What is conversational commerce?

How does conversational commerce work?

Conversational commerce integrates communication channels into e-commerce platforms; businesses engage with customers directly through messaging and voice-based interactions. Automation and AI-driven tools underpin its quick responses, provide personalized recommendations and guide customers through purchasing processes. Before automation and AI, a chatbot built with branched logic or a real person guided the would-be consumer.

Conversational commerce tools are often connected to back-end systems such as customer relationship management (CRM) software, inventory databases and payment gateways. This integration enables companies to offer real-time assistance, manage transactions, and gather valuable customer data to refine marketing strategies and improve the customer experience with personalized suggestions or touchpoints.

Different types of conversational commerce

There are several methods businesses employ for conversational commerce:

• Messaging and chat apps. Platforms such as WhatsApp, Facebook Messenger and Instagram Direct let businesses connect with consumers in their preferred communication channels.
• Click-to-message ads. These ads, displayed on websites or social media, enable consumers to converse with a brand directly. For example, Google's click-to-message ads connect potential customers with businesses using SMS (Short Message Service) or other messaging apps.
• Chatbots and AI. Automated AI-powered chatbots provide personalized shopping assistance, answer questions from users and guide customers through the entire checkout process.
• Voice assistants. Virtual assistants, including Amazon's Alexa and Google Assistant, facilitate voice-based shipping interactions, enabling customers to place orders, track deliveries or ask product-related questions.
• SMS marketing. Brands use text messaging to send promotional offers, order updates and personalized recommendations.
• Live chat. Many e-commerce sites offer live chat features that connect customers directly with human agents for immediate support or personalized shopping experiences.

Benefits of conversational commerce

Conversational commerce offers businesses and customers a powerful way to connect, enhancing consumer shopping experiences while simultaneously driving business sales. Companies streamline the customer journey and improve engagement by using real-time, personalized interactions through messaging platforms, chatbots and voice assistants.

Key benefits of conversational commerce include the following:

• Generate qualified leads. Messaging potential customers helps identify high-quality leads based on their inquiries and interests. This approach pinpoints higher-value leads as being more likely to purchase after a conversation.
• Reduce abandoned carts. Automated messages or reminders nudge customers toward purchasing, improving conversion rates. Brands send reminders or discounts to encourage the completion of the transaction.
• Obtain customer data. Interactions through chat platforms generate valuable insights into customer behavior and preferences. This zero-party data, willingly provided by customers, is the most helpful consumer data source.
• Enhance customer engagement. Personalized, real-time communication -- in a place and at a time comfortable and convenient for the consumer -- fosters long-term customer relationships.
• Improve customer support. Immediate responses to queries during an online shopping transaction enhance satisfaction and reduce friction in the purchasing process.
• Enable personalized recommendations. AI-driven tools analyze customer data to provide personally tailored product suggestions, driving repeat business through upsell and cross-sell opportunities.
• Streamline the customer journey. Conversational commerce simplifies decision-making and boosts immediate sales by offering support at each purchase process step. It also improves a brand's accuracy and predictability of future customer journey mapping.

Conversational commerce use cases

Applicable across various business scenarios, conversational commerce helps companies enhance customer service, boost sales and improve operational efficiency. By integrating conversational tools into customer interactions, businesses can automate processes, personalize communications and create more engaging experiences.

There are many everyday use cases for conversational commerce in business processes:

• Customer support. Provide quick answers to common questions through chatbots or live chat. For instance, Apple and its customers use Messages for Business in iOS to assist with product inquiries and support.
• Personal shopping assistants. Brands, including H&M and Nordstrom, use chatbots to offer personalized product suggestions based on customer preferences. They also collect data such as interests, styles and past purchases to improve recommendations for future sales.
• Order placement. Voice assistants and chat platforms facilitate seamless order processing, from the My Starbucks Barista voice ordering app to the interactive Dom from Domino's interactive chatbot.
• Appointment scheduling. Service-based businesses, including salons and medical practices, enable customers to book appointments directly through messaging tools such as chat or voice assistants.
• Product recommendations. AI-powered chatbots analyze past purchases and browsing behavior and suggest relevant products, like the clothing brand Perry Ellis' approach and its AI-powered recommendations.
• Promotions and discounts. Businesses of all kinds send personalized offers to customers using SMS or messaging apps to encourage purchases.
• Postpurchase support. These conversational channels also assist with order tracking, returns and feedback collection.

Conversational commerce vs. social commerce

While conversational and social commerce aim to drive sales and improve customer engagement, they use different methods and platforms. Conversational commerce focuses on real-time interactions between brands and consumers through messaging and voice-based technologies. In contrast, social commerce involves selling products directly through social media platforms and integrating shopping features within social networks.

Noteworthy differences between these two approaches include the following:

• Channels used. Conversational commerce uses messaging apps, chatbots and voice assistants across various channels such as websites, SMS platforms and customer support portals. Social commerce occurs within social media platforms -- such as Instagram, Facebook and TikTok -- where integrated e-commerce features support direct purchasing within those social channels.
• Engagement methods. Conversational commerce emphasizes personalized, interactive communication, answering questions and guiding users toward a purchase. Meanwhile, social commerce media channels use social proof, influencer marketing and native shopping features, enabling users to purchase directly on a platform.
• Customer journey. Conversational commerce supports the entire purchasing process, offering assistance and support even after buying. On the other hand, social commerce typically focuses on discovery and immediate purchase through social feeds. Both encourage and complete a sale, but their deployments vary. Social commerce is often a top-of-the-funnel entry point in purchasing, while customer lifetime value grows from cross-sell and upsell opportunities with conversational commerce. Properly tied into a CRM or other database, conversational commerce better tailors future purchase recommendations with repeat business.