How chat and voice tech are changing retail

There is no shortage of companies, white papers, studies and advice blogs aimed at helping retailers write perfect emails to their customers before and after they visit stores (Google "email marketing" if you don’t believe us.)

Yet email isn’t the only avenue available to companies trying to communicate with customers outside of stores. Retailers and brands now have more online and mobile communications tools at their disposal than ever before — mobile messaging; text, voice and video chat; and even website and in-app content and community forums. These tools enable more direct, real-time communication with customers than email could ever hope to offer.

"There are various factors driving this trend," Adam Pressman, partner in A.T. Kearney’s digital transformation practice told Retail Dive in an email. "Timeliness, scale and costs/value are all in play. Also, with e-commerce continuing to grow, it’s now necessary to support interactions outside of the store in order to succeed. It’s no longer a nice-to-have capability."

"Retailers definitely need to be mindful of the balance between being helpful and being annoying. They should never push information on customers."

Adam Pressman

Partner, Digital Transformation, A.T. Kearney

As retailers sort through new options, at least one long-standing rule about customer engagement still applies, according to Pressman. "Retailers definitely need to be mindful of the balance between being helpful and being annoying," he said. "They should never push information on customers."

It’s a rule that retailers may feel tempted to break as they try to beat the competition, win customer loyalty and unify their offline, online and mobile engagement efforts.

"Retailers need to think about the before, during and after of purchases and tailor their communications and interactions accordingly," he said. "Combining context and content can create a very powerful understanding of behavior and the ability to shape the interaction.

Opening the chat channel

Mobile messaging and chat applications are not new tools for retailers, but increasingly look like the best way for immediate, direct contact between consumers and retailers. Automated chatbots running off mobile messaging platforms are another mobile-first avenue for consumers to engage with their favorite brands.

Retailers such as Sephora have gamely explored their potential, offering a variety of capabilities through chatbots on Facebook, Kik and elsewhere, and Facebook Messenger has promoted itself aggressively as a home for chatbots.

The first generation of these bots were somewhat limited in what they could, but now artificial intelligence is being used to create the next generation of chatbots, capable of learning from customer interactions and switching to live human helpers at the moment a customer need to do so.

However another evolution in chat communication between retailers and customers already may be upon us. In June, Apple announced plans for Apple Business Chat, a dedicated chat service for customers to communicate with the staff of businesses, including retailers, for the types of customer service exchanges that otherwise would take place by phone or email.

Not to be out-done, WhatsApp announced it will soon test new features aimed at helping businesses communicate more easily with their customers via the platform. WhatsApp noted in a blog post that businesses such as clothing stores and bakeries already accept orders from some of their customers through WhatsApp. But "the way this happens now on WhatsApp is pretty rudimentary. We've heard stories of shopkeepers who use WhatsApp to stay in touch with hundreds of customers from a single smartphone, and from people who are unsure about whether or not a business on WhatsApp is authentic."

Turning chat into dollars

Facebook deserves some credit for promoting chat as a medium for exchanges between customers and specific retailers and brands. In early 2016, it began to enable brands to easily create chatbots on Messenger, and in many instances it has paid off for those companies, according to Facebook's own research.

Sephora, for example, increased in-store makeover bookings by 11% by allowing customers to use Messenger to schedule them, according to a Facebook Business spokesman.

American Eagle Outfitter’s Aerie chatbot has exchanged at least 4 million messages with customers since launching in late 2016, and the retailer experienced a 25% click-through rate from Messenger to its web site, the Facebook spokesman said. In addition, 75% of Aerie bot users were new to the brand, he said.

"Chat tools are certainly a more innovative form of communication which gives consumers a more personalized and seamless experience around the clock, allowing shoppers to gain advice from staff that they would otherwise have to go in store for."

Charlotte Pearce

Analyst, GlobalData Retail

Translating chat exchanges into potential shopping moments is significant, as Charlotte Pearce, analyst at GlobalData Retail, told Retail Dive that such tools help enable retailers to offer the type of personal shopping and support experiences that increasingly are seen as keys to success in retail.

Other research from Facebook shows that customers are becoming increasingly comfortable using chat tools to engage in a personalized way with businesses they patronize. About 61% of Facebook Messenger users told the social network that they "like" getting personalized messages from businesses. Another 67% said they expect to chat with these businesses more frequently over the next two years.

Pearce also pointed out that use of chat platforms is exactly the kind of mobile-first approach that multichannel retailers should be taking as they react to changing consumer habits and attempt to build stronger online relationships with customers. With a plan for interacting via mobile and some luck on their side, retailers and brands can turn these interactions into sales and loyalty.

Conversational and content-driven commerce

Chat isn’t the only new communications tool available to retailers and brands. Voice-activated virtual assistants, such as Amazon’s Alexa, Apple’s Siri, Google Assistant and others represent a nascent format for communication between sellers and buyers. More retailers and brands have also been taking cues from social media, and are starting to incorporate more and different kinds of written and visual content on web sites and mobile apps.

Both of these strategies use online and remote mobile communication to form stronger bonds with customers. Virtual assistants do so literally through conversational commerce, though companies still exploring their potential for ongoing customer contact and personalization. While Alexa has dominated conversational commerce early on, and Google is just now connecting the dots between voice chat with Google Assistant and opportunities to shop via voice with Google Express partners like Walmart, it’s not clear how many voice assistants the market can support, or if every brand’s audience really wants to interact with one.

"This technology is not a one-size-fits all approach," A.T. Kearney's Pressman said. "Retailers will need to understand frequency and types of customer interactions to determine what will work best for their customers and for them."

