What is conversational commerce? Examples, types, + benefits
Conversational commerce refers to how e-commerce brands and retailers use messaging and conversational technology to improve the shopping experience. Learn how to use conversational commerce to boost sales.
By Jesse Martin, Staff Writer
Last updated August 16, 2023
In today’s digital age, customer interactions have evolved, and businesses must leverage creative ways to engage with their audience. Conversational commerce has emerged as an innovative solution where conversations drive experiences, shape customer journeys, and drive business success.
Conversational commerce is the intersection between e-commerce and messaging, where lines between brick-and-mortar retail and digital spaces blur. From chatbots and AI-powered automation to messaging platforms and voice assistants, learn the various facets of conversational commerce to build meaningful relationships with customers and to stay competitive in your industry.
- What is conversational commerce?
- How does conversational commerce work?
- Benefits of conversational commerce
- Common types of conversational commerce
- Conversational commerce use cases
- How to get started with conversational commerce
- Examples of conversational commerce
- The future of conversational commerce
- Conversational commerce FAQ
What is conversational commerce?
Conversational commerce has changed a lot in the last decade. Today, conversational commerce can refer to the numerous ways e-commerce retailers use messaging and conversational technology, like artificial intelligence (AI) and bots, to enhance and support the shopping experience.
Conversational commerce examples include:
- Embedding a widget on an e-commerce page for shoppers to ask questions
- Messaging-first marketplaces, where consumers sell directly to consumers
- Using business text messaging to stay in touch with customers and share promotions
- Employing in-app messaging between customers and shoppers
- Integrating payments and user authentication when shopping in third-party messaging apps like WhatsApp or WeChat
Conversational commerce is everywhere, and it’s up to brands to enable the conversational experiences customers have come to expect.
Similarly to how the lines between brick-and-mortar retail and e-commerce experiences are blurred, the ways messaging intersects with e-commerce, sales, and support are, too. The customer journey is complex, and conversational technology constantly creates new opportunities for brands and customers to connect.
How does conversational commerce work?
Conversational commerce refers to the numerous touchpoints along the customer journey where messaging, chat, and conversational experiences influence the purchase decision.
With the integration of chatbots, automation, and connections to e-commerce and payment platforms, defining a singular conversational commerce experience becomes challenging. Here are a few examples of conversational commerce in action.
- Proactive chat on mobile or webpages: Businesses initiate chat conversations with visitors on their websites or mobile apps, providing real-time assistance and personalized recommendations.
- Click-to-message ads on webpages and social media: Ads on websites and social media platforms prompt users to initiate conversations via messaging apps, enabling direct communication with the businesses.
- Utilizing third-party messaging apps like WhatsApp or WeChat: Customers engage with retailers, complete purchases, or make payments through popular messaging apps, creating seamless and convenient transactions.
These practical illustrations highlight how conversational commerce manifests in various contexts, emphasizing the importance of interactive and personalized communication in driving customer engagement and conversion rates.
Benefits of conversational commerce
Small and large businesses alike can reap the benefits of conversational commerce. While the technology is constantly evolving, here are some of the key ways companies benefit from it today.
- Improve customer retention
- Create upselling and cross-selling opportunities
- Gain more customer data
- Get qualified leads
- Reduce abandoned carts
Customers want interactions to feel authentic and personal and want past interactions to inform future conversations. So instead of being treated like a one-off ticket, they’re recognized for their patronage of your brand.
Messaging via web, mobile, and social channels is the best avenue for these experiences, weaving each interaction into a larger dialogue between the customer and the brand. The result is better customer experience (CX), seamless conversations across channels and touchpoints, and a better bottom line for the retailer.
Conversational commerce can help boost sales when you engage your customer at the right time. A strategically placed web widget, a proactive notification, and a great AI chatbot can increase engagement by suggesting products and showcasing promotions.
The bot on this page (bottom right corner), for example, can direct you to help center articles to assist with frequently asked questions. A retailer might use bots to clue you in on a discount code for first-time shoppers. If you were a repeat customer, the bot could recommend a discount code based on previous exchanges.
