Will Live Chat Convert For You?

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Live Chat

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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!

About Pascal Van Opzeeland

Pascal is the marketing manager and one of the founding members of Userlike, a German-based company offering live chat software in a SaaS form to small and medium sized online businesses. As part of his marketing activities Pascal is responsible for maintaining the company strategy, international partnerships as well as international expansion. You can learn more by following him on Twitter.

  • http://twitter.com/emgreen85 Emily Green

    Hey- Great article. It’s so interesting to see how social media is changing, especially as technology advances! Its also great because its an instant effect, unlike mail, where you have to wait for shipping, then a response…

    • http://onlineincometeacher.com/ Matt Smith

      Hi Emily!

      Live chat is definitely the future (or the present for some people) as it lets customers interact instantly with the site. This can be very helpful when you have specific questions about a product or service before you purchase it. If you were in a shop, you’d just ask a member of staff, so it shouldn’t be any different online really.

      It will be interesting to see how this develops over the next couple of years. Most big online companies are already investing in service like this, but whether smaller, independent sites can also do this is yet to be seen.

      Thanks for the comment Emily :)

  • Andi the Minion

    I would love to see a live chat between a customer and a flip flop salesman! :-)

    A very interesting post, I like the idea of live interaction, people have hidden behind the internet avoiding dealing with clients for quite a while and I wonder how good this would be in generating affiliate sales. However it could soon rob people of a lot of time, so for the smaller affiliate marketers this is probably not a great idea but for big companies it makes sense, especially if they have a call centre. It wouldn’t surprise me if soon things will take a shift towards removing phone based call systems to more web based live chat.

    Now I do not know whether that will be webcam based like a Skype chat or a simple text chat based like you get with Hostgator which is an excellent live chat system and can really help sort out any issues that you may have. For me I do not need to see the person, sometimes just knowing that you are actually talking to a real person and not relying on a series of automated responses is very reassuring.

    For some people though, I could see that seeing a smiling and helpful face as they ask questions could be very reassuring and help increase sales, especially if it is a high ticket item. When you think of the smart phones we have, being able to Skype chat for free to anywhere in the world, give it a few years and live chat customer service could be the norm.

    • http://onlineincometeacher.com/ Matt Smith

      “I want to talk to the manager about these flip flops!” :)

      Yeah, I’m not sure whether you need it to be face to face like Skype, but a simple text based chat would be welcome in most circumstances. HostGator is a great example, they helped me sort my site out over live chat (text based) when I was having problems with the site the other week.

      But as you say, give it a few years and it could be the norm!

      Merry Xmas Andi