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10 tips for employing live chat profitably

by | Feb 26, 2009 | Marketing | 0 comments

By Don Davis
Knowing how and when to invite a customer to chat and which customers to chat with can turn live chat from a customer service convenience into a sales-generating tool.
Baffled as to what to buy her boyfriend, Annabel accepted an invitation to chat while browsing the web site of Ted Baker, a UK apparel retailer. She soon was typing messages back and forth with Dominique, who introduced herself as “one of Ted’s Personal Shopping Assistants.”
Dominique suggested a belt, pointing out it was 100% leather, or a wallet, which she noted had a coin pocket and space for nine plastic cards, used the live chat connection to send Annabel links to product pages and helped close the sale.
Exchanges like this one, which took place during the holiday season, are convincing a growing number of online retailers that live chat can boost conversion rates.
“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.
One reason for chat’s effectiveness is that a chat agent can use the live connection to a customer to send links to web pages, something a phone agent can’t do. 80% of the information customers are looking for is available on the retailer’s site, says David Lowy, director of best practices consulting at Talisma Corp., a provider of chat technology. In many cases, the customer just needs a little help to find it.
Chat can offer that help, and its use is increasing at a modest pace. In a recent survey of 100 top Internet retailers, 32% offered live chat, up from 29% in the previous year’s study by The E-Tailing Group. Once viewed primarily as a less expensive customer service alternative to the telephone—since a chat agent can handle more than one exchange at a time—increasingly retailers view it as a way to boost sales.
But retailers must use chat judiciously, as they pay for every minute of an agent’s time. Increasingly, e-retailers use analytics data to maximize the profitability of chat. Making good use of data is at the heart of several of the tips that follow about how to make live chat pay off.
1. Know when to offer a chat
Orvis invites customers to chat only when they are on certain pages, such as customer service. “We have a lot of stuff on the customer service page,” Wolansky says. “If 15 seconds go by and you’re still on that page, you’re probably looking for something and haven’t found it.”
Orvis also offers chat to customers lingering on the checkout page. But Orvis does not offer chat on product pages, where visitors may linger reading reviews, examining photos, watching videos and comparing products. “Sitting there for a long time is not an indication you have a problem,” Wolansky says. “I don’t want to bother you.”
With the help of web analytics, retailers can map out the typical paths taken by customers who buy, and identify deviations that indicate a visitor is likely to leave, says Kevin Kohn, executive vice president of marketing at chat provider LivePerson Inc. If a lot of visitors abandon after two minutes on a particular page, he says “when someone’s there for a minute, 45 seconds, it’s not a bad idea to reach out offering assistance.”
2. Offer chat to profitable customers
Retailers can set rules so that they offer chat only to customers who have made purchases of a certain amount in the past year, identifying them by cookies placed in their browsers, says Ashu Roy, chairman and CEO of chat technology provider eGain Communications Corp.
Retailers can also segment customers by how they come to the site, Roy says. For instance, a visitor who arrives by clicking on an ad on the Wall Street Journal’s web site might well have money to spend.
Home Depot, which rolled out chat last year, uses mainly proactive chat, in part to keep down agent costs, and only in certain lines of business. “Customers generally need assistance in making decisions on high-value, complex products. Appliances are a very good example,” says Yaron Yaniv, senior program manager, customer relationship management, at Home Depot.
Products must have a substantial gross dollar margin to justify the added cost of chat, says Bernard Louvat, CEO of inQ Inc., which offers hosted proactive chat. He says an item must as a rule have at least a 30% margin and be fairly high-priced. “A $10 item won’t justify chat,” he says.
InQ charges only when the chat results in a sale, taking roughly 10% of the sales price, Louvat says. Other outsourcers charge by agent time. Retailers that handle chat in-house have to consider the cost of software, agent time and management time.
A chat might cost a retailer on average $4 to $6, says Lowy of Talisma. Outsourcer 24-7 INtouch charges between 40 cents and 55 cents per minute of chat time, based on volume.
3. Don’t offer chat to unprofitable customers
Agent time is money, and retailers should not waste time on customers they can’t sell to. The web site of the UK’s Ted Baker does not sell to U.S. visitors, and thus does not offer them chat, says Martin Newman, head of e-commerce. The geographical location of the customer can be detected by the IP address.
A retailer might also want to exclude visitors from a competitor’s web domain, or from universities or research firms, figuring they are probably not shoppers, says Kohn of LivePerson. “If there’s a portion of people you’ll never sell to, take those off the table,” he says.
4. Make invitations relevant and personal
If a customer is looking at appliances on the Home Depot site, Yaniv says, the chat invitation might read like this: “Hello, my name is Yaron. I’m a Home Depot specialist. Are there any questions I can assist you with today?”
The invitation box at Orvis lets customers shape the conversation, giving them the choice of chatting with an expert in fishing, hunting and shooting, other products or customer service.
Relevant invitations can help sell customers add-on items, says Scott Carlin, vice president of sales at InstantService Inc., a chat provider. If a customer buys a fishing rod but doesn’t look at reels, a retailer can extend an invitation to chat about reels that match the rod, Carlin says.
“The customer now knows they can lean on the retailer’s expertise about the products they’re looking at,” Carlin says. “They’re more likely to click a chat invitation like that.” Overall, about 15% of visitors to retail sites accept proactive chat invitations, according to Kohn of LivePerson.
