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Remember when you could walk into a store (Nordstrom comes to mind) and be approached by a friendly sales associate, welcomed in a genuine way, and treated to engaging human conversation about your shopping needs? When your new best friend was focused on finding out what you wanted and helping you quickly track it down?

With that personal touch on the sales floor, you’d get your questions answered with authority, use what you learned to make decisions that felt right, leave as a satisfied customer, and look forward to going back later (as soon as your budget allowed, anyway). All that, plus the sales assistant would make their commission numbers.

Ah yes, life before The Great Pandemic (and even before that).

Well, that’s still true about Nordstrom and some other retailers, but let’s talk about the addition of online shopping.

From shopping in-person to shopping in PJs

Then along came Amazon and the rollout of online retail. Convenient though it was to not have to leave home, something was missing: the ability to summon a sales assistant to inform and buttress your decision making and cheerfully ring up your purchases. Try as retailers might on their online platforms, with rudimentary text-to-speech features and unrefined personalization attempts, they couldn’t duplicate that reassuring experience of a compassionate live human hovering patiently. 

With the AI revolution and deep learning, that’s all out the window. Now we’ve got the promise of “conversational commerce”, buoyed by “conversational AI”, poised to provide shopping-excursion joy for consumers (and business buyers) that can virtually rival those of being in a physical retail environment.

Who knows, maybe yakking in your jammies with a nice knowledgeable bot could be even better than the real thing, or at least a viable alternative? Time will tell, but as is true in a physical store, online shoppers are more open to exploring and buying when “someone” representing the company is there to chat about their buying needs or whatever else is on their consumer minds. 

What is conversational commerce?

Among other definitions, conversational commerce is a promising form of leveraging user intent and applying personalization. It’s the art of providing engaging online user experiences, namely, humanlike, helpful conversational experiences, which are made infinitely possible by recent advances in AI and machine learning. Conversational commerce encompasses all the customer-journey touchpoints where a chat or messaging session could have an impact on the shopper’s choosing to buy an item.

“Conversational commerce is about delivering convenience, personalization, and decision support while people are on the go, with only partial attention to spare,” explained Chris Messina when he coined the term in 2015. In its modern incarnation, Laura Hennigan adds in Forbes, it’s about “the place where e-commerce and technology intersect, allowing brands to connect with their customers in new ways, 24/7.”

A good place to talk

How and where does conversational commerce — which also goes by “conversational marketing” and “social commerce” — take place? It happens with bots and live sales agents, on ecommerce websites and in messaging apps such as Facebook Messenger, plus continually with people issuing voice commands to voice assistants like Google Assistant and Apple’s Siri.

Many conversational AI tools can be integrated with ecommerce-site functionality so that conversational interfaces are always ready to strike up a conversation. A messaging app, for instance, could let people connect with a natural-sounding selling assistant at a company and come away with product recommendations tailored to their interests. Consumers can get help with returning unwanted items, ask questions about products, be made aware of items they might like (and that might even be on sale), ask for gift ideas, get order-tracking details, register a complaint, all from a non-human who’s good at imitating human speech.

If the online retailer is intent on harnessing conversational AI systems to improve its customer relationships, a shopper can strike up multiple, consistent-sounding conversations across various channels, such as on the web site, in the brand’s mobile app, and in a social-media environment like  Instagram. Online consumers can often even buy an item in the course of such a conversation — there’s no need to be transferred to the company site (if they’re not already on it) or switch to a phone connection to reach the online store’s call center.

Is conversational AI the same as conversational commerce?

Conversational commerce is a slightly different concept than conversational artificial intelligence, an evolving field focused on letting people talk (or type) with technological entities such as virtual agents and chatbots. Conversational AI is driven by applying machine learning and natural language processing (NLP) to data, plus breakthroughs in generative AI, which empower AI models to use datasets to come up with personalized content without being programmed, plus relay it to the consumer in a human way, making an online shopper feel at ease.

What drives conversational AI technology?

Machine learning and NLP are the key technologies making conversational commerce tools so effective. With machine learning, computers take in data and keep learning from it as time goes by, in the process getting better at “understanding” the content. Its teammate, NLP, facilitates machine understanding of human language nuances. The result is chatbots and other conversational converse entities that seem natural and relatable as people’s electronic companions.

Types of conversational commerce 

Businesses have multiple ways to engage with their shoppers in conversations that can both improve the customer experience and lead to gains in the bottom line.

Voice assistants

When they hear “conversational commerce”, many people think first of talking with their good friend Siri or Alexa, who can also help them buy products and get information about items and services. “Just over 48% of US adults will be monthly users of [voice assistant] technology in the next three years,” projects eMarketer.

