Conversational Commerce in 2023: A Complete Guide to Strategy, Benefits and Best Practices

Conversational commerce, also referred to as chat commerce, messaging commerce or conversational business, is transforming the ecommerce landscape. It involves leveraging messaging apps, chatbots and AI assistants to replicate the fluid, interactive communication of the in-store experience online.

According to Insider Intelligence, conversational commerce represents a $102 billion opportunity as consumers increasingly embrace messaging and voice assistants for shopping. Leading platforms like Whatsapp, Facebook Messenger and WeChat have over 2 billion monthly active users combined.

In this comprehensive guide, we will:

• Explain what conversational commerce is and its growing popularity
• Discuss the key benefits driving adoption
• Provide best practices to develop an effective conversational strategy

Let‘s examine how brands can leverage conversational interfaces to differentiate the customer experience, boost sales and build loyalty.

What is Conversational Commerce?

Conversational commerce refers to the use of chat, voice and messaging to interact with customers across the shopping journey – from product discovery to post-purchase service. It brings the personal experience of talking with an in-store associate into the digital world.

Gartner defines conversational commerce as:

"Computer-mediated natural conversations with customers across their preferred digital touchpoints."

It involves brands communicating conversationally via:

• Chatbots – AI programs that conduct text or voice conversations with customers at scale.
• Voice assistants – Allowing customers to interact using natural voice conversations.
• Live chat – Direct real-time messaging between human agents and consumers.
• Messaging apps – Facilitating sales and service conversations on popular platforms like WhatsApp.

Conversational commerce brings together AI chatbots, live chat, and messaging platforms to engage customers through contextual, interactive experiences.

Conversational interfaces enable continuous dialogues where businesses can interact personally with each customer to drive discovery, purchase and support.

According to Forrester, the top goals companies aim to achieve with conversational commerce are:

• Increased sales conversions
• Improved customer experience
• Higher customer satisfaction
• Reduced service costs

Properly implemented, conversational commerce allows brands to differentiate themselves by providing amazingly personalized, frictionless customer journeys.

Key Benefits of Conversational Commerce

Adopting conversational commerce strategies delivers the following advantages for businesses:

1. Enhanced Customer Experience

The #1 benefit of conversational interfaces is superior customer experience leading to higher satisfaction. Messaging apps and chatbots create fast, frictionless shopping experiences by:

• Providing 24/7 availability – Bots answer customer questions in real-time, even after hours or while customer service teams are busy.
• Increasing convenience – Shoppers can find information, browse products and complete purchases all within a messaging app.
• Personalizing engagements – AI chatbots can recommend products and offers tailored to individual customer needs and preferences.

According to PwC research, 75% of consumers rank friendly, personalized and convenient experiences as key factors motivating them to purchase from a brand. Streamlined conversational interfaces deliver on these expectations.

For example, Sephora‘s chatbot on Facebook Messenger recommends beauty products customized for each user. The bot asks about skin type, preferences and previous purchases to suggest relevant items. Customers can also easily check out within Messenger itself.

Sephora‘s Facebook Messenger chatbot provides personalized recommendations based on customer data and preferences.

With helpful, frictionless conversational experiences, brands can boost satisfaction metrics like Net Promoter Score (NPS) and Customer Effort Score (CES).

2. Increased Sales Conversions

Conversational commerce also directly increases sales conversions by engaging customers at the buying stage. According to Forrester, chatbots can deliver conversion lift ranging from 15-30%, while live chat can improve conversions by 20%.

Messaging conversations build relationships with prospects, leading them to purchase. Tactics like abandoned cart reminders and personalized promotions sent through messaging apps increase purchase completion.

For example, home furnishings brand Wayfair increased conversions by 10% by letting customers complete purchases through their conversational bot on Facebook Messenger.

And Club Factory saw a 2.5x increase in conversions by implementing personalized chatbot shopping experiences on multiple messaging platforms.

3. Higher Customer Loyalty

The highly contextualized experiences enabled by chatbots and messaging results in improved loyalty.

According to a Retail TouchPoints survey, 61% of customers are more likely to return to a brand that personalizes engagements.

Chatbots build rich customer profiles to understand preferences and behaviors. They can then use this data to deliver relevant suggestions, recommendations and offers tailored to each person.

The unmatched convenience of messaging also enhances loyalty – it facilitates ongoing conversations that keep customers engaged. Issues can be addressed quickly through channels customers already use daily.

For instance, clothing brand Asos interacts with over 4 million customers per year via chatbots on Facebook Messenger and WhatsApp. These personalized, convenient experiences have increased satisfaction and loyalty.

4. Enhanced Competitiveness for SMBs

For small and medium businesses, conversational interfaces help level the playing field when competing with leaders like Amazon and Walmart.

According to Forrester, the top reason SMBs adopt chatbots is to better compete with larger players. Messaging commerce allows smaller brands to differentiate through highly personalized experiences.

And with chatbots handling common questions and conversations at scale, SMBs can cost-effectively manage higher volumes of customer interactions. This enables punching above their weight class.