5. Don’t offer chat when it’s not available
While some retailers extend invitations to chat, the proactive approach, others put chat buttons on their site, letting the customer choose when to initiate a chat. Retailers that choose the reactive approach must decide what to do when no agents are available, either because they are busy or because the contact center is closed. Approaches vary.
Ritz Interactive, operator of web photography, fishing and boating web sites, and Day-Timers Inc., which sells pocket planners, briefcases and handbags, both use “smart button” technology from InstantService that hides the chat button when agents are not available. Orvis, another InstantService client, leaves the chat button up, but adds text saying that live chat is temporarily closed if agents are unavailable.
At Improvement Direct, if chat is unavailable a customer who clicks on that button will get a message asking them to send an e-mail or to try again when chat is available. Chat agents typically are available from 6 a.m. to 6 p.m. daily, says Ryan Brewer, vice president of operations at Improvement Direct, which uses chat technology from Velaro.
Retailers that have many repeat customers are better off having the button visible all the time, advises Talisma’s Lowy. “You don’t want your most profitable, repeat customers to look for the button, not find it and get frustrated,” he says. When agents are not on call, he suggests the chat button link to an offer of another source of help, such as phone or e-mail.
6. Give agents the information they need
Agents should have access, at a minimum, to all the information the customer can see on a retailer’s web site, Lowy says. And the information should be consistent across channels. “Customers are smart and will keep going until they get the answer they want, instead of the right answer,” he says. For instance, if the web site says there is a restocking fee on returned items, a customer might seek a better deal from a chat agent.
Agents should also have access to information on inventory and order status. “All our agents on chat are tied into our ordering system, warehouse system and inventory system,” says Fred Lerner, CEO of Ritz Interactive. Agents can also query supervisors for answers, then provide them to the customer. Ritz, which made chat more prominent on its web sites this past holiday season, found customers who chatted converted at a rate of 10%, well above the rate of non-chatters.
Another tip is to provide agents with information about the purchase history of returning customers. That can generate add-on sales, especially for retailers selling complex products like computers, says Louvat of inQ.
For instance, if the customer bought a computer recently, but didn’t buy a popular software package, that’s a prime selling opportunity. “Within three months of a purchase, that’s the sweet spot,” Louvat says. “The further you go from a purchase date the less likely the customer is to buy add-ons.”
7. Customers won’t wait long, but will chat a while
Most retailers want agents to respond to chat requests within 20 seconds, lest customers give up. One retailer’s average response time for a week during the holidays was 15 seconds—and 10% of customers were already gone.
Ritz found customers were more patient during the holiday season, in some cases waiting up to 2 minutes and 20 seconds for a response before clicking off, compared with 1 minute before and after the holidays. To keep customers from losing hope when seconds tick by with no response, some retailers send automated messages periodically to assure a customer that an agent is working on his request.
Once engaged, customers will stay on a while—chats averaged 8.11 minutes in the E-Tailing Group’s mystery shopper survey last fall—and agents have to learn how to gently say goodbye.
Chats go on in part because customers, once engaged with a knowledgeable human being, often think of additional questions to ask, Lowy says.
He suggests the following four tactics agents can use to bring a chat to a close: try to cross-sell or up-sell, which often leads the customer to end the chat; offer a friendly “Have I answered your question today,” a subtle hint the chat is ending; less subtly, say the chat is over and invite the customer to return if she has more questions; and offer more information through e-mail, a less costly channel.
8. Find agents who are up to the task
What kind of person makes a good live chat agent? For starters, someone who can handles calls on the phone, says Steve Addy, project center manager for the contact center at Day-Timers. Once someone is qualified on the phone, the retailer gives a writing test to see if the agent can handle e-mail and chat, Addy says.
Wolansky of Orvis looks for a special type of communication skills along with product knowledge. “The type of people who are the most successful chatters know the product, know the site inside and out and are very clear and succinct communicators,” Wolansky says. “They can get their ideas across in as few words as possible and type quickly.”
Retailers must train their agents to convey the warmth of a smile in their typed responses, just as a phone agent uses inflection to convey empathy on the phone, says Jeff Fettes, chief operating officer of 24-7 INtouch. Ways to do that include: say “please” and thank you” often, personalize canned responses with the customer’s name, and pay close attention to what customers say so they don’t have to repeat themselves—a challenge when agents are handling several chats at one time.
9. Limit the number of simultaneous chats
Addy of Day-Timers says agents are permitted to chat with up to three customers at a time, but that few agents are comfortable handling that many at one time. Ritz Interactive permits agents to handle up to four chats at a time.
Among Talisma clients, the average is 2.3 chats allowed at a time, Lowy says, although that includes retailers serving business clients who may need less hand-holding than retail consumers.
10. Ask for the sale
In a recent study of live chat, consultant Lauren Freedman of The E-Tailing Group was struck by how many online retailers did not conclude a chat session by encouraging the customer to buy.
Only about a third of the 20 or so retail sites she chatted with went so far as to push her a link to a product. A few were more aggressive, notably an agent at Apple who pointed out she could get a free printer with a computer purchase and encouraged her to buy immediately. “I liked him because he was trying to sell me a product and listening to what I was saying,” she says.
Survey feedback suggests chat can help close sales, says Wolansky of Orvis. “Customers love it,” he says. “We get comments like, ‘It was great talking to Ashley today. Because of her I placed my order.’”