But, just as AI can help chatbots become more effective and useful, the AI behind virtual assistants increasingly will allow them to tailor their direct exchanges with customers to the individuals involved. That can make product and service recommendations "not just about what ‘others like you’ have done, but really about what is relevant to you —the customer — and your context," he said.

Meanwhile social media already to be an effective tool for broadcasting to and communicating with customers about promotions, and as platforms like Instagram to the extent that some retailers and brands have begun to create their own on-site and in-app social and content feeds, bringing the stories and community aspects of the form under the umbrella of their own brands.

Doing so is part of the necessary process of continuing to improve and enhance web sites and mobile apps, Pearce noted. "While retailers improve the basic functions and features of apps, they must also create more relevant content to encourage visits, such as how-to videos, for example," she said, adding. "Including social media content and user-generated content on retailers’ web sites and apps is also beneficial, particularly for clothing and footwear retailers. It allows them to showcase products in a more natural way."

Pressman said the key is to let customers share such content with the brand and with other customers. "I love the approach of offering compelling stories and thus creating emotional connections with customers, and allowing them to share with each other," he said.

Email remains important

As a wider variety of customer contact tools are becoming available, it may seem like email, which lacks immediacy as a real-time, two-way, open channel is fading in importance, but that is not the case.

A recent study from ReturnPath found that about one in five commercial emails worldwide fail to reach its intended inbox, in many cases getting diverted to a spam folder. Hence some four out of five commercial emails do reach the intended recipient. Some segments, such as apparel, even achieve a higher deliverability rate than that.

"Retailer emails are still effective, particularly for keeping retailers front of mind for consumers, and for reminding shoppers that they have abandoned their shopping basket online or promoting particular campaigns," GlobalData’s Pearce said.

Adding more personalization to email communications, both pre-purchase and post-purchase, also can make email a more effective medium. Personalized subject lines have proven to achieve higher open rates and click-through rates, according to an Experian study. A welcoming email after a customer visits a retailer’s Facebook page offers an opportunity for low-pressure, non-sales-focused engagement, and post-purchase emails that let customers know their business is appreciated and not forgotten after the transaction is approved, also are important and considerate.

Still, Pearce acknowledged that shoppers can easily get annoyed if they are emailed too often, or if the content of emails is deemed not relevant. If retailers cross that line, they risk emails being deleted by shoppers – or worse, consumers may unsubscribe altogether, thus totally losing the relationship with the shopper.

Monitoring open rates and clicks can give companies clues about how receptive customers are to being emailed, but ultimately, retailers and brands also need to see a pay-off on their end for email to be worth the effort.

It’s critical to not just look at a traditional metric like open rate, said Pressman, but also be able to see the connections between those emails and purchase behavior or other desired outcomes. "Engagement and loyalty are not the same thing, so understanding how both are working is extremely important," he said.

Tying it all together

Chat — whether it’s text with a human or a bot, voice via a virtual assistant, or even video-based (the latter being something retailers haven’t explored yet, but could be a future factor) — are opening new channels of communication between brands and their customers. Social media-influenced community and content strategies also offer new paths for interactions. Meanwhile, email remains an effective tool, as long you aren’t craving real-time contact.

"It’s imperative to have the tools and technology to capture and link interactions across channels — capabilities that are definitely improving. While not simple, it’s now easier than ever before to know if a customer has contact via social, email, voice, etc."

Adam Pressman

Partner, Digital Transformation, A.T. Kearney

But all of these technologies operate now as fairly self-contained channels. Having a comprehensive view and awareness of when, why and how often each channel has been used for interactions — and which party initiated each interaction — is going to be very important in the future. It will be key to determining overall effectiveness of contact strategies, and to ensuring that retailers and brands don’t cross the line into stalker behavior.

"It’s imperative to have the tools and technology to capture and link interactions across channels — capabilities that are definitely improving," Pressman said. "While not simple, it’s now easier than ever before to know if a customer has contact via social, email, voice, etc."

Also, though chat in particular enables a real-time channel that goes beyond email, brands would of course love to communicate with customer while they are logged-in on the company’s e-commerce site or mobile app. If a brand representative can be chatting with a customer while that customer is logged-in, it allows for a more tactical approach — identifying the customer, and being able to link together transactions and past interactions in a comprehensive view.

"We expect to see more and more retailers pushing existing customers to log in before contacting them — either via an app or via online — so that they can have the best context possible to support them," Pressman said.

Customers already have come to expect a certain amount of context awareness and personalization in their communications with brands. There are three main stages of consumer expectation relative to these interactions, according to Pressman:

Expect to execute: Consumers expect retailers to use the information they’ve already provided to support their needs. If they’ve ordered products, they expect that the retailer should know it, without having to be told.
Supposed to solve: When issues arise, the retailer should proactively find ways to help the customer. If a shipment is delayed, or a product is out of stock, for example, the retailer should be able to let the customer know, or perhaps even solve it before the customer knows.
Right to recommend: Once they build customer trust in these other areas, retailers then earn the right to recommend new products/services that relate to my past interactions, but are allowed to not be perfect. This might be compared to a specific friendship the customer has with someone who maybe isn’t always right, but knows enough about to recommend things that make sense.

Ultimately, retailers may be of the mind that they need to interact with every customer across every channel, but their real focus should be on understanding key interactions and use cases and how to best enable them. In some cases, interacting via chat may be most effective, but in other cases, sending an email post-purchase with product installation details could be a better relationship builder that makes customers feel they are getting more personalized treatment.