or more.

Pante also notes that LivePerson’s live chat function is an alternative way to deal with the national Do Not Call Registry. “Companies aren’t doing as much outbound telemarketing,” he says, “so this is a nice complement and a way to engage potential customers when they’re interested in your product.”

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