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The Complete Guide to Conversational Commerce

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Everything you need to know.

What is conversational commerce? Why is it such a big opportunity? How does it work? What does the future look like? How can I get started?

These are the questions I’m going to answer for you right now.

Ready? Let’s do this.

“It seems pretty obvious now that the first inclination of most people when they want to talk to a friend or a family member is to text them. It’s crazy this hasn’t come to businesses yet. The first businesses that are able to fully embrace this and be as responsive and communicative as a friend will be able to drive significant new relationships with their customers and ultimately increased business. This isn’t a matter of if, just when. The technology is coming along fast.” — Josh Elman, VP Product at Robinhood and Venture Partner at Greylock

What is Conversational Commerce?

First off, people have been using conversation to drive sales and make customers happy since humans first began trading. From asking the store owner about which wine you should buy to messaging a boutique on Instagram to find if they still have that custom necklace left, conversation has always been — and always will be — a core part of commerce.

Today, conversations can be automated, and it is this automated experience that we are referring to when we use the term “Conversational Commerce”.

Definition: Conversational commerce is an automated technology, powered by rules and sometimes artificial intelligence, that enables online shoppers and brands to interact with one another via chat and voice interfaces.

Conversational experiences can add value to every part of the customer journey, ranging from when a customer makes their first order to answering a product-related question instantly.

“I think the first place we’ll see chatbots really take off in eCommerce is in customer support. Yes/No and other intent based filtering will make eCommerce support WAY more efficient.” — Ezra Firestone, CEO of Smart Marketer Inc.

Conversational commerce is possible on any platform that supports chat or voice bots (Facebook Messenger, Amazon Alexa, Google Home, Apple Business Chat, SMS, WeChat, LINE, Telegram, etc).

“I think chatbots and voicebots may become the future of commerce, as it relates to Gen Z. We optimize for efficiency and grew up on on-demand services, such as Uber, Lyft, Postmates, etc. Therefore, we expect the same when shopping. What better way to do that than interacting and shopping via chatbots and voicebots? That completely changes the game. It’s a whole new experience. It makes online shopping less tiresome and interactive and fun again!“ — Tiffany Zhong, Founder & CEO of Zebra Intelligence

Conversational commerce will even be able to read your thoughts. (… We’ll talk about this later.)

If you haven’t wrapped your head around conversational commerce yet, don’t worry. Here’s an example to help you visualize what conversational commerce is.

Example:

If you were to purchase something from Nordstrom online, after a week or two, you would receive an email encouraging you to leave a review about the product you purchased.

In order to successfully leave the review after being emailed, you will have to:

  • Open the email.
  • Scan through all the different call to actions. (I see at least 15 in the example email below.)
  • Click the review call to action.
  • Wait for the webpage to load.
  • Fill out your name and information.
  • Fill out your review.
  • Hit submit.

It’s a lot of work.

If Nordstrom were to use conversational commerce, which I’m sure they will, this experience would be 10x easier:

  • Open message.
  • Respond to message.

“As consumers increasingly adopt conversational UX, stores that adapt to this trend will have an advantage over those that don’t.” — Chris Woods, Sr. Software Developer at Liberty Mutual

Instead of sending you a bloated email, Nordstrom could simply message you on Facebook and ask what you thought of your new boots.

“We’re seeing businesses large and small drive tangible results using messaging as a marketing channel — from acquiring new customers to driving repeat sales. Businesses are turning to Messenger to help their customers find the perfect gift, book appointments, get personalized deals, receive shipping updates and so much more. Messaging helps businesses and their customers connect in a personal and productive way — all at scale.” — Andrew Kritzer, Product Manager, Messenger Platform.

Conversational commerce is powerful not only because it makes the automated interactions between the brand and the consumer feel so much more human, but because it reduces the number of steps the customer has to take to complete an action.

This all looks cool Matt, but how big of an opportunity is it really?” you might be thinking. “Why should I be paying attention to this now?

Great questions. You’re going to want to know the answers.

Conversational commerce is a huge opportunity. MASSIVE. Scroll down and I will explain.

