Conversational CommerceWhat AI Means for Online Retail

July 21, 2023 | 8 min read

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Conversational Commerce

In a Nutshell

Success is not just about offering the lowest price. As we’re seeing more and more, the future of eCommerce is conversational. Today, we’re taking a look at conversational commerce — what it is, how it works, and why it might be the next great leap forward for the online marketplace.

How Artificial Intelligence May Help Take Conversational Commerce to the Next Level

Most brands seek to capture customers’ loyalty by offering the best products at a price that’s lower than any competitor. However, that’s a lot easier said than done, especially in the digital market.

eCommerce competition is fierce. Amazon dominates nearly half of the US market, putting them in a position to easily undercut smaller competitors. Fear not, though; price and name recognition are not the only way to attract and retain customers. When you think about it, it’s obvious that the real “deal-breaker” is the customer experience.

The latest trends reveal that the quality of experience a brand provides holds the key to conversion rates. Data indicates that over 80% of customers would pay extra for a superior experience. So, that raises the question: how do you provide that superior experience?

Thankfully, AI tools are now at our disposal. With the power of chatbots, predictive analysis, and other assets, so-called “conversational commerce” is now within reach. And, this approach may well represent the future of eCommerce.

What is “Conversational Commerce?”

Conversational Commerce

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Conversational commerce is a strategy which involves the incorporation of messaging and chat apps like Messenger, WhatsApp, and WeChat into the customer’s buying journey. This allows for a more personalized, responsive experience.

In the retail context, conversational commerce refers to the intersection of shopping and conversational technology, such as live chat, chatbots, or voice assistants. Essentially, it's the process of interacting with customers through various messaging apps, social media platforms, or on-site chatbots to assist with shopping.

The goal is to enhance the customer experience by offering personalized, real-time engagement. This may include functions like:

  • Answering Questions About Products, Shipping, etc.
  • Providing Product Recommendations
  • Taking or Assisting With Orders
  • Providing Post-Transaction Customer Support

Conversational commerce allows you to connect with your customers on a more personal and immediate level. This can lead to higher customer satisfaction, better conversion rates, and increased loyalty.

Why Embrace Conversational Commerce?

The customer journey can be segmented into five phases: awareness, consideration, decision, retention, loyalty, and advocacy. With the right conversational commerce strategies and tools, you can touch base with your customer at each phase, enhance their shopping experience, and cultivate a lasting relationship from each interaction.

Conversational commerce offers a unique opportunity for you to engage with customers throughout their entire journey. There’s no need to employ intrusive pop-ups or banners. Instead, this approach fosters a two-way conversation; you’re present at every stage of the decision making process, but never to the point of being intrusive.

It allows for a stronger rapport with prospective buyers. It can also help retailers connect with buyers across different demographics and age groups.

Conversational commerce appeals to coveted Millennial and Gen-Z customers, who are accustomed to an integrated, tech-facilitated experience. At the same time, providing a smoother experience with easier access to support can also help brands connect with older, less tech-savvy customers. The appeal transcends social class and cultural divides as well.

Benefits of Conversational Commerce

To put a finer point on this, here are a few direct benefits for conversational commerce in the retail sector:

Create Personalized Shopping Experience

Conversational commerce allows you to provide a highly personalized shopping experience. You can offer product recommendations based on a customer's preferences and buying history, creating a sense of individual attentiveness.

Improved Customer Engagement

You can engage customers more effectively through real-time conversation. A conversational strategy lets you answer questions promptly, address concerns immediately, and guide shoppers through the buying process seamlessly.

Increased Sales

With conversational commerce, potential barriers to purchase can be addressed on the spot, increasing the likelihood of conversion. Also, upselling and cross-selling opportunities can be explored during the conversation.

Enhanced Customer Support

Post-sales service is as crucial as the buying process. Conversational commerce allows for immediate support, resolving issues swiftly and preventing potential negative reviews (or even chargebacks).

Gathering Valuable Insights

Each conversation is a trove of useful information about your customers. You can collect data from customer interactions, which can be analyzed for insights to refine marketing strategies and improve product offerings.

