January 2010 – Online Insights: Conversion

Live Chat: No Longer a Novelty

I’ve heard time and again that live chat tips the scales of success for e-commerce businesses. I’ve spoken with e-retail entrepreneurs about how the technology catapults conversions and I’ve participated in management conversations with multinational corporations about how live chat delivers superior customer satisfaction at a fraction of historic costs. But I still talk to companies that aren’t convinced–that still believe live chat software is a novelty, a cute feature to be filed in the “nice to have” column.

Until recently, my only retort was to summarize what I’d heard from our customers. But now I say something different. Something like this: “Quantitative data from the industry’s first benchmarking report shows that by adding live chat to your website, sales will go up by anywhere from four to 86 percent. What other initiatives are you working on that will deliver that kind of return?”

This is the story of how a few anecdotes have led to an industry standard.

THE ANECDOTAL

Live chat has grown over the last decade and is finally becoming recognized as a critical customer communication channel. Initially thought of as strictly a customer service tool and relegated to the bottom of “Contact Us” pages, live chat has evolved into an important sales channel appearing at the top of leading e-commerce websites everywhere. Website visitors use live chat to ask questions, find out more information and seek advice. They ask FansEdge.com about color and size selection for the perfect ball cap. They ask Allergy Buyer’s Club about the most space-saving air purifiers. They ask ApplianceZone which water filter fits their LG refrigerator. They want to know whether the Dean and DeLuca tote bag comes with the “Road Trip” gift basket.

These interactions aren’t just simple pleasantries; they have a real and significant impact on the bottom lines of e-commerce businesses.

Abt.com has informed us that chatters convert at 20 times the rate of normal website visitors. A long-time customer of ours, Exent Technologies, tells me they reduced support costs by more than 25 percent. Jim Allen, the CEO at ApplianceZone, is riding a rocketship of growth by engaging more than 11 percent of website visitors in chat. Credit Alliance Group is using live chat to help people who are facing mounting debt and has increased sales by 22 percent. The Source, a Canadian electronics retailer, proactively invites website visitors to chat when they enter the shopping cart–more than 20 percent accept and engage in conversation with an agent.

THE ACTUAL

While the results these customers have experienced are impressive–if not downright enviable–they are admittedly anecdotal. One thing they are not, however, is rare. I used to go on and on describing similar examples from other Internet retailers, but often, it didn’t matter. Prospective customers still wanted to know, “what will live chat do for me?” We’ve spent the last 18 months tackling this question and putting statistically relevant arrows in our quiver. Some time was wasted trying to find secondary sources that proved live chat’s efficacy. When it appeared that nobody was looking quantitatively at live chat, we decided to.

Many companies dismiss live chat under the assumption that if a visitor wants to communicate, they’ll just pick up the phone. For our first foray into this investigation, we went directly to the source and asked the Internet shoppers themselves. Our quantitative project with over 250 regular e-commerce buyers revealed several findings, including some that surprised us.

Under several shopping and customer-care scenarios, we asked respondents to indicate their preferred method of communication. To be honest, we thought the phone would win; after all, it does have a 130-year head start. We were shocked, however, that in every scenario presented, the phone was never the number-one choice. It was, we admit, a close race. But the fact is that live chat won every time.

We learned some other things, too. For example, while 58 percent of the entire sample said that live chat positively influences their purchase decisions, the percentage rises significantly with more regular shoppers.

WE’VE SEEN LIVE CHAT FROM BOTH SIDES NOW

Despite everything we learned, skeptics remain. There are those who criticize our research based on the assumption that what consumers say and what they do are sometimes quite different. So we ventured into new territory. Because our products are provided through a software-as-a-service model, our infrastructure includes aggregated data from one of the world’s largest live chat user communities. We decided to interrogate this data in order to illuminate the real experiences of businesses actually using live chat on an everyday basis. What we found is quickly becoming the de facto standard in the industry.

Here is just a sample of what we uncovered:

• Adding live chat to a website increases purchase conversions by between four and 86 percent.
• The average website can expect to have six percent of their proactive invitations accepted.
• The average website can expect to engage between one and 21 percent of its visitors in chat. One of the biggest determinants is the overall traffic volume of the site in question.
• Placing a chat button on multiple pages increases chat volume by 53 percent.
• Repeat visitors are 64 percent more likely to engage in a live chat.
• Seventy-nine percent of visitors fill out post-chat surveys and, overwhelmingly, live chat interactions are given high satisfaction ratings.

BEATING THE BENCHMARKS: ALLERGY BUYER’S CLUB

Allergy Buyer’s Club is an online retailer of healthy-home and allergy-relief products such as air purifiers, specialty vacuums and dehumidifiers. A long-time believer in live chat, the company has spent years measuring and tweaking their implementation in order to turn it into a major sales channel. Robert Scott, the company’s chief operating officer, has led and managed the effort with results that, by and large, exceed the benchmarks. In November 2009, the beginning of their busy holiday season, we pulled some interesting data:

• Live chat increased conversions by about eight percent for Allergy Buyer’s Club.
• Visitors who engaged in live chat with a representative during this month were about eight times more likely to buy.
• Allergy Buyer’s Club’s use of rules-based proactive chat increased their overall chat volume by a multiple of five in November.
• During this same time, repeat visitors were 70 percent more likely to accept invitations from Allergy Buyer’s Club agents.

Scott and his entire team are able to beat the benchmarks for two primary reasons. The first is their impressive and continuous improvement processes. Allergy Buyer’s Club is constantly applying and re-applying website analytics in order to maximize chat’s effectiveness.

The second explanation for their success is due to their superlative focus on customer service manifested by their extensive live chat agent training. Their focus on developing an implementation that is customized and works specifically for their needs has truly paid off.

I like to believe there’s a third reason that Allergy Buyer’s Club succeeds so impressively. It’s the fact that for them, live chat isn’t a novelty but a primary sales channel worthy of considered measurement and executive-level support.

Ross A. Haskell is director of marketing for Bold Software, a web communications solutions provider. He can be reached at ross@boldsoft.com.