Why Conversational Commerce Is Such a Big Opportunity

I know, ecommerce has been built on the back of email. It’s used for marketing, customer support, sales, retention, all of it. So…what benefits could conversational commerce possibly have over email?

I’ll tell you right now.

“All of the big trends in commerce over the past couple of decades have been in moving to where your customers are. Rather than forcing your customers to come to you, you go to where they are. The next generation of that is conversational commerce. It is inevitable that everyone is going to have to incorporate conversations inside of Messenger, and into social media platforms, in order to sell things more effectively.” — Phil Libin, Founder of All Turtles and Evernote

This is why high growth stores are implementing conversational commerce:

  • Conversational commerce enables two-way communication with the customer. It doesn’t just tell them things, but also learns from them, hears their questions, and builds a relationship.
  • Connect with 2–5x more customers than you’ve previously done over email. (You’re probably thinking “How the heck can you do that??”, don’t worry, I will explain this later.)
  • Stores using conversational commerce, in the right way, are increasing annual revenue by 7 to 25%.

These stats are amazing, and they are only the beginning. The future of conversational commerce is very bright.

Why? I’ll tell you right now.

Over 2,000,000,000 people are using messaging apps.

  • Adoption for messages apps is growing faster than social networks.
  • 37% of the world’s population is using messaging apps.

The massive distribution of this technology, and the emergence of conversational commerce, gives businesses the ability to communicate with each of their customers in a private, personalized, and two-way environment

“Our chatbots are already performing better than email, when comparing organic growth, read rates, and click-throughs. We know that fans want to feel close to their favorite artists, and this solution helps us connect them in a way that’s authentic. Email just doesn’t provide the same opportunity to show off your personality.” — Jeremy Kutner, VP of Web & Mobile at Warner Music Group

This is huge shift from the non-personalized mass marketing that social media platforms like Twitter and Facebook have popularized over the past decade.

On top of the adoption of messaging apps, did you know that over 40 million people own a smart speaker (like an Amazon Alexa) and that that number is expected to double in 2018?

Voice-enabled devices don’t stop there. 2.5 billion people are expected to be walking around with smartphones by 2019.

Conversational platforms are exploding, and it makes perfect sense. Conversation as an interface is the most natural way for humans to interact with technology.

“After a life of sitting at a desk my whole adult life I finally got a hemorrhoid. When I went to the pharmacy to pick something up, I couldn’t understand the differences between all the options. I was too embarrassed to ask the pharmacist about it, so I walked out. I went to Amazon and bought the first thing that looked right. It was totally wrong. We idealize human interaction, but for some things a bot is better.” — Andrew Warner, Founder of Mixergy and Bot Academy

Conversational commerce represents a paradigm shift in how brands and customers interact, and it will have major impacts on the entire customer journey. This is why conversational commerce is such a big deal.

“[Conversational commerce] will make it easier for businesses and customers alike, by removing the hurdles of having to use web sites or apps.” — Trond Stroemme, Technology Strategist at Nestlé

But how exactly does conversational commerce work? What are all the possibilities of conversational commerce?

I will explain that right now. Better yet, I will show you.

Scroll down to see.

How Conversational Commerce Works

When thinking about conversational commerce and how it will apply to your business, you need to think about four different types of experiences.

  1. Proactive / Automated. Example: A customer makes their first purchase ever, and the next day the store automatically sends them a nice message thanking them for shopping at that store.
  2. Reactive / Automated. Example: A customer just bought a new camera, but it’s not working correctly, so they message the store asking for assistance. The store automatically recognizes their question and sends them the correct guidance.
  3. Manual / One to Many. Example: The store just opened 10 new locations and they want to notify people in nearby areas. They send out a custom message to a targeted segment of customers that live within 10 miles of the new locations.
  4. Manual / One to One. Example: Sending a thank you message, and a coupon, to a customer who just shared a positive review and photo on Twitter.

“By analyzing shoppers’ habits, a conversation can be sparked regarding new deals or complimentary products.” — Dennis T Elder, Director of Technology at Bigfish Creative Group

Now that you know the four ways in which conversational commerce can be included in the experience, you need to figure out which parts of the customer journey would benefit from a targeted conversational commerce experience.

