Live chat makes business sense

Converting e-commerce Web site visitors into customers is the key to maximizing e-business profit. One of the most powerful tools for turning browsers into buyers is live chat, which allows the visitor to get help from a live assistant via text chat. Live chat helps customers make up their mind, overcome technical glitches and get the feeling that there are "real people" behind the product and the Web site.

Introduction of live chat has generated a lot of enthusiastic reports

“Live chat has one of the highest conversion rates of all our channels,” says Brad Wolansky, vice president of e-commerce at Orvis, a multi-channel outdoor gear and apparel retailer. “Particularly when someone doesn’t know what they want, it has the highest conversion rate of anything.” He says customers who chat convert 15% to 20% of the time, roughly triple the rate of e-mail.

According to benchmarks by CompUSA:

... The chat session conversion rate was ten times that of the average site conversion rate. Coremetrics LIVE Profiles also showed a higher incidence of return customers among those who had chatted, as well as higher average order value. As a result of these impressive statistics, CompUSA hopes to expand the number of agents and extend the hours of operation for its live chat service.

A Coremetrics executive added more information about the same data:

Jane Paolucci, VP of marketing for Coremetrics ... said that 68.5 percent of CompUSA customers chatted while browsing the site and that 32 percent chatted while in the shopping cart during the late stages of the buying process.

"Out of that," she said, "over 10 percent of those sessions convert to a sale, 10 times the average website conversion rate." Paolucci says that only 28 percent of ecommerce sites are currently offering live chat.

But they are "increasingly spending more money on technologies that are bringing them closer to their clients.

And yet another enthusiastic report:

Live chat produces a conversion rate of 15-20% at Backcountry, roughly 10 times the 1.7-2.0% buy rate for all customers, Bruni reports. It also produces higher orders. In one week this spring customers who chatted ordered $224 on average, versus $135 for the site overall. “We’ve taken what would be viewed as a consumption center—customer service—and turned it into a profit center,” Bruni says. Backcountry is not unique—56% of retailers that used live chat said they found it a useful tool, according to the State of Retailing Online 2006 survey by research and consulting firm Forrester Research and retailers organization Shop.org.

Some insight into why live chat helps may be found in this report from an enthusiastic customer:

...[W]e require a human being to handle a problem, even if he or she is only in the "chat room" typing messages back and forth to us.

... I received a 20%-off coupon to use at RedEnvelope.com, a gift-buying site. Browsing through the site, I found a gold-and-pearl necklace... I placed my perfect gift into my online shopping cart, and clicked to the site's checkout.

After spending five minutes entering my personal information and credit-card number, my coupon code was rejected. I could have abandoned my shopping cart and headed to another site as do many frustrated shoppers. But instead I clicked on the site's real-time chat service and connected online with a live customer-service representative. Within minutes, the problem was fixed...

Because RedEnvelope.com had the foresight to add its Java-based, live, customer-service link, the company was able to ring up my $335 purchase -- and a degree of loyalty too.

More Web sites are discovering that live Web chat rooms can boost sales and reduce the number of shopping carts abandoned in cyberspace, says Chris Martins, a research director with the Aberdeen Group, a research firm in Boston. "We believe that intervention will increase customer retention as long as companies make sure their site design and order process is as good as it should be," says Mr. Martins.

According to industry estimates over 50% of customers leave a Web site during checkout and abandon their e-shopping carts. By making help available during this critical phase, live chat can dramatically increase sales.

Live chat is cheaper, and can be better, than phone support. According to Forrester Research, “Average live-chat sessions cost $3 to $5, compared to $10 or more for an average customer service telephone call.” And live chat sessions can leave a visitor searchable record, so there is no doubt about who said what, what features are available and what promises were made. Like a live salesperson, live chat can send an invitation while a customer is browsing, while telephone service can only help a customer who asks for help.

Some vital features of a good live chat application include:
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