For those internet retailers who may feel they have their hands full dealing with their customers - via everything from in-person visits to phone calls, faxes and email - tech savvy observers have some bad news: You really should consider adding a live chat feature to your website.

Live chat provides real-time text support within a given website's browser. Using the technology, customers may either click on a live chat button and be placed into contact with a company representative - often through an instant messaging (IM) portal - or they may even find themselves suddenly receiving an IM from a rep who's been tracking the customer's activity on the site and is concerned that the customer may be experiencing difficulties or have questions that aren't easily answerable on the site itself.

Applications of live chat permeate news and sports-related websites, and several retailers have experimented with it on their websites. In fact, in a recent study of companies using live chat, over 70 percent indicated that they believed the technology put them ahead of their competition.

Another study, conducted by Wichita-based live chat technology provider BoldChat and released on March 26, says, "A direct correlation between live chat and a growth in sales for online retailers," exists. Among its findings:

• Live chat is influential during the sales cycle. Respondents indicated that live chat positively impacts their likelihood to purchase. "In fact," the study says, "58 percent of the entire sample said that if a site offered live chat, that fact alone would positively influence their decision to make a purchase."
• Online merchants not offering live chat are missing desirable opportunities. Those that shop more frequently online and those that spend more - measured either by the average amount they spend when shopping, or the greatest amount they've ever transacted in a single purchase -- are more likely to choose live chat in sales interactions and rank its positive influence much higher than other groups.
• Live chat has a loyalty effect, particularly with desirable shoppers. In general, the report says, "Chatters choose the technology over other methods during the sales cycle."

From a practical standpoint, the technology's cheerleaders say that an effective live chat session is comparable to a successful in-store salesperson who can convert an uncertain shopper into a real customer buying goods and/or services.

"Live chat is gaining a tremendous amount of traction," says Kate Leggett, director of eservice product strategy at KANA Software, which specializes in multichannel customer service solutions including email, call centers and chat. "When it first started about eight years ago, we all thought it would take off like a firestorm, but it has really been in the last 12 to 18 months that we have seen a lot of activity, and a growing, enormous amount of requests for information."

Increasingly, offering live chat on a website indicates that a given company is modernized, which gives off a "cool" vibe to potential customers and partners - particularly the younger ones, Leggett says.

"Traditionally, companies want to add it as a differentiator," she says. "The Gen X's and Y's and Z's have all grown up with chat, and now they're maturing into consumers with their own buying power; they're going to want to interact with companies on their own terms."

"Part of the pitch we give is that it makes you more technologically advanced than your competitors," agrees Greg Kosicki, director of call center services at web design company and ecommerce solutions provider Solid Cactus. "But it only really works if it's done right."

Kevin Kohn, executive vice president, marketing at LivePerson, a provider of online engagement solutions that facilitate real-time assistance and expert advice, says that when he started at the company in 2004, "Chat was mostly a button on the Contact Us page. Now it's become a means of proactively engaging customers and potential customers, monitoring their behavior and mining customer data."

Simply throwing up a Chat Now button on a website and waiting to see what might happen is, to put it mildly, a bad idea. All chat providers strongly recommend you first understand how your customers are using your website, which can be accomplished with a clickstream analysis: the process of collecting, analyzing and reporting aggregate data about which pages visitors visit in what order, which themselves are the result of the succession of mouse clicks each visitor makes.

"Understanding how your customers use your website is key," Leggett says. "Think through what transactions happen on your site and on what pages live chat might be useful in helping convert an opportunity into a sale, or increase an average order value. You probably don't want a live chat button on every page, but your customers will in effect 'tell' you that as you do your research."

Once patterns start to emerge, companies can use chat to actively monitor both new and existing customers in proactive ways.

"When a visitor comes to your website, you can monitor what pages they're looking at and what they're doing on those pages," Kohn says. "That leads to better understanding their behavior, and you can better anticipate when the right time might be to offer assistance. That level of sophistication can make a situation go from a passive browsing experience to a sale."

The idea that a company rep who's already answering phone calls and/or email can also handle live chat is a hazardous one. "The biggest failure we see is when a company thinks that because they have live chat capabilities, it will completely erase their phone calls," Kosicki says. "There's still a good percentage of the population that's most comfortable picking up the phone and talking to somebody. It can be hard to understand a person's emotions in live chat."

"It's all about user experience," Leggett says. "If a customer has a bad chat experience, they may never use chat - or any other kind of interaction - with that company again. The chat agent is part of the service experience; he or she is the voice of your company. There should be no difference in the customer's experience whether they're contacting you through chat or email or a phone call."

Besides having a trained agent (or team of agents) dedicated only to live chat, it's also important to make sure that your supply of agents is meeting customer demand.

"Ideally they should be multitaskers," Kohn says of chat agents. "They should be able to handle up to five chats at a given time. And customer wait time should be low; as soon as someone clicks on it, they should either immediately be in contact with an agent, or see a message to the effect of, 'We will get to you in 20 seconds.'"

Companies just starting out with chat, or who feel they have a finite number of customers interested in the technology, may opt to offer chat on a limited basis. If so, clearly communicating what the availability of chat becomes critical.

"You don't want people clicking on 'chat' and never getting a response, even if it's 2 in the morning," Leggett maintains. "Set up a calendar on your website, explaining when you offer chat. Is it business hours only? Then say so, and have the link active for only those hours. You can also shut down chat if the wait times are getting progressively longer."

Personalizing chats - not only through greeting the customer by name, but also by allowing some of the agent's personality to come through - helps ensure the customer that he's interacting with a real person and not an automated system. In addition, if particular questions seem to come in regularly, some canned content can be composed to cut down on requiring an agent to keep typing in the same information. Alternatively, if answers are available on a website's FAQ page, customers can be directed there.

Still, there is a real danger of inviting comparisons to George Orwell's "Big Brother" if overeager chat agents are approaching customers willy-nilly.

"Most people, if they go to a Best Buy and immediately have someone running up to them asking if they can help, push back against it," Kohn says. "There's very much an art involved in understanding what the right time is to offer chat to someone."

Despite some potential pitfalls, live chat can be a real boon to a growing business. In addition to being technologically hip, engaging customers in a new way and potentially maximizing sales, there's also chat's data mining capabilities.

"You can get a lot of good information from them," says Kosicki, "and over time you can build individual and group profiles based on buying patterns, age, practically whatever demographic you like. All chats can be archived and scanned to see how many people are buying a particular product. If a certain category suddenly sees a sales spike, you can get a pretty good idea of why."

"You can also include a survey at the end of each chat," Leggett notes. "Just a short one: 'Was your question answered?' Then you can use the results to fine tune your chat offering. Most chat products have reports, which you can use to determine if you need more or fewer agents, what should be in your canned content, and so on."

Live chat, she adds, "isn't about cutting costs, necessarily; if it's not done correctly, chats can be as expensive as phone calls. But what you're doing is enhancing the customer experience and differentiating your company from the competition."

For more information, contact:

Kevin Kohn
Executive vice president, marketing
LivePerson
462 7th Avenue 3rd Floor
New York, NY 10018
Tel.: (Sales inquiries) 917-477-0520
Website: http://solutions.liveperson.com/sb/

Greg Kosicki
Director of call center services
Solid Cactus
106 South Lehigh Street
Shavertown, PA 18708
Toll Free: 888-361-9814
Tel.: 570-706-7150
Website: www.solidcactus.com

Kate Leggett
Director of e-service product strategy
KANA Software
181 Constitution Drive
Menlo Park, CA 94025
Toll Free: 800-737-8738
Tel.: 650-614-8300
Website: www.kana.com