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A Retailer’s Guide to Chatbots, Live Chat, and Messaging Why Smart Retailers Are Turning to Emerging Chat Technologies, But Not Leaving Humans Behind

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When was the last time you picked up a phone to contact customer service? Emailed? Facebooked? There are a staggering number of communication channels available for connecting with businesses these days. Tried-and-true channels like phone and email have long held the top spots for communicating with retailers, but new research from [24]7, a customer engagement software and services company, finds that chat—including online chat tools and messaging apps like Facebook Messenger—is now the most popular way for consumers to interact with retailers while making a purchase. Based on a survey of more than 1,000 U.S. consumers, “A Retailer’s Guide to Chatbots, Live Chat and Messaging” is designed to help retailers looking to make greater investments in online chat, and increase digital adoption among consumers. Chat has the potential to digitize common customer service and sales processes, particularly as online shopping eclipses brick-and-mortar experiences and consumers turn to online channels to comparison shop and complete purchases. Millennials lead the pack when it comes to embracing chat. Their openness to, and existing familiarity with, online chat has solidified it as millennials’ top customer service channel, presenting a major opportunity for retailers to digitize customer service. This report outlines how consumers currently use chat and examines where the technology is headed. The study also explores areas of opportunity for retailers to implement online chat technologies and educate consumers on the power of this emerging communication channel.

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KEY FINDINGS > 1 in 4 consumers

1/4 of consumers

 ore than one-in-four consumers (28.9 percent) prefer M to use chat technology when interacting with a retailer, surpassing phone (28.7 percent) and email (27 percent) as the most popular customer service channel.

 quarter of consumers (25.8 percent) prefer to chat A with retailers on their websites, while 3.1 percent say messaging apps like Facebook Messenger­— a very new channel for customer service­— are their top choice.

1/4 of consumers

4 out of 10 consumers

 quarter of consumers (26 percent) A embrace interacting with a company through a messaging app like Facebook Messenger or WhatsApp, and the number jumps to 39 percent for millennials.

 our out of 10 consumers (39 percent) are willing to have F automated conversations with chatbots, and 10 percent prefer to always interact with a robot while interacting with a retailer online.

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 ore than a third of millennial M consumers (37 percent) identify chat as their favorite way to contact companies, while less than a quarter rank phone or email as their No. 1 choice.

Convenience and access

Messaging apps are incredibly valuable for retailers looking to enhance relationships with consumers, particularly millennials.

> 1/3 of millennial consumers

- Scott Horn, CMO of [24]7

Consumers cite convenience (15 percent) and access to conversation history (10 percent) as the primary benefits of using messaging apps. Top concerns include security and privacy (28 percent) and distrust of third-party apps (12 percent).

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CHAT SURPASSES PHONE AS TOP CUSTOMER SERVICE CHANNEL Chat has surpassed phone and email as the most popular way for consumers to interact with retailers, driven by millennial shoppers embracing new technologies such as chatbots and messaging apps, along with the comfort of knowing they can interact with live agents as needed. When making a purchase online, 28.9 percent of consumers prefer to use a form of chat technology, overtaking phone (28.7 percent) and email (27 percent) as the top choice.

Although messaging apps are a relatively new way to communicate with companies, 3 percent of consumers already rank them as their favorite way to contact retailers—a significant enough number to push chat over the top. Consumers are turning to the technology as it becomes more integrated within their personal lives and evolves to be better at handling customer service needs in an efficient and engaging manner.

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Millennials are leading the charge when it comes to adopting chat technology. More than a third (37 percent) of survey respondents ages 18 to 34 rank chat as their favorite way to contact companies when making a purchase, with 30 percent choosing online chat and 7 percent selecting messaging apps. This finding demonstrates the importance of communicating with customers in the channels they prefer, and already use in their everyday lives. Less than a quarter of millennials prefer to use email (23 percent) or phone (21 percent) to contact retailers.

While messaging apps are still emerging as a way to interact with retailers, 39 percent of millennials are open to using the technology as a customer service tool, significantly higher than consumers overall (26 percent). Becoming an early adopter of channels such as Facebook Messenger is a way to appeal to this demographic.

How do you prefer to interact with an online retailer if you

How do you prefer to interact with an online retailer if you

have questions while making a purchase?

have questions while making a purchase (ages 18 to 34)?

