Cheaper and better

Retailers encourage consumers to use live chat because of its unique capabilities and relatively low cost.

Zak Stambor

The 25 gun technicians that firearms e-retailer Brownells Inc. employs to answer consumers' questions know their stuff. They each have at least 20 years of firearms experience, and their pay reflects that knowledge, says Van Schlichting, online experience manager for the operator of three e-commerce sites that sell firearms and related supplies. But because the gun techs' time is valuable, they only handle by phone and e-mail questions forwarded to them by the retailer's "front line" customer service agents.

While that approach works, it put roadblocks in the way of shoppers looking to get answers to questions beyond the range of a typical customer service agent, such as if a Nightforce scope works with a Weatherby rifle, Schlichting says.

That's why earlier this year the retailer worked with customer service vendor Needle Inc. to add live chat as another way for shoppers to get their questions answered. The vendor recruits agents from Brownells' customer base and those agents—who are Needle employees—earn an hourly wage and points they can apply toward merchandise.

The live chat option offers a relatively inexpensive way to help shoppers get instant answers from informed agents. The cost per interaction for live chat is half that of a shopper interaction with a Brownells gun tech and only 15% more than a phone call with a less knowledgeable customer service rep, Schlichting says. Live chat has also provided a boon to sales—Brownells shoppers who chat with a Needle agent are nine times more likely to make a purchase than other shoppers.

Live chat is also an effective way for shoppers to get their issues resolved. Customer service ratings vendor StellaService Inc. research shows that the percentage of issues resolved at the end of a live chat interaction is typically better than e-mail and just a tick below phone. For instance, housewares retailers resolved 93.2% of issues, on average, when shoppers reached a merchant on the phone; they resolved 91.7% of issues addressed via live chat and 70.5% via e-mail.

Live chat's draw is simple. It's cheaper for agents to chat than answer the phone. The average cost of a phone call service inquiry is $7.76, while a live chat session costs an average of $3.52, according to a report by contact center outsourcer Telus Communications Co. The cost per live chat is only slightly higher than the $3.37 average cost for an e-mail answer and, unlike e-mail, it enables shoppers to get their questions answered immediately. Moreover, because of live chat's unique capabilities—such as the ability to extend chat invitations to shoppers who seem to need help but aren't asking for it—it can be more effective in generating sales than service channels that require consumers to make the first move. This helps explain why 37.0% of the retailers in Internet Retailer's 2013 Top 500 Guide offer live chat—little changed from 37.6% a year earlier—and why many retailers are finding new ways to encourage shoppers to chat with them.

Part of live chat's appeal
is that shoppers don't necessarily use live chat the same way they use the phone or e-mail, says Alan Higley, vice president of marketing at Coolibar, a web and catalog retailer of sun-protection products. Many shoppers turn to chat while researching a product and use phone or e-mail to resolve customer service issues, he says, adding that's one reason that Coolibar is in the midst of adding live chat. He declined to share the name of the live chat vendor Coolibar is working with.

Many Coolibar customers have been diagnosed with a skin condition and have an important need for sun-protective products. Because of those conditions, many spend time poking around the retailer's site looking for answers to their questions.

Coolibar has long offered a 24/7 call center to answer shoppers' phone calls. But that means a shopper has to pick up the phone and call the retailer. Soon, with live chat, if a Coolibar shopper lingers at the site's frequently-asked-questions page or size charts the live chat system will trigger Coolibar to send the shopper an invitation to chat. The retailer hopes those proactive chat invitations will help save sales from shoppers who might otherwise click away.

"Live chat is an important part of the acquisition funnel," Higley says. "It closes the loop on the acquisition by answering questions before someone makes a purchase. Our phone calls are more about servicing our existing orders."

Live chat logs let office products manufacturer and retailer Brother Canada better service and nurture relationships with customers. Part of the company's value proposition is the lifetime customer support it extends to shoppers and live chat helps it improve service levels, says Lina Racaniello, the company's marketing director.

Brother Canada began using the Enterprise edition of LogMeIn Inc.'s BoldChat live chat technology earlier this year. The technology lets an agent see a consumer's purchase history, past chat transcripts, and enables him to follow along as the shopper moves from page to page on the manufacturer's site. Other customer service channels, such as the phone, don't offer agents the same range of tools since a shopper talking on the phone to an agent, for example, has to describe what he's seeing on the site or has try to direct the agent to the page.

Live chat is also cheaper for Brother Canada than phone interactions because agents can handle up to five chats at a time. This is one reason Brother Canada two months ago began encouraging consumers to interact with the brand via chat. That encouragement takes a number of forms, primarily via relatively simple tweaks, like rearranging the site's list of customer service options to make it the top choice.

Those steps are leading more consumers to use live chat, although Racaniello says it's too early to quantify the increase. Expecting more demandfor live chat, the recently moved about half of its 45 customer service agents to focus full-time on chat.

Another benefit of live chat is that it makes it easier to understand what the consumer is asking about than other channels do, says Kirsty Traill, chief customer advocate for online photo service Snapfish by HP. "Because a customer's question is written, you can see exactly what she is asking rather than trying to understand what she's trying to convey over the phone," she says. "And because it's online, [agents can see] where the shopper has been."

Snapfish uses live chat technology from LivePerson Inc. that lets agents see if a shopper, for example, was on a product page, clicked to another page, went back to the original product page and then clicked chat. It can couple that information with the shopper's past chats to arm agents with plenty of information they can use to quickly resolve her issues.

The retailer can also use LivePerson tools to analyze its chat transcripts to identify customer service trends—such as several people complaining about a coupon code not working—and examine what agents who aren't successfully resolving shoppers' issues are missing from their interactions with shoppers.

While it also analyzes contact center agents' phone call logs and e-mail inquiries, being able to see the full chat transcript lends itself to more analysis than the other channels, Traill says. "Having the transcript of exactly what was said enables us to unearth, not just the sentiment in the interaction, but also exactly how the issue was handled," she says.

And because agents are well armed to handle shoppers' issues, the conversion rate for shoppers who interact with the retailer in chat is about 25% higher than other shoppers, she says.

Moreover, the cost per interaction is about one-third that of phone calls (she declined to share Snapfish's cost per phone call), and the retailer's internal surveys have shown that shoppers who chat with the retailer are more satisfied than other channels, she says.

That's why the retailer makes it easy for shoppers to launch a chat. It features a prominent Live Chat button on the right side of every product and category page. It also launches a proactive chat invite when shoppers stall or appear to have issues; the amount of time varies based on where the customer is on the site. And, thanks to that ease, chat has accounted for the "majority" of Snapfish's customer service interactions for the past two years, Traill says, declining to disclose exact percentages.

For Snapfish by HP, chat is cheaper and in many ways better than other customer service channels, Traill says, and that's a good thing for business. "There are so many advantages to chat from a business perspective," Traill says. "But that wouldn't matter if shoppers didn't like it. But they do. And so everyone wins."