Today, price and product are no longer the main unique selling points. Instead, customer experience is everything, and brands are looking for ways to stand out. To achieve this, they’ll need to view each and every touchpoint throughout the customer journey as an opportunity. That’s where conversational commerce comes in.
Conversational commerce is making customer communication faster, more efficient, more contextual, and generally more valuable. In fact, it’s transforming the role of business communication, allowing brands to take a more proactive approach to customer support.
If you’re new to conversational commerce, don’t worry. In this article, we’ll go over everything you need to know to succeed in 2023.
Table of Contents:
What is conversational commerce?
How does conversational commerce work?
Examples of conversational commerce
KLM Royal Dutch Airlines
3 Reasons conversational commerce matters now
5 Ways conversational commerce benefits online retailers
Use cases for conversational commerce
Conversational commerce happens on the apps we use every day
Conversational commerce platform
Conversational commerce is the intersection of messaging apps and shopping. It's a way for businesses to give customers convenient and personalized service.
The term was coined by Uber's Chris Messina in 2015. Since then, it's played a major role in shaping the business models of many brands.
Conversational commerce uses technology to engage with customers in real-time. Chatbots, conversational apps, and WebChat are examples of conversational commerce technology.
Through automation, data, and messaging apps, conversational commerce helps brands connect with customers at every step of the customer journey.
Automation / Conversational commerce chatbots
Conversational commerce is about delivering convenience and timely support while people are on the go. People prefer messaging channels because they can get fast answers while going about their routines, instead of being put on hold or waiting for a response via email.
For that reason, chatbots and conversational apps are a crucial part of conversational commerce. It helps brands deliver consistent customer experiences and timely service -- without hiring more agents.
Data works with automation to make conversational commerce relevant. It helps make conversations contextual, personalized, and meaningful. Modern conversational apps can connect to your CRM, supply chain data, and other important information. That makes for valuable conversations at each stage of the customer journey.
Lastly, messaging apps are a major piece of the conversational commerce puzzle. Messaging apps are now the most popular way for people to connect with each other. So, it’s no surprise that they’d want to reach brands on the messaging apps that they already use every day.
But messaging apps aren’t just a way to communicate with friends and family. Today, they encompass more and more of what people do online.
In 2020, Facebook started adding shopping features that keep users from needing to complete purchases elsewhere. Using Facebook Pay, people can make purchases from the social media company’s family of apps without being redirected to a different landing page.
The head of Instagram also made headlines when he said the app was no longer primarily about sharing photos. “Right now we’re focused on four key areas: Creators, Video, Shopping, and Messaging,” he said.
As messaging apps continue to build out their business features, conversational commerce will be an even greater force to reckon with.
The Austrian women’s fitness brand, Women’s Best, used WhatsApp to establish a central customer communication channel to resolve people’s queries and keep them updated on the status of their orders. They are now receiving 30,000 customer support requests via WhatsApp per month.
Since implementing the WhatsApp Business API, the fitness provider has seen the following results:
- 30,000 customer service requests received via WhatsApp per month
- 50% faster processing time for each customer inquiry
- 40 WhatsApp tickets resolved by a single agent in an hour
Happy Socks increased sales of its socks during Christmas and Valentine’s Day with a playful conversational commerce chatbot—resulting in an average 2.7X return on ad spend.
“Bots for Messenger are a new way of guiding our customers through our extensive product catalog. The format enables people to find the perfect gift in a fun and informative way. So far we’ve had great experiences doing this during the gifting season, but also for our Valentine’s Day campaign,” said Marc Verschueren, Online Marketing & Sales Director at Happy Socks.
KLM Royal Dutch Airlines used the WhatsApp Business API to give customers important information and updates about their travel details, sending over 220,000 gate assignment messages in the first five weeks.
With WhatsApp, KLM was able to reach hundreds of thousands of customers with media messages featuring gate assignments and the KLM 100 logo.
In the first five weeks, KLM achieved the following results:
- 186,364 welcome messages sent
- 220,447 gate assignment messages sent
- 88% of all gate assignments sent via social media were sent by WhatsApp in the first week
1. Conversational commerce makes omnichannel experiences possible
Retailers have long understood the benefits of omnichannel experiences, but delivering them is easier said than done. In a world with desktop and mobile devices, official eCommerce stores, Instagram, Facebook, live chat, and more -- the modern shopper can reach out through many touchpoints.
Until recently, technology has failed to connect all of these touchpoints in an effective way. As a result, businesses are left with siloed information, disjointed experiences, and difficulty getting an accurate picture of the customer journey.
Now, through conversational commerce, businesses can finally offer omnichannel experiences effectively. They can aggregate channels, integrate data, and orchestrate the customer journey in a whole new way.
2. Customer expectations are at an all-time high (and loyalty is scarce)
Customer expectations were already rising exponentially before the pandemic. Now, businesses have been forced to undergo major digital transformations -- seemingly overnight. The competition is heating up online as brands move their budgets away from traditional media and into digital channels.
According to a recent McKinsey report, over 75% of consumers tried new brands, places to shop, or methods of shopping since the pandemic began. This opened consumers up to new brands and familiarized them with new ways of purchasing from both new and familiar businesses.
In short, customer loyalty is up for grabs. Brands need to find ways to retain customers and find new ones. They must invest in the right places in order to compete in this landscape, and conversational commerce is at the top of the list.
3. Messaging apps are on track to be the main way people communicate with brands
Messaging apps are becoming more powerful every day. Facebook (or should we say Meta), Apple, Google, and other platforms are all competing to be the place where conversational commerce happens.