Here’s a brief example of a customer journey (Challenge: Can you imagine how you could pair these steps with conversational commerce?):

  • Visits the store online for the first time.
  • Adds a product to their cart.
  • Looks at a product.
  • Places order for the first time.
  • Order is shipped.
  • Order arrives.

Take a second to think about how you could use conversational commerce to improve the customer experience during each of these steps.

“Ecommerce services should consider building shopping experts that help guide the user towards the right purchase. This can work well when there’s a wide variety of options (e.g. in fashion) or when there’s complex products (e.g. calling plans).” — Ofer Ronen, General Manager of Chatbase at Area 120 (incubator operated by Google)

Done?No Matt, I want to see some real examples of conversational commerce!

General Manager of Chatbase at Area 120 (incubator operated by Google)Okay, OKAY, I hear ya!

Here is a list of conversational commerce experiences, and integrations, every store should have.

Ready? Scroll down for examples of chat and voice based conversational commerce.

Examples of Chat-Based Conversational Commerce

These are a few examples of chat-based conversational commerce. (“I’m looking for voice based examples, Matt!” well alrighty, I hear ya, just scroll down a bit more to see the voice examples!)

“Talking to virtual employees will play an increasingly pivotal role: customers don’t want to wait for answers to simple questions. And business don’t want to allocate resources to answer the same questions over and over.” — Phil Vanstone, Program Manager at Shopify Plus

Index of chat-based conversational commerce examples:

  • Seamlessly connect with the customer on Facebook Messenger.
  • Chat with the customer directly from the online store.
  • Touch base with the customer after they leave the store.
  • Let the customer know that their order has been made.
  • Let the customer know that their order has shipped.
  • Thank the customer after their first purchase.
  • Confirm with the customer that their package arrived and ask for their opinion.
  • Recommend products based on purchase history and customer data that’s been collected conversationally.
  • Ask the customer if they are ready to reorder a replenishable product.
  • Troubleshooting.
  • Answer a question.

Seamlessly Connect With the Customer on Facebook Messenger

The first thing you are probably wondering is, “How the heck do I message my customers on Facebook?”, the answer is quite simple: You need to implement the Facebook Messenger Checkbox.

What does the checkbox do? Here is the high-level explanation:

  • The checkbox automatically detects a customer’s Facebook profile when they view your store, even if it is the first time they have ever been there.
  • Stores place the checkbox next to the “Add to cart” buttons on product pages or during the checkout confirmation screen.
  • Customers who go through a flow involving the checkbox are able to give the store permission to send them future messages on Facebook.
  • Once the store has permission to send messages to the customer on Facebook, the store can start to send conversational experiences when they are trigged during the customer journey (like sending a message when a customer doesn’t complete an order).

Most stores currently collect email addresses during the checkout process, meaning that most shoppers who add an item to their cart are never connected over email with the store.

An implementation of the Facebook Messenger Checkbox moves the ability to connect with a customer to the top of the funnel. You have the potential to increase the number of customers you can talk to by 2–5x.

Chat With the Customer Directly From the Online Store

When someone walks into your physical store, they can ask you questions, point out products, tell you about what they are looking for, etc., and an employee at the store can help in real time.

How do you provide this same level of service for customers shopping online? By installing an automated on-site live chat.

“Integrating chatbots can dramatically enhance the pre and post sales customer experience. For the ecommerce store owner, she can free up time by delegating repetitive FAQs and product questions, for example, to the automated chat system.” — Mari Smith, Facebook Marketing Expert and Author of The New Relationship Marketing

If you’ve never seen one before, this is what it looks like:

You can personalize the chat experience to send the customer messages based on multiple data points, like their purchase history or what product they are currently looking at.

By using conversational commerce, you can automate conversations about questions, deals, and product discovery, helping the customer throughout their journey.

But Matt! What if they need to talk to a human?!” Great question my dear reader! In this situation the customer can automatically be connected to a human support agent or directed towards a phone number or email where they can get in touch with a real person to solve more advanced inquiries.

Touch Base With The Customer After They Leave The Store

When a customer adds a product to their cart and then doesn’t complete the purchase, the store can send a private message 1–4 hours later to the customer asking if they would like to complete their purchase or if they have any questions.

