Answering questions the instant the online shopper asks them
By Andrea McKenna Findlay
Live chat may have started as something that distracted
teenagers from their homework, but live chat—no doubt pushed along by teens
who grew up with it—is about to become a powerful customer service and marketing
tool for retail web sites—another technology that has the potential to bring
the web-shopping experience closer to the real-world.
While fewer than 5% of retail sites offer live chat
today, results from early adopters show that the technology has promise—especially
since retailers who are using it say the cost of implementing it is low compared
to the return. “We perceive it as such a low-cost way of communicating with
our customers that only now are we qualifying and quantifying how much impact
live chat is having,” says Rich Atlas, director of direct mail and e-commerce
marketing at Venus Swimwear Inc., which has been using live chat for 18 months.
Venus Swimwear is not alone in its enthusiasm. Specialty
retailer TechnoBrands.com of Colonial Heights, Va., which uses LivePerson Inc.’s
chat application, reported a 35% increase in average dollar amount spent by
customers who engaged in live help chat. New York-based LivePerson supports
1.2 million live help chats per month for 3,200 clients, including such retailers
as Godiva, Neiman Marcus, QVC and Sony.
Shoe company K-Swiss Inc., which uses ServiceReps.com
Inc.’s live chat product, reports more than double the average conversion rate
when customers use live chat, since 75% of chats are directly related to product
knowledge and getting questions answered often prompts shoppers to buy. And
Jacksonville, Fla.-based Venus Swimwear, which sells junior swimwear on three
web sites, has experienced a 15% drop in abandoned shopping carts since implementing
Seattle-based InstantService Inc.’s live chat in 2000. “Because customers get
an immediate response they are more inclined to complete their orders,” says
Robin Johnson, Venus’s customer care manager. It has also put a lid on its threefold
annual growth in e-mail from customers.
Revolutionary
Live chat holds so much promise because it changes the
way shoppers experience web sites without requiring a huge technology investment,
analysts say. “Live chat brings the cost of customer service down significantly
and puts the retail sales rep in the home with customers while they are shopping,”
says Leigh Duncan, manager at KPMG Consulting Inc., McLean, Va. “It’s revolutionary.”
In spite of the promise, few sites today—LivePerson
says only 3-4% of all retail web sites—employ live chat. One reason is that
many are unfamiliar with the technology as a business tool, perceiving it mostly
to be something that kids use to talk to their friends. Others are afraid of
live chat because the technology is too new for anyone to know if its ease of
use will create so many chat sessions as to overwhelm a customer service center.
Nonetheless, market participants say the rise in consumer
instant messaging offered by America Online, MSN and Yahoo will boost the technology,
making not only consumers but retailers as well more familiar and accepting
of it. “People understand how to use instant messaging and retailers are beginning
to realize that they can utilize this tool for casual conversation in customer
service,” says Tony Pante, executive vice president of marketing and product
development at LivePerson.
IDC predicts that more than 400 million consumers worldwide
will be using instant messaging by 2004. “As customers become more familiar
with chat technology, shoppers are going to demand live chat on retail sites,”
predicts Jim Tisdel, president and CEO of Montreal-based ServiceReps.
Web-based chat itself has been around since the inception
of the Internet. Market participants contend that a phenomenal number of online
chats and IMs occur every minute, but the fact that many are private makes their
number difficult to tally. If the market develops the way chat vendors expect
it to, that large number will grow even more. Once the results that early users
achieve become known, demand will follow, they say.
Overwhelmingly in
favor
Among the results that retailers seek with live chat
is to provide instant service—much like a clerk answering questions in a store—to
customers who would have had to go offline to call the customer service center
or wait for an e-mail response.
Venus aimed to increase customer loyalty with the service.
Johnson says positive consumer response confirms that customers appreciate a
live chat option. Venus conducts 100 live chats per day in a service that it
offers Monday through Friday from 8 a.m. to midnight. The company is certain
that number will grow as the swimsuit season approaches. “The response we get
from customers is overwhelmingly in favor of live chat,” Johnson says, adding
that there’s another benefit as well: “Our operators are getting more done because
they can handle up to five chats at once.”
Being
able to handle multiple chats at one time requires special skills and training.
While vendors say operators can learn to master the technology of live chat
in less than a day, there are other traits that retailers must seek in the customer
service reps they hire for live chat. Venus tests call center reps for typing
speed, grammar and spelling ability, and overall quality of written skills.
“The skill set is definitely higher and we test and train for that before we
put someone on live chats,” Johnson says. Just like with e-mail, though, live
chat has an added benefit in that retailers can set up preformatted answers
to make the chat move faster.
Analysts and vendors say the cost of implementing live
chat is low and the implementation is not onerous. Generally, the application
can be downloaded onto a retailer’s server in under an hour. In addition, the
retailer’s customer service reps must all have browsers on their computers,
which most have today.
But it’s not just the simple implementation and training
that makes live chat applications appealing. Most vendors also boast that live
chat costs less than customer service phone calls and e-mails. “Depending on
wait time and the time of a customer service phone call, it can cost $15 to
$35 to handle calls,” says ServiceReps’ Tisdel. Emails can cost $7 to $13, with
that price affected in part by the fact that reps deal with e-mails serially
rather than simultaneously. Live chats are about $2 per transaction, Tisdel
says. Part of the cost analysis takes into account how long it takes to resolve
customer questions. E-mails can take up to three days, while phone and chat
resolve questions immediately.
Avoiding Big Brother
Early adopters like Venus may be enthusiastic enough
about live chat that they haven’t bothered to run the analysis, but vendors
know that won’t last. Senior management and financial backers are focused on
ROI these days, and so vendors are developing ways to analyze consumer behavior
after using live chats. LivePerson says it can measure its usefulness by tallying
the number of people going to web pages through a chat reference and identifying
which chat customers make purchases as well as the type of items they buy and
the amount they spend. Some believe that such a fine-grained understanding of
customer behavior is what will really sell live chat. “Providing the back-end
routing and reporting is really the secret sauce,” says Mike Lande, president
and CEO of InstantService.
Live chats also can be used to monitor customer activity
and push information when a customer clicks on certain items or if a shopper
appears to be stuck in a particular area. LivePerson offers an option to send
an icon across the computer screen asking, “How can I help you?”—an approach
that Pante says is less intrusive than having a customer service rep initiate
a chat. Pante says some retailers are putting the chat icon next to specific
products to encourage shoppers to connect if they have questions on that product.
And LivePerson plans to launch a product this spring that will allow retailers
to see what people are buying when they are chatting so they can make cross-sell
suggestions. “That’s powerful information that can really make cross-selling
work,” he says.
But retailers may not be quite ready for that yet. “We
would never use the technology to monitor customers while they are shopping—that’s
too Big-Brother-ish,” says Christopher Cunningham, CIO at online gift retailer
RedEnvelope.com, which uses chat technology from FaceTime Communications Inc.
“The shopping session is private unless a consumer wants to make it otherwise
by initiating a chat. Once a chat is engaged, our agents can push a page to
try to encourage sales.”
KPMG’s Duncan says future instant messaging and chat
applications for not only cross-selling and up-selling but also for wireless
notifications that can be personalized and localized for consumers could change
the landscape of retailing altogether. “Retailers who use live chat to build
the human element are going to be the long-term winners,” she says.
andrea@verticalwebmedia.com