Voice assistants field an abundance of questions from people about prospective purchases, plus, many of those shoppers prefer to take the simple route: Instead of wading through product pages on a website, they just tell their voice assistant what they want and ask to have the purchase made for them.

Chatbots

The “face” of conversational commerce is most likely the software-enabled AI chatbot — the on-screen entity shoppers are likely to be welcomed by on an ecommerce site. It’s decked out as a smiling robot, available for answering any and all questions. Bots appear to have done their homework, too: they’re equipped to remember a shopper’s interests, keep track of their buys and browsing, and give personalized suggestions. That makes them well liked by shoppers, although businesses may be the bigger winners. Unlike real-people sales agents, conversational AI chatbots can multitask extensively, assisting multiple shoppers at once without getting flustered. Another thing they have going for them: they never sleep. They’re always cheerily available in the contact center for chatting with insomniac shoppers.  

Live chat 

Even more popular with shoppers than chatbots could be typing with an actual human. Getting help via phone or by email certainly pales by comparison with this more convenient option: according to Meta, 64% of consumers prefer to message with a business rather than use their mobile device (or landline phone?) to call customer service (and be forced to navigate an annoying phone tree and wait on hold). As with chatbots, the fact that a human customer service agent can interact with multiple shoppers at the same time is a plus for businesses looking to streamline their operations.

Text messaging

Marketing cold calls have never been popular with consumers, especially back before Caller ID allowed them to simply ignore attempts by some random marketer making their way down a contact list of prospects. By comparison, how do texts (often with friendly, personally engaging emojis) from companies in a messaging platform app such as WhatsApp, WeChat, Slack, or Facebook Messenger fare?

For some people, texts could be slightly less threatening and more welcome, given that nobody has to pick up the phone to hear a sales pitch. Texts could be even more liked among the tech-loving younger generations due to their direct and instantaneous nature. In fact, did you know that on average, people use messaging apps even more than they use social media? And they naturally extend this preference to contacting — and being contacted by — not just friends but companies, such as when they have a question about a product.

Search

Speaking of extending conversational AI applications to wherever consumers may find themselves considering making a purchase, search boxes aren’t just for that old purpose of typing in queries. The first step in helpful search techniques beyond simple querying was autocomplete features and faceted options. Now, generative AI has introduced the possibility of consumers and companies having conversational flows while staying in the search-engine environment, starting, say, after a prospective customer has entered the name of a product they want to know more about. 

Examples of conversational commerce

Here are a few ways conversational commerce is used in online retail:

  • Proactive in-app messaging: retailers use third-party apps to text shoppers, talk about their needs, offer incentives, upsells, and discounts, and seamlessly process transactions when they’re ready to buy. 
  • Customer support: ecommerce-savvy bots are stationed wherever they might be needed, where they wait patiently to answer FAQs and other questions
  • On web pages: Businesses use bots to strike up conversations with site (and app) visitors, supplying them with personalized recommendations and help in real time, rather than having to scour the self-service portal or wait for a call or an email.
  • Ads in social media: Shoppers start conversations with businesses in messaging apps by clicking ad content

Business benefits of conversational commerce

It’s probably obvious to you what the benefits are to a business when it comes to engaging in conversational commerce. A more compelling customer retail experience translates to higher revenue, of course. More repeat visits mean a better brand reputation. Let’s look at some of the ripple effects.

Staying in touch

When you can talk to shoppers (or have your bots do it) as they’re making their way through the product evaluation process, you can potentially keep them from getting sidetracked or leaving your site. Being on hand for potential conversation can add up to higher efficiency.

In your app, via email, on your website. Do your shoppers often visit more than one channel as they’re deciding whether to buy? Your job with conversational commerce is to be consistently and omnipresently available. For instance, let’s say your bot talks to a prospective buyer about an item. Then the shopper seems to want it, but instead, abandons their shopping cart. You don’t have to leave it at that; you can go omnichannel and send them a cordial follow-up text notification about their patiently waiting items, or email a quick hello to check on where they are in their process.

Saved customer-support time (and money)

Conversational commerce workflow automation makes it possible for a company to talk to hundreds — even thousands — of potential customers about their needs all at once. When shoppers have straightforward support questions, having a capable bot that’s programmed to take care of various use cases frees up human-agent time so they can focus on more involved issues. Plus, a little artificial intelligence help has been known to improve human customer service performance as well. AI work and conversational commerce platforms can help save everyone’s time and sanity.

