What is conversational commerce? Definition and guide

Understanding conversational commerce

Today’s consumers demand top-notch products, fast delivery, and extensive selection. Conversational commerce is increasingly vital in shaping and enhancing the customer journey by facilitating real-time interactions. This concept merges e-commerce with technology, enabling brands to engage with customers continuously. The traditional model of waiting for a response through online contact forms or relying on sporadic social media interactions is outdated.

In conversational commerce, personalization drives customer loyalty, achieved through AI chatbots, messaging apps, and other automated tools. Shoppers value convenience and expect immediate responses to their queries. As most consumers spend a significant amount of time online, they anticipate brands to be perpetually accessible for guidance and interaction.

Four key types of conversational commerce

Conversational commerce has evolved significantly since it gained prominence, initially highlighted by Chris Messina in a 2015 Medium post. Messina predicted that "concierge-style services may become the primary way in which people transact on their mobile devices." This period marked a pivotal moment for conversational commerce, with notable events such as Facebook acquiring WhatsApp and the introduction of voice assistants like Amazon’s Alexa and Apple’s Siri.

Today, various effective conversational commerce methods are in use, with many companies adopting multiple strategies to enhance customer service.

1. Messaging apps: Platforms like Messenger, WhatsApp, WeChat, and Snapchat enable users to send messages, memes, and emojis to brands. These social messaging apps offer businesses a valuable channel for customer interaction, increasing engagement and often leading to higher conversion rates.
2. Live chat: Live chat software improves response times and customer service by allowing users to start a chat session via a pop-up window on a brand’s website. This tool is typically managed by staff who provide real-time support, offering a cost-effective alternative to phone-based customer service.
3. Chatbots: Chatbots use artificial intelligence (AI) to automate customer interactions, responding to queries with pre-programmed answers. These virtual assistants simulate human conversation, helping users find information quickly without the need for live personnel.
4. Voice assistants: Voice assistants leverage voice recognition, AI, and natural language processing to enable users to request products or services through voice commands. There are two types of voice assistants: general-purpose ones like Amazon’s Alexa, which work with connected speakers, and bot voice assistants, which are integrated into websites or apps to assist with navigation.

Top 3 challenges in conversational commerce

Despite its numerous advantages, conversational commerce faces several challenges, primarily related to resource demands and implementation complexities.

• Limited human interaction: Many users find interacting with bots unsatisfactory, particularly when there are language barriers, perceived lack of empathy, or slow response times. To address these issues, businesses should invest in advanced tools and ensure that human operators are available to intervene when AI solutions fall short.
• Implementation complexity: Conversational commerce involves managing numerous components that are continually evolving with technological advancements. Businesses often need to handle multiple channels, each attracting different consumer groups, which can make it challenging to coordinate and optimize various approaches effectively.
• Fragmented data: As conversational interactions occur across various channels, data can become dispersed and isolated, leading to incomplete customer insights. To mitigate this, companies should use integrated tools that consolidate data across platforms, ensuring a comprehensive understanding of customer interactions and preventing fragmented data experiences.

Advantages of conversational commerce

Conversational commerce offers customers new ways to engage with brands, providing round-the-clock support, information access, and the ability to make purchases via messaging apps. This approach enables businesses to customize their offerings and meet buyers' needs through innovative sales channels. Here are several key benefits of adopting a conversational commerce strategy:

• Enhanced engagement: By integrating conversational commerce into touchpoints like website chat buttons and social media, companies can boost engagement. This approach offers customers a convenient way to explore products, with live chat operators or chatbots assisting by answering queries, making recommendations, and guiding them towards a purchase.
• Decreased cart abandonment: Customers often abandon their carts due to factors like high shipping costs, long wait times, or better prices elsewhere. Conversational commerce addresses these issues by re-engaging customers through automated emails, pop-up reminders, and shared product information, helping to convert them into buyers.
• Valuable feedback: Companies seek timely insights into what works and what needs improvement. Conversational commerce facilitates real-time customer feedback through surveys and messages, often managed by chatbots and delivered shortly after a purchase.
• Increased online sales: By utilizing effective tools and technologies, businesses can enhance automation, leading to greater value for buyers. Conversational commerce automations streamline upselling and cross-selling by leveraging AI to analyze large data sets and offer personalized recommendations. This ongoing customer nurturing can contribute to higher sales.
• Strengthened brand loyalty: Personalized solutions provided through conversational commerce demonstrate to buyers that the brand values their time and investment. A seamless experience with high levels of engagement and customization fosters increased customer retention and long-term brand loyalty.

How conversational commerce functions

Conversational commerce can be utilized by businesses of all sizes, provided their hosting platforms support its integration. This approach helps brands engage effectively, run awareness campaigns, and connect with the right audience at the right time. Here's a guide to getting started:

• Set your objectives: Begin by identifying your business goals. Are you aiming to boost online conversions or enhance customer response times? By assessing these objectives, you can determine what aspects are working well and what areas need improvement.
• Conduct research: With numerous options available, selecting the right conversational commerce partner requires careful consideration. Compare various solutions against your goals and Key Performance Indicators (KPIs). Engage actively by asking questions, requesting demos, and reviewing performance outcomes.
• Select a partner: Choose a conversational commerce partner with relevant industry experience and expertise. Consider your customers’ needs and preferences: What services do they seek? What challenges do they face? Opt for tools and technologies that address these issues effectively.
• Implement and refine: Define how conversational commerce will integrate into your brand and how you will measure its success. This phase involves development, testing, and refinement before the official launch. After deployment, monitor for any issues, solicit feedback, and make necessary adjustments to optimize performance.