Soon, instead of going to a retailer’s website to shop, customers will do everything right from messaging and social apps. This shift is already well underway, and soon, messaging apps will replace websites as the main interface between businesses and customers.
1. Conversational commerce chatbots helps brands scale personalized support
For many businesses, conversational commerce chatbots are the tool that makes personalized support possible. They add much-needed data and scale to the equation. Sales chatbots integrate with apps like Facebook Messenger, WhatsApp, and WeChat.
Conversational commerce chatbots help complete sales so that the customer doesn't have to leave the messaging app. The result is increased conversions and better customer experiences.
2. Conversational commerce increases average ticket value (ATV)
Conversational commerce increases your average ticket value (ATV). A well-built conversational application knows your customer information by talking to your CRM. It uses this customer data to serve up hyper-personal suggestions.
Conversational apps know your customers' purchase history and the products they might like. This personalization makes it easy for customers to find the products they love, thus increasing your average basket size.
Conversational apps also let customers know which items are selling fast or about to go out of stock. This creates a sense of urgency that leads to more impulsive buying. Essentially, conversational commerce is like shopping with a best friend who knows your taste and style.
3. Conversational commerce prevents shopping cart abandonment
The best way to deal with an issue is to prevent it. Shopping cart abandonment is often attributed to a poor user interface or experience. Some common reasons for cart abandonment are:
- The website is hard to navigate
- Forms are too difficult to fill out on a mobile device
- Uncertainty of delivery and return policies
- A long or complex checkout process
These are all areas where a conversational commerce chatbot helps. Chatbots reduce friction by creating a smooth and intuitive shopping experience. Your customers won't have to go searching for shipping and return information or payment options. They can simply ask the chatbot and receive an answer within minutes.
When there's a ticket that a chatbot can't solve, they know when to ask for help. Chatbots seamlessly hand over complex conversations to a human agent. This plays an important role in reducing the likelihood of customer frustration, and cart abandonment.
4. Conversational commerce builds brand loyalty
Conversation holds great power in any relationship. Without conversation, you can’t build trust or exchange information. You can’t get to know another person truly without communicating with them.
According to Forrester, the value of human connection, emotions, empathy, and personalization are now more important than ever in a post-pandemic world. When people have an issue with a brand, they need to be able to trust them to help resolve it. When they place an order, a simple acknowledgment gives them peace of mind.
Conversational commerce provides a higher level of empathy and interactive problem-solving. As empathy takes center stage, conversations will be a key driver of loyalty.
5. Conversational commerce reduces customer service costs
Conversational commerce reduces operational costs related to customer service. It decreases time to resolution, automates frequently asked questions, and creates a well-oiled customer service machine.
Brands that use conversational solutions (like chatbots) find that they can automate up to 80% of their inquiries. This frees up their human agents to handle higher-value, more complex support tickets.
Conversational commerce can be used to improve almost every aspect of the online shopping experience. Today’s use cases are increasingly complex, as the boundaries between sales, marketing, and support, are breaking down.
With that said, here are a few examples of conversational commerce use cases:
- Lower cost per acquisition, compared to ads on other digital platforms
- Increase average order value
- Reduce seasonal hiring
- Reduce handling time for customer care agents
- Increase the amount of interactions agents can handle simultaneously vs. phone
- Reduce costs in customer care channels at scale
- Improve net promoter scores
In China, WeChat is a great example of the power of conversational commerce. WeChat started out as a way for people to communicate with friends and family but has transformed into something much more.
Today, WeChat is considered a super app. In many ways, it is more of an operating system than an app. Third parties can develop and run their mini-programs through the app, reducing friction for the user.
WeChat is a portal to everything that people in China want to do online, from ordering a cab to filing for divorce (yes, you read that right). People use it to shop, order food in restaurants, make payments, send “lucky money” to their friends and family, and much more.
Meta continues to release tools that further the company’s mission to better mimic the connection and experience that consumers get from offline shopping in the online, social environment.
“We are looking at how online shopping experiences can more deeply create the same connections people get from in-person shopping experiences. We will continue to invest in ways to connect people and businesses through the commerce journey as it remains a key priority for us,” Zuckerburg explains.
Some of these tools include the ability to:
- Sync real-time inventory and organize shopping catalogs
- Integrate flexible, secure payment methods that customers will trust, including cash on delivery and bank transfers
- Start conversations from hyperlinks that you can add to emails, messages, social media posts, and more
WhatsApp (owned by Meta) is another platform where conversational commerce is booming. Worldwide, more than 50 million businesses are using WhatsApp Business (Wall Street Journal). Compare that to just 5 million businesses the previous year.
This exponential growth comes as WhatsApp continues to improve the types of businesses accounts and features available through the platform. It’s still rolling out access to the WhatsApp Business API, which allows businesses to build branded experiences from within the messaging app.
WhatsApp Business makes the adoption of conversational commerce easy for businesses. It’s widely used, has rich media capabilities, end-to-end encryption, and more.
Conversational commerce requires flexible technology that can adapt to your business as it grows. As you adopt new channels, expand to new markets, and experiment with new technology, you’ll need a platform that can adapt to changing demands.
Hubtype’s conversational commerce platform is the future-proofed solution you need. We provide the technical interface between your customers’ messaging apps and your CRM/tech stack. With it, you’ll manage your customer experience all from one place, connect to the tools that you use every day, and start using automation more meaningfully.
Learn more about our conversational commerce platform.