The irony of “live chat” is that there most likely isn't any “chat” at all. Live chat is usually a text-based communication that happens online between a customer and a merchant. It's akin to the instant messaging youmight do with a friend through Apple's iChat or AOL's InstantMessenger.

From the seller’s perspective, online chat lets support staff reach out to a customer visiting its website in a one-on-one interaction to offer assistance or to push promotional offers. A “live chat” icon is placed on the merchant's website, and a customer clicks that icon to initiate a chat with a customer-service representative.

Reduces cart abandonment

For ecommerce businesses, live chat is a strategy for reducing shopping-cart abandonment which, from recent research conducted by www.marketingsherpa.com, averages 59.8 percent. Live chat extends communication opportunities between buyer and seller while maximizing the customer’s overall satisfaction with their website experience.

According to industry research conducted by Phplivesupport.com, a livechat technology provider, an online shopper who uses the live chat is 20 percent more likely to make a purchase than a customer who does not. The reason is live chat’s ability to serve as a virtual-sales assistant during a visitor’s product selection and ordering process.

Maximizing the online-customer experience is a priority for ecommerce businesses because, by satisfying the customer’s goals, they can satisfy their goals for more sales. Live chat, whether through its common instantmessaging platformor itsmore advanced customer analytical capabilities, creates key opportunities for ecommerce businesses including:

• Offering an alternative and more instantaneous communication channel for website visitors compared to telephone and email.
• Enabling consultative interactions between a visitor and a customer support agent for relevant upsell and cross-sell opportunities while supporting the visitor’s buying process.
• Providing real-time consumer behavior insights to identify intentions and create new strategies for adapting and influencing those behaviors.
• Creating a powerful merchandising-research tool based on customer interactions for new product-development opportunities.
• Helping reduce shopping-cart abandonment by enabling customer-support staff to intervene prior to losing the sale and aiding the customer to completion, either through a promotional incentive like free shipping or guiding them past a checkout barrier.
• Temporarily allowing websites to overcome site-search and navigational challenges by pushing the most relevant web pages to the visitor based on their requested needs. “Temporarily” because insights gained through live chat should be funneled back into site search and navigational improvements.
• Ability to craft personalized and highly-relevant offers based on a visitor’s unique behavior including click-stream, referring URL, keyword usage and time on site data.

Requires planning and careful implementation

Creating value through live-chat technology requires strategic planning and skilled implementation. “It’s still misused and underutilized by many retailers,” stated Elizabeth Harrel, analyst with Forrester Research. Poor planning and execution of a live-chat strategy can create negative experiences including:

• Disruption to a visitor’s buying process. Ecommerce is inherently a solo activity and interrupting a visitor’s delightful browse may create anxiety, distraction and ultimately abandonment with no chance of return.
• Investment in staff. Live chat requires availability and a high level of site-wide knowledge; therefore, you may have to hire a skilled support person to sit in front of a PC during business hours to handle live-chat sessions.
• Visitor frustration with “offline” messages. During “after hours” visitors receive a “leave a message” or “offline” type statement from the live-chat channel. Similar to getting voice mail, a visitor who consistently views an “offline” live-chat window may become frustrated and not return.
• Lower-end live-chat technology risks technology barriers associated with widespread pop-up blockers.Many basic versions of live-chat technology rely on standard pop-up windows to interact with visitors who often get blocked.

Live-chat technology is relatively inexpensive for basic instant messaging services and increases in cost with more advanced features like customer analytics. It is available either as a web-hosted application for a monthly fee per user or as an annual license for the source-code download. Some of the more popular live-chat providers include:

• BoldChat.com - priced at $25 to $79 per month per user.
• LivePerson.com - starts as low as $99 per month per user.
• PHPLive.com - from $19.95 per month per user or $90 for full-source code.
• HelponClick.com - from $19.95 per month per user.

If you have PHP programming resources on staff, you can implement an open-source live-chat application called CraftySyntax. Small businesses with limited budgets are perfect candidates for open-source applications because they are free. However, trusted and skilled technical resources are required for implementation and customization.

Cheaper than a phone call

Live chat offers excellent benefits to connect with your visitors. According to Forrester Research, “Average live-chat sessions cost $3 to $5, compared to $10 or more for an average customer service telephone call.” Therefore, live chat is an economical communication alternative. The key is how live chat is planned and implemented.

As with all website conversion strategies, consider testing live chat and measuring its effectiveness for reducing shopping cart abandonment and maximizing your customers’ online experience. Coupled with other effective conversion strategies, live chat may provide a boost to your ecommerce sales and strengthen your customer’s website experience.

This article is filed under Conversion & Usability and has the following keyword tags: live chat, customer service.

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