March 1, 2010, 12:00 AM

Growth curve

Retailers use chat more, and more effectively, as they grow conversant with its potential.

With the holiday season looming, Delight.com co-founder Tracey Tee was looking for ways last fall to boost the efficiency of her already hardworking staff. “The question was, how do we maximize our time with a small staff without overloading them with customer service requests?” she says.

Delight, a company of six employees with annual sales of under $2 million, found an answer in live chat, the technology that enables a consumer to instant-message a question to a retailer via its web site, typing and receiving text responses in a window that opens on the web page.

The communication takes place in real time and lends itself to quick question-and-answer exchanges. It can be a quicker route to answers than e-mail or the phone for shoppers poised to buy but in need of more information first, or for those who want to check on shipping status, return protocol or other issues.

A cost-effective tool

Chat can also can be a more cost-effective way to answer questions than taking phone calls. Agents can juggle chat exchanges with more than one customer at a time, something they can’t do on the phone, and pre-formatted answers to frequently asked questions add to agents’ productivity.

Online retailers have been employing live chat for more than a decade, and 57% of the Internet Retailer Top 500-the leading online merchants in North America by web sales-now use it. What’s more, they are using it in increasingly sophisticated ways, such as by using historical browsing pattern data to determine which consumers on a site are the most likely to become buyers if offered the chance to chat with a customer service agent.

For retailers exploiting chat extensively the payoff can be impressive. For instance, web and TV retailer ShopNBC.com realized a return of $4.19 million in higher sales, lower costs and other benefits within two months on an investment of $1.4 million in a proactive chat program, according to a new study by research and consulting firm Forrester Research Inc. The study was sponsored by live chat technology provider LivePerson Inc.

To be sure, there are complexities to chat, especially when introducing proactive chat, in which the retailer initiates the exchange with a consumer on its site. But retailers small, medium and large are finding benefits in live chat, and many gradually add new ways to use chat once they’ve gotten their feet wet.

Do more with less

For Delight.com, the biggest benefit from its first foray into live chat has been allowing agents-employees who all wear other hats, too-to handle more customer queries in less time. Delight, which sells gifts, launched its chat program in November with software vendor WebsiteAlive. Delight figures chat cuts about 75% off the time needed to resolve a customer question and that live chat has reduced the number of customer calls and e-mails by 30% to 50%.

In addition, customer changes or updates to orders delivered via chat reach staff more quickly than they would by phone or e-mail, allowing Delight to make the adjustments before order processing starts, Tee says. At under $100 per month, chat paid for itself almost immediately, she adds.

Delight could dial up the functionality of its program further. For instance, it chooses to use only one preformatted answer-on shipping rates. But with 50 to 100 chats a day during peak volume periods, Tee is happy to use chat to field shopper questions and not looking, for now, to drive more out of it.

“For a small business,” she says, “it’s been amazing.”

Higher tickets

Abt Electronics, a substantially larger retailer with web sales of $86.5 million in 2008, launched live chat on its web site in 2000, primarily to expand customer service. But over time it’s grown into a tool for increasing sales.

Since 2008, Abt has used chat vendor Bold Software. In 2009 it paid about $10,000 for licenses allowing up to 25 agents, all Abt employees, to use live chat at one time. Agents field product questions, post-purchase questions, and in fact, all queries except tech support and product service and repair questions.

Abt launches a customer survey after each chat, and co-president Jon Abt says feedback is generally positive. More importantly, customers are registering their approval by spending more as a result of interacting with an agent who can offer additional information about complex consumer electronics products.

“Someone may want a television with a Blu-ray player,” Abt says. “Even though it might also be written on page somewhere, our sales and service people can certainly tell them that they’ll need this cable to make this product work with that one, or ask them if they’ve thought about installation,” Abt says.

He estimates a 20% increase in average order value among customers who chat over shoppers who purchase online without assistance. Abt notes that the program offers advanced features including the ability to display all incoming chats onscreen, allowing agents to choose inquiries that best match their skills.

While not ready to dive into proactive chat, Abt has extended the chat link from just product pages at first to every page on the site. It’s also speeded up query resolution time by giving its agents access to 50 to 60 preformatted answers to common questions.

While Abt uses chat to boost sales as well as to answer customer questions, retailer Soft Surroundings relies on it as a customer service tool. Soft Surroundings has long experience with live chat on its web site, using technology from vendor nGenera, formerly known as Talisma.

The retailer of women’s clothing, accessories and home décor has 45 agents in its contact center who chat with online consumers. Call center operations manager Jim Manno wouldn’t disclose what the retailer pays for software licenses and maintenance fees; the retailer hosts the software on its own servers.

Soft Surroundings’ experience using chat for customer service has taught it lessons about how consumers interact differently in an instant-message exchange than they do on the phone or e-mail.

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