Live chat is becoming more common as a support channel throughout the eCommerce industry. Online shoppers are getting more accustomed to live chat as a way to get answers to their questions in a quick and easy fashion. Concurrently, an increasing percentage of online shop owners are experimenting with offering a live chat support function on their pages.
As an online shop owner, you can choose between different types of live chat solutions, from very basic free options to complex download solutions or lightweight software-as-a-service versions. However, all of these basically promise the same benefits: an increase in customer satisfaction, an increase in customer loyalty, and most importantly, an increase in conversions!
The cost of a live chat system on your site aren’t limited to the price of the software. The ‘real’ costs come from the human resources that are required to man the live chat, which is why it’s important to know whether live chat might be interesting for your business before you invest time and money in the first experiments.
Through our experience as a live chat vendor we know that not all websites will experience the same amount of benefits from the implementation of live chat. Through a questionnaire among 100 eCommerce users of live chat we aimed to find out what type of websites benefit the most from live chat.
It became evident through our questionnaire, there are three properties of an online shop that decide whether live chat is worth the investment:
1. How complex are the products sold?
If you sell complex products for which the quality or benefits are not easily discernible for the average customer, giving your visitors the option to reach you through live chat can have a great positive impact on your conversion rate.
Electronics and cosmetics are good examples of complex products. Most of the questioned eCommerce sites selling such products indicated that they used live chat as a direct sales tool to convert their visitors. They indicated that live chat was especially powerful in convincing visitors that they were the best choice among the competition.
On the other hand, if you’re selling more straightforward products (e.g. flip-flops), you can expect live chat to have much less of an impact on your revenue stream.
2. Amount of Daily Visitors
As the real cost of live chat comes from the personnel behind the chat, your website needs a certain amount of user involvement and daily visitors to justify the investment.
The exact number is hard to point out and will be unique to every website, but as a rule-of-thumb we found that at least 150 unique visitors are required per day for a significant on-site interaction that will bring out the benefits.
3. Profit per Sale
The higher this number is, the more sense it makes to invest in service employees to support your visitors in the sales process. Of course, when the margin on the average sale is so low that they are exceeded by employee costs, implementing a live chat solution doesn’t make a whole lot of sense. We talk here about the margin on the sale, not on the product. The margin on the average product sold might not be enough to justify sales support, but the investment might still pay off if your average sale consists out of a number of these products.
So the type of website that would benefit most from the integration of live chat would be one with a daily traffic of at least 150 visitors, selling complex products with sufficient margin.
It should be noted here that the abundance of one of these factors could offset the shortage of the other. For example, the investment in live chat when selling a simple product like flip-flops can be justified when the website has thousands of daily visitors. Just implementing live chat at the checkout page could in this case have a strong diminishing effect on shopping cart abandonment.
So will live chat boost my profits?
It certainly can, but before you start experimenting with live chat, the most important criteria for you to consider are the complexity of your products, whether you have enough daily visitors, and what is the average profit you make per sale.
Do you use live chat on your site? Is so, has it benefited your business? If you don’t use it yet, would you consider implementing live chat in the future? Let us know by leaving a comment below!