Customer conversations are a goldmine for data. You can even use customer conversations to create a language model to train and improve chatbots. These conversations are also relevant sources of information that you can leverage for product feedback.
Conversational data, when stored securely, can authenticate customers and offer a more personalized experience. Rather than being treated like a stranger, they’re recognized and appreciated as the loyal customers they are.
Before your customer speaks with an agent on your live messaging platform, it’s likely they’re interacting with automation. In the past, this was a hurdle for small businesses to deploy, requiring specialized engineering, pricey bots, and a larger staff.
Today, out-of-the-box automation solutions are readily available in conversational commerce platforms–meaning you don’t need developers to get up and running. One of the key features of this sort of automation is how it can route to the right person for the job. Bots can ask prospects questions in the chat and collect information to qualify the lead or authenticate the customer, ensuring they speak with exactly who they need to.
Abandoned carts are a persistent challenge for online retailers. However, data indicates that implementing clever interventions can significantly increase the likelihood of customers completing their purchases. These interventions include:
- Leveraging conversational chatbots
- Deploying proactive notifications or messages
- Ensuring a quick initial response time
To combat abandoned carts, a best practice in conversational commerce is to ensure messaging options are readily available on your e-commerce pages. Additionally, sending proactive messages to keep customers engaged before they check out can be highly effective.
Moreover, leveraging social messaging apps and AI-powered conversational commerce chatbots presents a unique advantage. These tools enable customers to complete purchases directly within the conversation, eliminating the need to leave the app or navigate to a separate page.
Common types of conversational commerce
Your businesses can incorporate conversational commerce into the multiple channels you use to communicate with customers. Here are the primary applications businesses use this strategy.
Messaging and chat apps
Businesses can use messaging and live chat apps to provide product recommendations, answer customer inquiries, and facilitate seamless transactions, all within the same conversation. A single agent can field multiple conversations at once, providing an edge over phone calls. The proactive nature of a chat app allows agents to engage with website visitors who would otherwise quietly lurk on the page, creating extra opportunities for interactions.
Voice assistants, such as Alexa, Google Assistant, and Siri, have become integral parts of consumers’ lives. Voice assistants allow consumers to purchase products, find product information, and access services through voice-based conversations. Conversational commerce in voice assistants enables hands-free, intuitive interactions, and can resolve customer queries.
Chatbots and AI
Chatbots and AI use advanced natural language processing and machine learning algorithms to simulate human-like conversations, answer frequently asked questions, and assist with transactions. These systems let businesses offer cost-effective, 24/7 customer support while streamlining processes. Chatbots and AI can recognize customer preferences, track purchase history, and offer relevant suggestions, aiding the delivery of a seamless customer journey.
Conversational commerce use cases
Conversational commerce has rapidly transformed the digital landscape, providing businesses with unprecedented opportunities to engage customers in personalized, real-time conversations across various channels. You can incorporate this approach to customer interactions into many areas of your organization to create an improved experience.
With a messaging widget embedded in an app or on a product page, a customer can message the brand to ask questions or seek help. Embedding messaging where your customers already are is a great way to reduce friction and encourage conversion. Customer service can use live chat opportunities to have conversations in real time.
On social messaging apps, customers can chat with brands with verified business profiles. Instagram enables conversational commerce experiences right in the app, with features that make it easier to shop, share, and chat.
Conversational commerce bots can automate the process by deflecting to FAQ pages, routing the conversation to the right salesperson, or even carrying out a fully automated purchase.
With a unified customer profile across all channels, conversational data from voice assistants, phone calls, and messaging get routed to the same place to provide clear insight into the customer. Agents and AI can tap into this information to provide the customer with tailor-made recommendations. Rather than spamming the customer with suggestions they have no interest in, they can learn about the company’s most relevant offerings.