3%

1%

1% 6%

11%

Email

Email

23%

Messaging app (Facebook Messenger, WhatsApp)

27%

Messaging app (Facebook Messenger, WhatsApp)

Online chat Phone (voice)

29%

12%

3% 26%

Self-service web tools (search bar, FAQ) Social media (Brand Facebook page, Twitter) Other

[24]7: A Retailer's Guide to Chatbots, Live Chat and Messaging

Online chat

7%

21% 30%

Phone (voice) Self-service web tools (search bar, FAQ) Social media (Brand Facebook page, Twitter) Other

[24]7: A Retailer's Guide to Chatbots, Live Chat and Messaging

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Messaging apps aren’t the only new technology causing increased use of chat as a customer service tool. Four out of 10 consumers (39 percent) say they’re willing to have automated conversations with chatbots, which have exploded this year as artificial intelligence has gone mainstream, particularly when they know they can be transferred to a live agent if needed. One in 10 consumers (10 percent) prefer to always interact with a robot instead of a human while interacting with a retailer online. Millennials are slightly more likely to interact with chatbots, with 43 percent being open to automated conversations.

Millennials also show stronger support for the benefits of messaging apps than consumers overall—66 percent of millennials see some benefit to interacting with retailers via messaging apps, compared to 52 percent of consumers overall. They are also more optimistic about the ability of messaging apps to improve their online shopping experiences; millennial consumers rank instant order updates via messaging apps as their top online retail trend of interest, while consumers overall rank it as second, ahead of virtual reality, drone delivery and even mobile wallet payments

If offered, how likely are you to interact with a retailer through a messaging

How do you prefer to interact with an online retailer if you

app like Facebook Messenger or WhatsApp (ages 18 to 34)?

have questions while making a purchase (ages 18 to 34)?

15%

Likely Not very likely

36%

39%

Not at all likely

14% 61%

I always prefer interacting with a human I always prefer interacting with a robot No preference if I can complete tasks Robot is ok if I can escalate to a human

10% 25%

[24]7: A Retailer's Guide to Chatbots, Live Chat and Messaging

[24]7: A Retailer's Guide to Chatbots, Live Chat and Messaging

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According to Pew Research, messaging apps are particularly popular amongst 18-29 year olds with half of smartphone users in this age group using messaging apps. Millennials’ frequent personal use of these apps has likely inspired their rapid adoption of online chat for customer service needs. This high chat fluency is reinforced by the fact that 15 percent of millennial consumers feel that the greatest benefit of interacting via messaging apps is that they already use these apps on their devices.

How do you prefer to interact with an online retailer if you have questions while making a purchase?

48%

50% 40%

34%

30% 20% 20% 10%

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15% 8%

9%

15% % 9% 10

9%

10%

12%

1% 0%

Messaging apps are particularly popular amongst 18-29 year olds with half of smartphone users in this age group using messaging apps.

0% Chat is my preferred way to communicate

Chat is my preferred way to communicate

I already have these apps on my device

All respondents

Other I have access to conversation history

It’s easy to use

I don’t see any benefits

Respondents ages 18-34

[24]7: A Retailer's Guide to Chatbots, Live Chat and Messaging

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WHAT CONSUMERS WANT FROM CHAT As chat technology continues to evolve, here are a few additional findings for retailers to keep in mind as they implement the technology: CONSUMERS WANT CONVENIENCE:

CONSUMERS WANT AN EFFORTLESS CHECKOUT PROCESS:

Fifteen percent of consumers are drawn to messaging apps as a way to interact with brands because they can communicate at their own convenience, followed by access to conversation history (10 percent), the fact that consumers already use these apps on their devices (10 percent), and ease of use (9 percent).

When making a purchase on a retailer’s website or mobile app, 13 percent of consumers say they would abandon a shopping cart if they couldn’t find answers to their questions, and 15 percent cite incomplete or inaccurate product info as a roadblock. In both cases, chatbot or live chat integration could make the checkout process more seamless, and in some cases, help them complete a transaction that they otherwise wouldn’t.

Chat offers the added convenience of allowing consumers to resolve service issues directly on a retailer’s website. This is a major opportunity for retailers to differentiate themselves from competitors, as three-quarters of consumers currently have to switch from their preferred method of interaction with a retailer to another channel to accomplish their desired task(s). CONSUMERS WANT A BETTER CUSTOMER EXPERIENCE: One in five consumers (20 percent) say that instant order updates via messaging apps would most improve their online shopping experience relative to other emerging technology, and second only to location-based coupons on mobile devices (24 percent). Updates via messaging apps ranked higher than other much-hyped technologies like drone delivery (13 percent), mobile wallets (12 percent) and social media buy buttons (12 percent).

CONSUMERS STILL HAVE RESERVATIONS: While consumers are embracing chat, they still have reservations about messaging apps. Twenty-eight percent of consumers worry about security and privacy, 23 percent prefer to speak with a live agent, and 12 percent distrust third-party apps altogether. Seven percent of consumers don’t use chat or text very often, and another 4 percent simply don’t understand messaging apps. Many of these concerns are based on myth (others are easily appeased through today’s technology), which provides retailers an opportunity to educate consumers on the value of communicating through these channels. On the flipside, 25 percent of consumers have no concerns about interacting with a retailer via messaging apps.

