Conversational Commerce Basics

Chat commerce (or conversational commerce) is a new avenue of shopping where people can interact with their brands directly to ask questions, find products, and make purchases all via a messaging platform. It combines the convenience of messaging platforms with the personalized experience of a real conversation.

It is changing the way both retailers and shoppers think about online shopping and those businesses that can move fast will get a competitive advantage.

If you’ve already heard about this topic, but aren’t sure how to get started, you’re in the right place!

We’ll explain the benefits of conversational commerce (both for retailers and shoppers) and have gathered 5 steps below to help you get started in your conversational commerce journey today.

How can conversational commerce contribute to your E-Commerce brand and increase your revenue?

Conversational commerce has become increasingly important for E-commerce retailers, as it offers numerous benefits for both the brand and the customers.

By integrating messaging platforms and artificial intelligence, conversational commerce provides a personalized and interactive experience for shoppers, revolutionizing the way E-commerce businesses engage with their audience.

This avenue of shopping opens a dialogue between retailers and their potential customers.

Customers may interact with one of the company’s human representatives, a chatbot, or a mix of both.

From guiding shoppers through their entire buying journey to nurturing post-purchase customer relationships, chat commerce enables brands to enhance customer satisfaction, increase conversion rates, drive sales, and foster customer loyalty and retention. According to a Hubspot study, 47% of shoppers are already open to buying items via a chatbot.

The most essential benefits in more detail are the following:

Engage shoppers with seamless experience

Conversational commerce tools can be integrated into various platforms, including live chat on websites and social messaging apps (like Facebook Messenger) allowing businesses to meet customers where they already are.

It saves shoppers time by providing instant responses and eliminating the need to browse through search engine results or navigate complex E-commerce websites. This immediacy not only increases customer satisfaction but also increases conversion rates and reduces shopping cart abandonment.

Personalize the buying journey

There are many ways in which chat commerce brings customers closer to businesses. By leveraging messaging platforms and AI-powered chatbots, e-tailers can create a personalized experience that meets the unique needs and preferences of each individual shopper.

Every interaction with your customers via chat commerce allows your E-commerce business to gain further insight into their preferences, interests, and concerns. 

By building this consumer profile, you’re able to create a much more personalized shopping experience.

Over time, chatbots can help you engage even more in natural conversations, providing relevant information and guidance in real time. They can remember previous interactions and preferences, ensuring a seamless and consistent experience across multiple customer touchpoints. For example, Sa Sa Hong Kong beauty retailer decreased waiting times by 57% with automated chat commerce solutions according to Facebook.

Improve conversion rates and order value

Chat commerce has the potential to significantly boost conversion rate and increase order value, particularly when automated by AI chatbots.

Thanks to chatbots tailoring their recommendations based on data that the shopper continuously provides, customers find products that they are more likely to purchase.

What’s more, this feature also increases the likelihood of upselling and cross-selling for businesses, thus driving up the order value.

Sometimes, consumers abandon their shopping carts due to distractions or indecisiveness. On the topic of order values, conversational messaging platforms can be leveraged to send shopping cart reminders as well.

By sending these reminders through chat apps (like Facebook Messenger or Viber), businesses can prompt customers to complete their purchases, contributing to a growth in conversion rates and average order value.

Improve the post-purchase experience

Leveraging conversational AI does not have to end upon purchase. AI chatbots can contribute to enhancing customer loyalty by providing customer service and support after shopping, like offering post-purchase recommendations and alternative products upon a return.

By automating this part of the shopping journey, companies can free up human agents to focus on more complex challenges, such as addressing specific consumer queries or handling escalations.

This allows them to provide faster and more efficient support to a larger number of shoppers, enhancing overall customer satisfaction.

How to implement conversational commerce? TL;DR

There are 5 main steps that businesses can take to successfully integrate conversational commerce into their operations.

1. Get to planning and goal-setting
2. Choose the right messaging platform
3. Create a structure for conversations
4. Implement and train your own AI-powered chatbot
5. Monitor and adjust relevant KPIs

1. Get to planning and goal-setting

Formulating your plans and objectives for implementing chat commerce in your store might be just as important as the practical implementation itself.

Understanding your business’ needs and goals is essential as it will help you determine how conversational AI can resolve your challenges effectively.

Pro tip: start small and build upon your successes. As for the first few weeks of your plan, set goals like decreasing the customer service queries by 8-10%, or increase online orders by 5-7%, etc.

Moreover, knowing where your customers are is fundamental. Different chat apps attract different demographics. Knowing the target audience’s preferred communication channels helps you with choosing which platforms to be present on.

Customer’s behavioral patterns and interests are also key factors. Analyze data from your existing customer base and identify common characteristics to create  personas.

These personas will guide your conversational commerce strategy, allowing you to tailor your messaging and personalized experiences to specific customer segments.

2. Choose the right messaging platform

When it comes to conversational commerce, choosing the right messaging platform is crucial for a successful customer journey. Popular mobile messaging apps like Facebook Messenger and WhatsApp are leading the way in consumer communication and online shopping. As of 2023, mobile commerce or M-commerce already takes up more than 60% of all E-commerce sales worldwide, based on Statista’s numbers.

