CRM BUYER SPECIAL REPORT
Behind the Hushed Demand for Live Chat

Although live chat has captured only a tiny share of contact-center interactions, some verticals have done well with this channel, particularly when it enables true collaboration between users and customer-service agents, according to a report from the Yankee Group.

Specifically, the financial services, retail and catalog, and technical-support camps have reaped favorable results when users can do more than simply exchange chat messages with customer-service agents, according to Art Schoeller, Yankee Group senior analyst and author of the report. To be successful, Schoeller told CRM Buyer, both parties might jointly navigate Web pages about new bank accounts, view different portions of an online catalog or attempt to troubleshoot computer hardware. However, he added, this collaborative chat strategy has not worked for all verticals.

In fact, just 1 to 2 percent of all contact-center communication now takes place via chat and Web collaboration, according to the Yankee Group study. That paltry figure contrasts with 74 percent via live voice (phone), 8 percent each via e-mail and Web self-service, 10 percent via IVR (interactive voice response) and 2 percent via speech recognition.

Human Nature

"Human behavior is hard to change, and the move to channels [other than the phone] will not solely be driven simply by their availability," the Yankee Group report noted.

In fact, chat is unlikely to gain much momentum in the next few years, according to Schoeller. "Does chat reduce talk time?" he said. "Generally, no. It takes more time to type."

Indeed, many contact-center clients "own but don't use" chat capabilities, according to Laura Preslan, research director at AMR Research. For example, several CRM companies, such as Chordiant, Onyx, PeopleSoft, Pivotal, SAP and Siebel, include chat in their contact-center offerings. Best-of -breed vendors like HipBone and LivePerson (Nasdaq: LPSN) also offer chat functionality.

Potential for Productivity

However, despite chat's lackluster uptake in contact centers at present, the technology has the potential to reshape how companies sell products and services online, said Robert LoCascio, chief executive of LivePerson. The company has expanded its offerings to focus more on marketing in addition to sales, LoCascio told CRM Buyer.

"Instead of just chat, why can't we send out pop-up windows that say, 'Welcome to our Web site. We have a special offer for first-time visitors.'" LoCascio said. "Many customers go to a Web site for research. If you can engage them during this research, the conversion rates are high."

For example, Forex Capital Markets has increased its interaction with customers since installing LivePerson's ServiceEdition click-to-chat application more than a year ago, according to Marc Prosser, chief marketing officer for the online currency trading company. The four-year-old firm has expanded to about 160 employees from 70 a year ago.

"Using chat has enabled us to grow while keeping costs down," Prosser told CRM Buyer. "Traditional channels like e-mail and phone are more costly." He added that although Forex has people answering the phone and e-mail, "when there's high activity, we move them to chat."

Challenges to Chat

Still, chat faces some significant challenges in its push toward the mainstream. When it first was introduced, the technology promised to increase agents' productivity by letting them serve multiple customers at one time, shifting back and forth from one communications channel to another.

This has not happened, largely because most companies still are not set up so that agents can engage in online chat when they are not on the phone, AMR's Preslan said. "A lot of companies haven't figured out how to segment inquiries by channel."

Use of chat will increase in the next few years, she noted, when universal queuing, which allows all contacts to come in on the same queue, takes off.

However, Schoeller expressed some doubts about universal queuing, saying that although everyone began talking about it in the late 1990s, not many people put it into practice. The value proposition of moving in this direction still is not that strong, he added.

Making Headway

In the end, though, chat is making progress on some fronts despite setbacks and is likely to become more accepted as a communications channel over time.

At year-end, for example, LivePerson plans to introduce a system that integrates chat, e-mail and a knowledge base. LoCascio said he expects this approach will be popular, noting that his company's challenge is to make sure each of the integrated system's pieces is strong. "Call centers are finally at the point where they want an integrated solution," he noted. "They want one single vendor who is solid."