Live streaming and “social shopping” platforms
In some ways, social media can be seen as the new mall. With social shopping, vendors large and small can share their products and interact with customers on camera. This is fertile ground for brands to connect products with shoppers and create purchases. For example, Instagram has features for businesses like live streaming and shopping tabs that make product discovery and instant query responses easier than ever.
Click-to-message ads are a prime example of conversational commerce that goes beyond mere hype. You may have seen enticing Instagram Stories ads prompting you to send a message, or noticed a banner link that opens a customer service conversation in Messenger. These ads demonstrate the tangible impact of conversational commerce.
With precise ad targeting, the likelihood of customer engagement and conversion increases significantly. With click-to-message ads, businesses can harness the power of conversational commerce to drive meaningful customer engagements and streamline communication processes effortlessly.
Search engine result business profiles
Google Business Messages offers a convenient way for customers to chat with businesses and brands, whether they’re discovered through search results or maps. This method is especially popular among customers who prefer chatting over making phone calls.
Businesses implementing simple automation processes can address frequently asked questions with a single touch. The beauty of Google Business Messages lies in its ability to empower businesses, regardless of their size, to scale their support operations without needing additional staff. It’s a win-win situation that enhances customer communication and enables businesses to handle inquiries effectively.
Generative AI is significantly impacting the future of conversational commerce and revolutionizing how it engages with customers. With generative AI, businesses can create highly realistic and dynamic bots, and voice assistants that can hold natural conversations and understand complex requests.
Generative AI’s ability to generate human-like responses and adapt to different conversational styles enhances customer satisfaction and engagement. Businesses can create more authentic, seamless, and efficient customer interactions, ultimately driving customer loyalty, increasing conversions, and fostering long-term business success.
How to get started with conversational commerce: 4 best practices
Entrusting automations with your company’s success can feel like a leap of faith, even when it’s just one aspect of your business. Here are four best practices to help you start on the right path.
1. Be proactive
Proactive messages connect customer service teams with customers by sending a message via their mobile app or web messenger. Businesses have full control over who sees which messages and when they’re sent. You can also decide if an agent or bot will field the response.
Proactive messages add to the customer experience by removing pain points encountered throughout the buyer’s journey. Bots can direct customers to FAQ pages, so they don’t need to open a ticket or call an agent. Configure proactive messages with triggers to follow up with customers who abandon their carts.
2. Adopt AI and automation to streamline support
On top of proactively reaching out to customers, businesses can use AI and automation in conversational messaging to intelligently triage interactions based on customer intent, sentiment, and language. AI can also route customers to the appropriate agent based on:
- Conversation priority
- Agent skill
- Agent capacity
- Agent status
For example, if a customer speaks Spanish and has a question about their bill, AI can direct them to a qualified agent who also speaks Spanish. Customers spend less time on hold, and agents spend more time resolving issues.
3. Use rich messaging types to embed offers inside conversations
Rich communication services (RCS) builds upon the foundation laid by SMS by adding new capabilities to business text messaging. RCS works across various platforms, helping to better link smartphones and computers. Businesses can send large messages, gather conversation and CX analytics, and share high-quality media files.
Not every customer is comfortable using third-party apps like WhatsApp or Telegram. The advanced messaging features of RCS reduce the need to use them, so you can still achieve engaging CX messaging with every customer.
It should be noted that not all phones have RCS functionality. Google has incorporated RCS into Android phones worldwide, but Apple has yet to adopt it. While RCS isn’t applicable to every interaction, it can still provide a competitive edge in certain interactions.
4. Personalize interactions by integrating systems and software
Your bots and messaging capabilities will be limited by the accessibility of information. If information silos prevent teams from sharing information or accessing buyer profiles, agents and bots won’t be able to personalize customers’ shopping experiences.
To be effective, agents need to know who the customer is and have context surrounding the customer’s previous interactions. AI bots can provide insight to agents in their workspace and suggest ways to fix the issue. Use a unified interface to ensure customers receive natural conversational shopping every step of the way.
Examples of conversational commerce
Conversational commerce use cases are rapidly expanding with advances in technology. Look to these conversational commerce examples for inspiration on how you can implement these strategies in your own processes.