These platforms offer a range of features that make them effective, such as direct and convenient means of engaging with potential and existing customers.

When choosing a messaging platform, it’s important to note which functionalities are supported and what limitations exist.

Each messaging platform is different, so based on the one you decide to use, you will need to adapt your strategy accordingly. 

3. Create a structure for conversation

Creating a structured and effective conversation between a seller and a client involves careful planning and design.

It’s important to maintain a conversational and friendly tone throughout the interaction, and the chatbot or seller should be adaptable to handle unexpected questions or issues that may arise.

Identify the scenarios you want to support via chat commerce and design an ideal conversation flow as the baseline to get started. 

Regularly analyze and refine the conversation structure based on customer feedback and evolving business needs to continually improve the chat commerce experience.

A possible guide for your seller-shopper conversation:

Greeting and introduction

Identification and verification

• if necessary, verify the shopper’s identity to ensure security

• asking for the customer’s name helps with personalizing the conversation

Customer inquiry

• use open-ended questions to gather information on what your customer is looking to buy

Product recommendations

• based on the customer’s needs stated previously, provide tailored product recommendations, including their most important features, pricing and availability

Questions and clarifications

• let the consumer ask clarifying questions about the products, and give informative and timely responses

Order assistance

• guide the customers through the order process, when they are ready to make a purchase

Customization or personalization

• if possible, offer shoppers the option to customize and personalize their order

Payment and billing information

• ensure transparency regarding pricing, taxes, and shipping costs, then assist the shopper in providing payment and billing details securely

Confirmation and order summary

• recap the client’s order, and request them to confirm that all the information is valid

Additional services or upselling

• offer related services, accessories, opportunities to upsell

Post-purchase chitchat – delivery and shipping information, support and assistance

• provide information on shipping options, delivery times, and tracking details, and offer post-purchase support (returns, exchanges, contact information for customer support)

4. Implement and train your AI-powered chatbot

For this to work, you’ll need to choose a conversational commerce platform that offers chatbot capabilities. These platforms often provide easy-to-use tools and integrations to build and deploy your chatbot.

Once you have selected a platform, you can start training your chatbot using natural language processing (NLP) and machine learning (ML) techniques. NLP allows the chatbot to understand and interpret user messages, while ML helps the chatbot learn from past interactions to improve its responses over time.

Additionally, sentiment analysis can be incorporated into the chatbot to understand the emotional tone of customer messages. This allows the chatbot to provide more empathetic and personalized responses, ultimately leading to better customer service.

These AI chatbots act as virtual shopping assistants and with sufficient training, they can replicate the feel of interacting with a store associate, being available 24/7 to answer questions, suggest choices, and guide customers to decisions based on their personal wants and needs.

5. Monitor and adjust relevant KPIs

Businesses that implement any form of chat commerce, require a thorough understanding of the key performance indicators (KPIs). By tracking specific metrics, businesses can gain valuable insights into customer engagement, conversion rate, order value, customer satisfaction, and abandoned cart rate.

Customer engagement measures the level of interaction and involvement customers have with chatbots or customer service representatives. Monitoring the number of conversations initiated, response times, and the overall duration of customer conversations can provide insights into the quality of the customer experience.

Conversion rate plays a significant role in determining the success of conversational commerce. Tracking the percentage of customer interactions that result in a purchase can help identify any bottlenecks or issues in the buying process. By analyzing conversion rates, businesses can optimize their strategies to drive more conversions and increase revenue.

Order value is another important KPI to monitor. It measures the average value of orders made through conversational commerce channels. By analyzing order values, businesses can identify opportunities for upselling and cross-selling to increase average order sizes.

Overall customer satisfaction is a crucial metric for assessing the effectiveness of conversational commerce. Monitoring customer feedback, ratings, or surveys after interactions can provide insights into the quality of customer service and identify areas for improvement.

Finally, tracking the abandoned cart rate is essential in understanding customer behavior and optimizing the shopping experience. By monitoring the percentage of customers who abandon their shopping carts, businesses can identify any pain points or barriers in the purchasing process and take action to improve it.

Wrap Up

Conversational or chat commerce has emerged as a powerful tool for customer engagement in the digital era. It’s a growing trend offering a more interactive and efficient way for businesses to engage with shoppers and drive sales.

Besides granting convenience to shoppers, the data-based personalized product recommendations and the 24/7 availability coming hand-in-hand with chat commerce are amongst the most attractive features for shoppers.

While automation can streamline processes and scale customer service, it is crucial to not lose the personal touch that human agents provide. Striking the right balance ensures that businesses can provide assistance while efficiently handling customer queries.

The effectiveness of chat commerce largely depends on how well businesses address the pros and cons to create a seamless and secure user experience.

For a comprehensive understanding of conversational commerce, check out our other articles on this topic covering its fundamentals, types of platforms and use cases.