11 May 2021
Although conversational commerce is still seen to be in its infancy, the last 12 months have acted as a catalyst for its maturation as 2020 saw a huge change in how consumers shopped and interacted with brands. As lockdowns across the world have forced brands to go digital as a way of maintaining relationships with their customers, conversational commerce has surged and although many things will return to the way they were before, this is a change that is set to stay.
But what is conversational commerce? It is a term coined in 2015 to describe how chat apps would change the way we shop online. It has hugely evolved since then to encompass all digital customer communication via voice, chat, Whatsapp, Facebook amongst others, to enhance the user experience. But what does this mean in real-world terms for brands and their customers and how must it continue to evolve, particularly when it comes to mobile?
The mobile opportunity
4.88 billion people across the planet own a smartphone and many of them are in constant use. Research from King University concluded the average American taps, swipes or clicks their phone 2,617 times a day. With this level of device engagement, it is a very obvious decision by brands to look to engage and make sales with their customers via mobile.
There are two statistics that perfectly sum up the potential and the challenges of the mobile opportunity.
Nearly two-thirds of spending is expected to originate from mobile devices by 2025 according to Juniper Research.
Basket abandonment is significantly higher on mobile devices. According to e-commerce specialist Barilliance it sits at 85.65%, 12% higher than on desktop.
Customers are willing to spend on mobile devices, but they are much more likely to give up partway through a purchase. There are plenty of reasons why basket abandonment is higher on mobile. For example, a user may simply wish to ‘digitally window shop’, with no real intention of purchase. However, there are areas that merchants have the power to do something about.
Firstly, making the most of being able to deliver an omnichannel experience for customers by incorporating conversational elements that help to keep them engaged. Secondly, and most importantly, stopping customers abandoning a purchase due to a difficult checkout process. Many of us have started an online transaction, only to decide punching in card and personal data over a number of slow loading pages is simply too much hassle. Address these two elements and brands are in a position to take full advantage of the mobile opportunity.
Step one: getting the conversation right
Conversation has always been a key element of making a sale and just because trade has moved online, doesn’t mean that need has disappeared. Conversational commerce addresses that need by introducing a range of ways that customers can interact with a brand; social media, chatlines and chatbots – the list is growing. What this means for the customer is that they have the option to interact on a purchase in the way most convenient to them. Smooth and engaging interaction with the brand helps to turn site visitors into customers.
The concept, while still finding its feet in Europe, is already prevalent across Asia, demonstrating how effective it can be. The WeChat revolution in China speaks volumes as to the benefits of marrying conversation with commerce. However also in Indonesia for example, sellers and customers were using Blackberry Messenger 10 years ago to sell and buy products. This prompted Blackberry to launch Blackberry shopping and Blackberry checkout in 2016. According to a 2018 McKinsey study, this kind of “informal selling” generated up to USD 3 billion in the country in 2017.
Conversational commerce in action
Let’s look at some more recent examples. LEGO is a brand that prides itself on its in-store experience. To move this experience online, it now has an inbuilt chatbot called Ralph. This is designed to give the advice and recommendations that customers expect from in-store staff and allow them to be sure they are making the right purchase. H&M offers a virtual stylist; it takes a customer’s tastes and provides recommendations with a chatbot that incorporates gamification elements to ensure maximum engagement.
These are just two examples of the highly personalised, flexible experiences that are now offered to customers and that help to avoid basket abandonment. However, although retailers may have engaged with their customers flawlessly up until this point, they have a final hurdle before crossing the customer finish line – payments.
Conversation commerce needs conversational payments
Payment is the point of sale that typically has the potential to add the most friction and in turn the riskiest point for losing a customer that had, up until this point, been engaged with a brand. And when the customer is using a mobile device, the risk only increases.
This is where conversational commerce must evolve to include a true conversational payment experience. By this we mean allowing a user who has been engaging with a brand via WhatsApp for example, to complete their purchase, without having to leave this communication channel. By seamlessly integrating payment, friction is significantly reduced and as a result the chances of losing a customer due to an arduous check out process. The whole process is designed with the customer in mind to make purchases faster and with as little hassle for the customer as possible. For the brand delivering this service, it is incredibly simple, they integrate with a company that offers this type of flexible payment without compromising on security or functionality.
Conversational commerce will undoubtedly be a huge trend for businesses, not only as the pandemic forces them to reach customers through digital channels but going forward as customers grow accustomed to this intuitive and engaging type of online shopping experience. However, conversational commerce will only be able to reach its full potential when conversational payments are fully integrated into the customer journey. Only when this vital step happens will merchants be able to deliver a truly frictionless, omnichannel experience that allows them and their customers to reap the benefits of the seamless customer journey, leaving them free to focus on what they are good at – retailing.