Customer Retention

Personal, prompt, and efficient service can greatly enhance customer satisfaction, fostering loyalty and encouraging repeat business.

Staying Competitive

As customer expectations evolve, businesses that offer conversational commerce will have a competitive edge. They show that they can meet modern demands for instant, personalized service, and will reap the benefits as a result.

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By integrating conversational commerce, retailers can deliver a superior, modern customer experience while also driving sales and fostering loyalty.

Know Your Customer & Your Content

Conversational commerce is not a single, unified trend. Rather, it’s a convergence of various current market dynamics.

It hinges on growing adoption of messaging apps like WhatsApp, Facebook Messenger, and WeChat, plus breakthroughs in AI chat technology. It’s also predicated on increased appetite for broader functionality within — and across — these platforms.

While these trends intersect in many ways, each one has its own distinct aspects. That’s why taking on a conversational approach to commerce demands a tailored strategy for maximum effectiveness. You need to:

Know Your Customer

It's essential to remember that not all customers use the same communication channels. If your target is a specific demographic group based on location, age, or interests, then demographic data can provide invaluable insights. A “one-size-fits-all” communication approach simply won't suffice. You need to clearly define who your audience is, then choose the most suitable platform and strategy that aligns with that audience.

Know Your Content

Once your audience and the optimal platform to reach them have been identified, the next step is to find the type of content that they find most engaging. Different demographic groups respond to different types of content. For instance, Gen-Z is more inclined towards video content. In contrast, white-collar professionals in their 30s and 40s tend to favor written articles. Younger audiences are consuming content on TikTok, while those professionals we mentioned are more likely to be found on LinkedIn.

Regardless of how robustly a piece of content is promoted, it won't resonate if it's not the kind of content that your target audience wants to see. That’s why it's crucial for you to understand your customers' responses to different types of content, then adapt your content to initiate meaningful conversations with. Otherwise, you’re effectively trying to adjust your audience to fit pre-existing content, which simply won’t work.

Deploy Technologies Effectively

AI is a remarkable technology with the potential to revolutionize your commerce strategy. However, it's crucial to remember that bots and other AI technologies don’t think; rather, they simply mirror what they observe. 

AI tools are proficient at simulating intelligence, but they can't truly generate it (at least not at the moment). They require continual monitoring and refinement. You’ll need to constantly test and revise, adjusting bots to make sure the voice these applications project to consumers reflects your brand and communicates appropriately with shoppers.

It's imperative not to unleash these technologies on the public without adequate preparation. They should be trained to make accurate recommendations and responses that best embody the brand's image. Establishing a pattern that doesn't adhere to customer service best practices could lead to ongoing issues. Even worse, it might lead to a PR debacle.

Once you deploy conversational commerce tools, it's crucial to monitor the launch closely to ensure they are functioning correctly and enhancing your brand image. Encourage their usage, and regularly review customer feedback. Use this data to tweak the process for better alignment with customer expectations.

Rise to Meet the “Micro-Moment”

Mobile marketing thrives on what we call “micro-moments.” This is the spontaneous, immediate desire of a consumer to satisfy a particular need, as it manifests in the moment.

Whether it's a quest for information or a product, the key lies in fulfilling that need at the very second it arises, in the place where the customer’s at. In a well-leveraged micro-moment, you’ll end up guiding a customer through three distinct stages:

  • I want to know
  • I want to do
  • I want to buy

The trick is to offer top-notch content that grabs the customer's attention and back it up with robust conversational technologies to deepen their engagement. The content piques the consumer's interest, and the engagement seals the deal. Again, a conversational commerce strategy allows you to be in that moment, and take advantage.

Mobile is increasingly becoming a primary sales channel. At the same time, AI technology is advancing at an exponential, even unpredictable rate.

Regardless of uncertainty, we can anticipate a surge in conversational commerce in the near future. By effectively harnessing this technology now, you can position your business for greater long-term prosperity and success.

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