By using the Facebook Messenger Checkbox, and an abandoned cart conversational commerce experience, stores have already started increase revenue by 7–25%.

Let The Customer Know That Their Order Has Been Made

Making sure that the customer knows the status of the order is important. After spending money online, customers want to know that the order was made and that it will be shipped soon.

“Virtual employees will likely become essential on the eCommerce front lines as companies scale and become more global, when around-the-clock assistance, multi-language fluency and deep product, pricing, and inventory intelligence will be expected by consumers worldwide, on demand.” — Tomer Tagrin, CEO of Yotpo

By sending customers messages on conversational platforms like Facebook Messenger, you can keep them in the loop and enable them to request future notifications related to their order.

Let The Customer Know That Their Order Has Shipped

Similar to the order confirmation message, the shipping message keeps the customer in the loop and reduces the amount of times they will need to ask a human at the store for the status of their order.

Thank the Customer After Their First Purchase

After a person has completed their first purchase at a store, it is a good idea for the store to send out a personal note thanking them for their business.

“Fundamentally, email is a channel that brings people back to the website or app to complete the user experience. However, chatbots and voicebots present new user flows that can be potentially handled natively. It’s very likely you will be able to complete an order, provide payment or authorization without ever going to the website or app. This is where chatbot and voicebots will go beyond the capabilities of email and make the user experience not only more efficient, but almost magical.” — Joseph Hsieh, Ecommerce Advisor

Doing this over conversational platforms enables the interaction to be more personable and meaningful than over email. Not only does the language sound natural, similar to how a friend or family member would talk to you, but it enables the relationship to immediately strengthen by allowing the customer to continue the conversation.

Confirm With The Customer That Their Package Arrived and Ask For Their Opinion

This message can be sent after the package has been detected as delivered, or an estimated 14 days after an order has been made (depending on which data is available to the store).

Stores can collect data such as:

  • Satisfaction with the product on a scale of 1 to 5.
  • Detailed written review of the product.
  • Pictures or videos of the customer using the product.

Recommend Products Based on Purchase History and Customer Data That’s Been Collected Conversationaly

If a customer walks into a store, they can get help from an employee. They can tell them what they are looking for, their preferences, the purpose of the purchase, etc.

Replicating this type of experience online hasn’t been as straightforward, especially over platforms like email.

Conversational commerce makes this very easy. Instead of just getting sent recommendations based on what is trending, stores can message customers questions that enable them to make very precise recommendations.

Help Reorder a Replenishable Product

There are certain types of products that customers will want to purchase over and over again, things like: hand lotion, face cream, food, and paper towels.

Using customer data related to each of these items, it is possible to predict how long it takes someone to consume a good, and then automatically send them a message asking if they need to reorder that item.

This is helpful for the customer and the business.

Troubleshooting

It is common for a customer to have questions about a product they recently purchased.

  • Can I wash this in cold water?
  • How do I shoot wide angle video?
  • It won’t turn on, what do I do?

Instead of requiring a person at the store to manually answer each of these questions, conversational commerce can be used to automatically detect the question and immediately respond with the correct answer or guidance.

Answer a Question

When a person walks into a store to look at a product, they have the ability to ask an employee questions.

  • Does this come in a small?”
  • Can this camera go underwater?
  • Do you carry red shoes?

Stores can use conversational commerce to answer this pre-purchase questions.

“[I think virtual employee’s, like chatbots and voicebots will play an important role in the future of ecommerce] because the product questions are usually the same ones over and over, which is a core use case for chatbots.” — Larry Kim, CEO of Mobile Monkey and Columnist at Inc and CNBC

But Matt! Show me the voice examples!

Yes, great idea! Let’s do that right now.

Scroll down to see conversational commerce examples for voice platforms.

Examples of Voice Based Conversational Commerce

These are a few examples of voice based conversational commerce. Keep in mind that voice bots cannot currently send customers proactive messages; they can only talk to a user after they have initiated a conversation.