Instant access

Remember the days when everything to do with doing business had to take place during business hours, Monday through Friday, 9–5, excluding holidays? In retrospect, that was a customer-satisfaction disaster.

With the help of conversational AI solutions, doing business is now a 24×7 phenomenon. If a customer is a night owl and needs help at 3 a.m., who are you to stand in their way? Of course your AI assistant can handle it, whether the shopper is on your site or in a social media environment. Not only will this customer not have to wait until 9 a.m. and be grumpy when they finally get help, they can possibly get their issue resolved and head to checkout with their purchase, then sleep while it’s in transit the next day. And that’s also a win in terms of late-night staffing expenses.

Improved engagement with shoppers

Before AI came on the scene, customer engagement with a human on the sales floor was a great thing for companies. People felt heard and cared about, and when they responded positively by buying items, companies felt justified in their efforts to provide more great customer service.

The same is pretty much true with online engagement. According to a 2018 PWC study, 82% of US consumers said they wanted more human interaction.

A bot may suffice, but the technology backing it up must be trouble free across platforms.

Between identifying a desired item and “walking out” with it, a shopper might want to consider various concerns (What color is best? Is this the right size?) and deliberate with the help of a caring assistant. When that helpmate is able to make personalized recommendations and offer or point out promotions to help the shopper learn options and move forward, this engagement can be lucrative indeed.

Speaking their language

Did you know that chatbots, among their many gifts, can be multilingual? It’s true — they mostly have the ability to do translation. If someone starts off with “Buon giorno” and starts speaking to them about a leather handbag, they might detect that they’re hearing Italian, then not miss a beat as they continue the conversation in the shopper’s language.

Better customer data

Conversations with virtual AI entities aren’t only a help for giving out helpful information. A chatbot or assistant is also a good listener that, whether they relay data from a survey or do automated follow-up in an email, can come away with a ton of data on the customer, as well as feedback that can be assimilated and acted on.

Better customer retention and brand loyalty

When a company or organization treats you like your activity with them matters, such as by giving you points you can use as discounts later, that better customer experience likely makes you more loyal, right? Conversational commerce is good at rolling out the red carpet. Who doesn’t want to chat with a thoughtful bot who knows a few things about you and seems to appreciate your presence? As with a human relationship, shoppers may come to know and love their respective shop bots. That’s good news for retailers that want to strengthen the shopping experience and build a larger customer base.

Fewer abandoned carts

According to Baymard Institute, despite ecommerce site owners’ efforts to present beautifully curated, mesmerizing pages and rewarding shopping experience features, almost 70% of ecommerce shoppers abandon their previously filled shopping carts. Some of this is because they may balk when they see how expensive the shipping is going to be, or they realize that they can find the item for a lower price on another site. Some of it is also relatively unrelated factors that can’t be controlled (e.g., the shopper had to leave the shopping session to head to work).

Still, the advent of conversational commerce is instilling hope in retailers that people will do less abandoning and more pushing of their full carts to the check-out counter. Can a pop-up chatbot or other form of artificial-intelligence intervention about items in the cart really make people reconsider? Perhaps, says research.

One approach: let’s say a cart abandoner was distracted by a social media post. On the social media platform, the company’s bot can casually reach out for a little follow-up Q&A and learn about their reasons for leaving their stuff unpurchased. If all goes well with the customer conversation, the bot can assist the shopper with completing the transaction without leaving the app or taking their eyes off of their social media content.

Higher revenue

As with so many AI features, there’s money to be made in having bots and virtual assistants on hand. That’s not just because of the cost savings of hiring fewer people; it’s because as a data-steeped bot becomes a trusted shopping friend, who, with the help of AI, learns more about the shopper with every interaction, a user may increasingly be smitten: open to their recommendations and suggested cross-sells that would seem to make excellent purchases.

The conversation continues

While many of its developments are still at various stages of maturity, conversational commerce is moving forward every day, and looks to be on track to transform online customer interaction for years to come. As AI-powered chatbots and virtual assistants become more sophisticated in the ways they operate, they’ll provide more-personalized recommendations and “intuitive” product suggestions based on a customer’s preferences and buying history, even, for instance, before the person might decide to look for the search bar so they can enter a query.

Chat with us

How’s your conversational commerce strategy? As a search and discovery industry leader, Algolia is adding conversational AI to our shopper experience toolkit. Connect with us about how you can leverage AI to optimize your user experience, conversion rate, and return on investment. You can also sign up for early access to our Conversational AI Co-Creation program. We hope to talk to you soon!

About the author
Catherine Dee

Search and Discovery writer

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