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HUMANS REMAIN A CRITICAL PART OF CUSTOMER SERVICE In order to fully realize the benefits of chat as a customer service channel, retailers cannot ignore the critical role humans still play in the customer experience.

How do you prefer to interact with an online retailer when resolving an issue after you’ve made a purchase?

1%

Consumers show a willingness to adopt new chat technology, provided human interaction remains easily accessible when needed. Almost two-thirds of consumers (62 percent) prefer to interact with a human over a robot at all times, and 13 percent of shoppers have no problem talking to a chatbot as long as they can easily escalate the conversation to a live person.

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%

3%

29%

Human intervention is particularly important post-purchase. Whether this is because consumers have a greater financial stake in postpurchase problem resolution or because past experiences have simply conditioned consumers to trust human interaction, consumers turn to other humans when in need of prompt assistance.

40%

Forty percent of respondents list phone as their preferred customer

18%

service channel when solving a problem post-purchase. Preference for chat technology drops to 21 percent after a purchase has been made, suggesting chat can play a critical role in sales but becomes less important as a troubleshooting tool.

Messaging app (Facebook Messenger, WhatsApp)

Self-service web tools (search bar, FAQ) Social media (Brand Facebook page, Twitter)

Online chat

Other

Email

The bottom line is that chat technologies and humans must work together to facilitate seamless customer engagement experiences online and help hesitant users over the adoption hump.

3%

Phone (voice)

[24]7: A Retailer's Guide to Chatbots, Live Chat and Messaging

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CONCLUSION: KEY TAKEAWAYS FOR RETAILERS Chat is quickly becoming the go-to customer service channel. Based on the findings of this study, here are a few lessons for retailers looking to invest in the technology: »»

 eet consumers where they are: Retailers will M find greater success with online chat technologies by emphasising the channel’s top strength— convenience. Forward-thinking retailers will play up how messaging apps complement consumers’ mobile lifestyles. Consumers can use messaging apps to communicate with retailers while on-the-go to solve issues in real-time, just as they might interact with friends and family. Rather than competing for mobile real estate and developing apps of their own, retailers can leverage consumers’ existing preference for popular messaging apps like Facebook Messenger that enable conversations between businesses and consumers.

»»

 ducate wary consumers: Millennials may be E early adopters and less risk-averse when it comes to new technology, but retailers can help other demographics understand the benefits of using messaging apps. For instance, retailers can generate content (online guides, video tutorials, testimonials, etc.) that highlight messaging apps’ security and privacy features, their ease of use and provide answers to commonly asked questions.

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»»

 evelop campaigns based on consumer feedback: Top retailers will begin to deploy D proactive order updates, such as shipping notifications, via messaging apps to match consumer preferences. This can be easily integrated as part of the checkout experience, enabling customers to opt-into receiving updates via tools like Facebook Messenger. Instant updates are a tasteful introduction to the communicative potential of messaging apps and lay the groundwork for more involved interactions down the line. Similarly, retailers can institute chat technologies to facilitate easy payment and checkout, and to ensure that fewer consumers abandon their shopping carts. Although chatbots cannot resolve transactional hurdles at purchase like price and delivery, they can help customers find desired information, fill out fields based on prior purchases and answer queries. With the right solution, anything more complex can be escalated to a live human agent.

»»

 nderstand consumer intent: Chat provides a way to keep the consumer’s interactions U within one channel. This added context to each consumer’s personal journey helps chatbots and live agents alike better understand what the consumer is trying to do. In effect, they are better able to provide efficient, personalized resolution.

»»

 ouble down on millennials: Millennials’ existing digital behaviors and trend-setting ways D make them logical candidates for newer technologies like messaging apps. What’s more, they’re making purchases and interacting with brands in an “Uber economy,” where the customer experience is easy and effortless. As this demographic’s expectations evolve, so should the service offerings provided by retailers.

Online chat technologies and messaging apps can play a critical role in catering to millennials’ unique preferences and harnessing their combined trillion dollar purchasing power.

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Although chatbots cannot resolve transactional hurdles at purchase like price and delivery, they can help customers find desired information, fill out fields based on prior purchases and answer queries. With the right solution, anything more complex can be escalated to a live human agent.

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METHODOLOGY The study was published by [24]7 and based on a survey of 1,007 U.S. consumers that was conducted using Google Surveys, September 2016.

[24]7 is a registered trademark of 24/7 Customer, Inc. All other brands, products or service names are or may be trademarks or service marks of their respective owners. Want to learn more about how today’s customers interact with businesses? Contact us today at www.247-inc.com 910 E. Hamilton Ave. Ste 240 Campbell, CA 95008 USA

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