“Personal assistants such as Alexa, Siri, Google and the use of voice will become increasingly popular. Brands need to integrate skills and technologies to stay relevant with customers’ expectations that they can simply ask a personal assistant a question.” — Anju Sharma, Artificial Intelligence Product Manager at HP Inc.

Index of voice based conversational commerce examples:

  • Deal of the Day
  • Finding Nearby Stores, Classes, Events, and Rentals
  • Product Recommendations
  • Check Order Status

Deal of the Day

Stores can enable their customers to ask Alexa, or another voice bot, to check if there are any current deals that store is offering.

Finding Nearby Stores, Classes, Events, and Rentals

Stores can help their customers locate nearby stores, classes, events, and rentals.

Product Recommendations

By asking the customer a few simple questions, stores can help recommend products that the customer is likely going to be interested in.

Check Order Status

Customers can ask their voice bot to check on their recent order.

Now that you have a pretty good concept of how conversational commerce can be used over chat and voice… let’s dive into something even more interesting.

Let’s look at examples of how artificial intelligence can be used to supercharge conversational commerce.

Let’s do this!

How Artificial Intelligence Can Improve Conversational Commerce

What is artificial intelligence? How can it be used to improve conversational commerce? What are examples of artificial intelligence being used with conversational commerce?

Don’t worry! I will answer these questions right now.

“I think we’ve already seen some forms of machine intelligence have a massive impact on the e-commerce industry. The fact that Stitchfix can form opinions on customer’s preferences without ever meeting them should scare brick and mortar retailers who believe their in-person relationships provide valuable insights to their brands. They do this through scaling the effectiveness of their stylists, but they also do this through proprietary machine intelligence algorithms, that in theory could also begin to inform new product creation in the same way Netflix uses their customer data to seed the ideas behind blockbuster hits.” — Lee Edwards, Former CTO of Teespring

If you already have a good grasp of what artificial intelligence is, or more specifically machine learning, then you can skip this part. If you are new to artificial intelligence, and you’re not exactly sure how it works, then spend the next 9 minutes watching this entertaining and extremely educational video that has over 2 million views:

Definition: Machine learning is an application of artificial intelligence (AI) that provides systems the ability to automatically learn and improve from experience without being explicitly programmed. Machine learning focuses on the development of computer programs that can access data and use it learn for themselves.

Artificial intelligence can be used to improve conversational commerce in two categories:

  1. Understanding exactly (or at least very closely) what a customer is saying or asking, and passing this data in the correct format to the bot so that it can respond accurately. (Example: The person says “Do you have dresses in my size that are good for summer?”. The bot can then use artificial intelligence to detect that the person is looking for a “dress”, it can translate “in my size” to the size the store has on file for the customer speaking, and it can look through reviews of the dress to see if sentiment shows that this dress is “good for summer”.)
  2. Predicting what a customer most likely wants to say or do next. (Example: The person just added a pair of shoes to their cart. The bot recommends another product that they will likely also purchase.)

Artificial intelligence is one of the fastest growing fields in technology, and it is expected to improve rapidly over the next ten years.

“AI is going to continue to change ecommerce in a big way. Due to the speed in which AI can react and be detail oriented, you are able to both service customers, as well as market to them in a way that feels one on one, but in a very scalable way. As AI progresses, you will be able to run ads to someone very specifically for example ‘I see that you are traveling to Seattle today. It is currently raining there and I notice you have not purchased a rain coat in a couple of years. Would you like one delivered to your hotel room?’ The experience will be better for both the consumer and the brand.” — Erik Huberman, CEO of Hawke Media

If you feel daunted by the complexities and unfamiliarity of artificial intelligence, don’t worry. Not only is artificial intelligence going to become more advanced, it is going to become integrated into easy to use products that enables departments like customer support, sales, and marketing to apply artificial intelligence to their daily tasks and decisions.

You might even be using artificial intelligence at your business today and you don’t even know it.

But, forget about today! Want to hear what crazy things will be possible in the future?

I’ll tell you all about it right now.

Arnav Kapur from MIT Media Labs showing off his mind reading device, AlterEgo.

The Future of Conversational Commerce

Matt, if all of this stuff is already happening, what could the future possibly look like? It’s going to be crazy!”. Yes! You are very astute in your observations, the future is going to be crazy.

