March 28, 2002, 12:00 AM

Answering questions the instant the online shopper asks them

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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, 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.

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