Conversations are at the core of Instacart, where a complex orchestration of agents, shoppers, and customers happens almost entirely in messages. The customer can chat with the Instacart shopper to swap out products as part of their purchasing experience.
Further, because they leverage customer data and a conversational customer relationship management (CRM) platform, agents don’t need to jump between channels and workspaces to get to the root of the issue. They have relevant customer data coming in on the ticket.
Although Instacart is not a retailer, it enables third-party messaging commerce experiences between brick-and-mortar retailers and customers—a testament to the blurring lines of e-commerce and the real world.
Tile + Ada
Tile creates Bluetooth finders that attach to easy-to-lose items, like keys, wallets, and pet collars. In partnership with Ada, a conversational intelligence platform, Tile provides seamless conversational support with the help of sophisticated AI chatbots.
Tile saved costs on seasonal headcount, while also seeing revenue grow from the customers who were served at faster rates—all thanks to the conversational, commerce-enabling chatbot, according to Justin Michaud, former senior customer support manager. The faster response time increases the likelihood of customers completing a purchase—and making another in the future.
“In under a month’s time, the Tile team had automated, on-brand answers for most of our frequently asked questions, saving our team valuable time and resources.” Justin Michaud, former senior customer support manager at Tile
Personalization is the norm in luxury. For private members club Soho House and its subsidiary brand Mollie’s Motel, messaging is a way to provide luxurious, personalized experiences at scale.
The company relies on conversational CRM to bring together new touchpoints on its customers’ journey. Messaging only streamlines communication while surfacing opportunities to upsell and cross-sell. According to insiders, messaging typically drives a 30 percent increase in spending and overall higher customer satisfaction.
If you’ve stayed at a Four Seasons Hotels and Resorts property in the past few years, you may be familiar with the conversational concierge in the company’s app (and your other messaging apps).
Room service is only the beginning of the story. Four Seasons guests can make purchases, request upgrades, and ask for bespoke recommendations—all inside of a continuous conversation. A leader in the guest messaging and digital concierge space, Four Seasons Chat is an award-winning, fully integrated conversational commerce platform that is now a widespread standard in luxury hotel experiences.
Fútbol Emotion is a specialty retailer of football merchandise, selling to more than 3 million customers and supporting 10 languages. Satisfying such a large and diverse customer base can be challenging, but Fútbol Emotion does it easily by implementing a scalable conversational commerce strategy.
Using Zendesk, the company has broken through barriers in their customer service operations. Chatbots deliver personalized service thanks to the custom flow builder. Conversations that used to be scattered across platforms are now in a unified workspace, so Fútbol Emotion can deliver great service on Twitter and WhatsApp. Customers can still interact via their preferred channel, and agents can respond quickly without missing a beat.
“If a customer wants to know the status of an order and starts a conversation with our support team, the AI bot knows who they are without asking for the order number, because that metadata is already stored in the system.” Daniel Hsu, e-commerce director at Fútbol Emotion
The future of conversational commerce
Businesses can incorporate conversational commerce strategies into their everyday workflows to deliver a seamless and personalized customer experience. As technology advances, embracing conversational commerce will be crucial for businesses looking to stay ahead in a competitive marketplace.
Conversational commerce FAQ
Check out these answers to common questions regarding conversational commerce
What is the difference between conversational commerce and social commerce?
The terms “conversational commerce” and “social commerce” are often used interchangeably, but there are important distinctions between the two. Social commerce specifically refers to the buying and selling of products on social media platforms. Conversational commerce can take place on social media, company websites, and messaging apps.
Why is conversational commerce important?
Conversational commerce is predicted to grow up to 18 percent every year until 2026, making it necessary for businesses to adopt to remain competitive. It makes it easier for customers to shop, providing a positive and personalized experience.
What is conversational commerce vs conversational marketing?
Conversational commerce pertains to the interactions between a business and its customers throughout the sales process. Conversational marketing seeks to raise customer awareness of the company and provide them with personalized information.
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