Here’s what’s happening:

  • Within the next 10 years, over 80% of people in the world will likely own a personal computer (maybe it’s a smart phone, maybe it’s something else).
  • Every device will support both text and voice-based bots.
  • Artificial intelligence will be able to understand and remember everything you say, or ask, no matter how simple or complex. Talking to a computer will be as natural as talking to a human.
  • You will have a rapport with artificially intelligent entities that you can talk to.
  • You will be able to see digital interfaces (augmented reality) overlaid on top of the world around you (like looking at someone’s shoes as they walk by and instantly seeing their price as it hovers in space).
  • Computers will be able to read your mind (and you will be able to read theirs).

Yes, you read that correctly — computers will be able to read your mind. Instead of looking at your phone, or opening your computer, or even asking Alexa something out loud, you will be able to simply think “buy that jacket he’s wearing” as you walk by a stranger with a cool jacket, and the transaction will go through.

This is going to change everything.

The line where you end and the computer starts will disappear; It will be like your conscious being suddenly connected to an internet connection.

You will be able to think directly to a store. “What’s she wearing?”, “How do I wash this?”, “Send me new socks”, “What time is my package arriving today?”, etc.

You should start building the groundworks of your conversational commerce strategy now, because the immediate applications are hugely valuable, and honestly this future technology isn’t that far off.

And you know how I know? Because people have already started to build mind reading devices.

As an example, look at AlterEgo, a mind reading device MIT’s Media Lab.

AlterEgo is a closed-loop, non-invasive, wearable system that allows humans to converse in high-bandwidth natural language with machines, artificial intelligence assistants, services, and other people without any voice — without opening their mouth, and without externally observable movements — simply by vocalizing internally.

How crazy is that?

The world is changing at a rapid pace, and as always the most exciting technology is right around the corner.

The stores of the future will be built on top of these platforms, the jobs of the future will be based on managing them, and this transition has already started.

The only question now, really, is are you going to put in the work to adopt conversational commerce and thrive, or are you going to wait until someone else shows you what success in this field looks like?

Not sure how to implement conversational commerce into your business? Again, don’t worry, I can point you in the right direction.

Let me show you how to start using conversational commerce right now.

How to Implement Conversational Commerce Today

This is no secret, but my team and I have spent the past few years building Octane AI, where we have been entirely focused on designing conversational experiences for brands like Kiehl’s and GoPro, and celebrities like Maroon 5, Poppy, and Jason Derulo.

Octane AI on the front page of The New York Times business section.

And guess what? We are focused entirely on conversational commerce, and it’s been working very, very, well.

How well? Let me walk you through it.

Our Conversational Commerce Experiment

During the first four months of 2018 we quietly ran an experiment with 25 up-and-coming ecommerce stores using Shopify. These are stores that individually make $10k to $1mil a month in revenue.

⭐⭐⭐⭐⭐ “OctaneAI is HUGE success! In just 90 days I’ve seen almost 3x as much engagement from my abandoned cart messages compared to my AC emails.” — Sweat Tailor

Here’s What Happened

  • The 25 stores made over $750,000 in additional revenue from Octane AI’s conversational commerce technology.
  • Most stores increased their monthly online revenue by 7–25%.
  • Over 15,000 products were sold as a result of a customer talking to a store’s Octane AI bot.

⭐⭐⭐⭐⭐ “This product is a new sensation for e-com conversion. Incredibly easy to setup and requires no real management. The conversions are 2–3 times higher than we’ve seen in the past on our platform and a no-brainer for any of our future installs.” — Aerosmith Store

How Octane AI Works

Octane AI enables stores to turn on conversational commerce with the click of a few buttons (no programming). It connects with your store, your conversational platforms (like a Facebook Page), and all the third party applications you use to power email, rewards programs, reviews, support, and more.

Easy, right?

If you have a Shopify store, you can get started with Octane AI in minutes by going here.

If you are using Magento, Woocommerce, or another ecommerce platform, sign up for early access here. We would love to help take your store into a more profitable future.

magnoliaThe Complete Guide to Conversational Commerce

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