Conversational commerce has been a game changer. According to Statista, SMB share of ecommerce sales jumped from 39.4% in 2018 to 52.7% in 2022, while Amazon‘s share decreased in the same period. The rise of messaging commerce has been a key factor enabling smaller brands to effectively compete.

Adoption of conversational commerce has allowed SMBs to increase market share vs. retail giants.

Top Platforms for Conversational Commerce

To implement messaging-based commerce, brands need a conversational platform that enables engaging customers across channels like chatbots, messaging, voice etc.

Leading options include:

When evaluating conversational commerce platforms focus on aspects like:

• Integrations – With your CRM, ecommerce store, payment systems etc.
• Chatbots – NLP capabilities, dialog management tools and analytics.
• Omnichannel – Support for messaging apps, SMS, video, voice etc.
• Analytics – Reporting on conversations, customers, campaigns and more.

Choose an end-to-end solution that seamlessly combines the tools needed to execute messaging commerce strategies.

Best Practices for Conversational Commerce

Here are proven best practices to develop an effective conversational commerce initiative:

Offer 24/7 Availability with Chatbots

Deploying smart chatbots enables conversational engagement at scale 24/7. They provide always-on customer service and sales support.

According to Dan Gingiss, author of Winning at Social Customer Care, "A huge benefit of chatbots is being able to answer simple questions outside of normal business hours."

When implementing chatbots:

Use AI and NLP – So bots can understand natural conversations and respond appropriately. Look for machine learning capabilities so bots improve continuously through real interactions.

Provide clear fallbacks – Have paths to seamlessly escalate complex issues from bots to human agents. Combining automated and human conversations delivers the best experience.

Monitor conversations – Use tools like Dialogflow‘s Analytics to identify areas where bots underperform. Refine responses to improve effectiveness.

Leading pre-built bot options include Watson Assistant, Dialogflow, Liveperson and more. Or you can build custom bots tailored to your needs.

Meet Customers on Messaging Apps

With over 5 billion active users globally, messaging apps have become the digital hub where consumers spend their time.

When developing your conversational commerce strategy, focus messaging efforts on platforms popular with your target demographics and geographies.

For instance, WhatsApp has over 2 billion users worldwide. Fashion brand H&M deployed a chatbot on WhatsApp in India, where the app has over 400 million users. This targeted omni-channel presence increased engagement.

Follow each app‘s guidelines for implementing bots and integrating payments. For example, the Facebook Business API enables Messenger integration. Provide a seamless, native conversational experience.

Personalize with Customer Data

Leverage what your chatbot knows about each customer to personalize engagements and recommendations. According to eMarketer, 40% of customers spend more when offered personalized products or services.

With user permission, collect information like:

• Preferences – Product types, styles purchased
• Behaviors – Browsing, cart abandonment
• Profile – Birthday, anniversary, location

Track metrics on customer journeys to offer relevant cross-sells, promotions and discounts at the right time. Keep profiles updated by capturing new behaviors and preferences during ongoing conversations.

Streamline Mobile Payments

Frictionless payments are key for converting conversational discovery into sales.

Integrate m-commerce payments into your messaging apps to allow completing purchases without leaving the conversation. Top options include Stripe for WhatsApp, Braintree for Messenger, and Shopify Pay for messaging commerce.

Providing payment convenience removes roadblocks to conversion. Enable features like one-click re-ordering and saved payment details to create smooth flows from cart to checkout.

Optimize Post-Purchase Service

The conversational approach also enables superior ongoing service. Chatbots can update customers on order status, returns and more via familiar messaging apps.

Be proactive in engaging users post-purchase – don‘t make them search for answers themselves. Resolve issues quickly to prevent dissatisfaction. Integrate systems like Shopify and Zendesk to manage orders and ticketing conversationally.

According to Don Peppers, author of The Customer Experience Field Guide, "You have to fix problems fast, remember the history, and follow up to make sure the resolution worked." Conversational interfaces enable this level of service excellence.

Continuously Improve Experiences

Use feedback and dialogue analytics to continuously refine your conversational commerce initiatives. Send in-app surveys to capture customer satisfaction across purchase stages:

• Post-conversation – Assess chatbot effectiveness in resolving inquiries
• Post-purchase – Gauge satisfaction with ordering, fulfillment, product condition etc.

Fix points of failure – review conversations where customers got frustrated or churned. Improve bot responses and handover procedures based on real examples.

By regularly optimizing based on voice of customer insights, you can ensure your strategy stays sharp as expectations evolve.

Key Takeaways

Done right, conversational commerce delivers unrivaled convenience with personalization to drive sales, satisfaction and loyalty.

Brands seeking competitive differentiation through superior customer experiences should pursue messaging-based commerce strategies.

Key pointers for execution:

• Meet customers on the messaging platforms they already use daily.
• Build intelligent chatbots to engage users 24/7 with relevant interactions.
• Provide personalized product recommendations based on customer data.
• Enable frictionless in-app payments to complete transactions.
• Continuously improve through customer feedback and conversation analytics.

With the right approach, conversational commerce allows brands to provide that human touch digitally – building connections that keep customers coming back. Adopt these best practices to remain competitive in 2023 and beyond.