By: Jim Iyoob, Chief Customer Officer, Etech
Have you considered implementing live chat features on your business website? If not, there are many reasons you should. For example, marketing experts say that implementing live chat support generates a 305 percent return on investment and a 20 percent increase in conversion rates.
As a direct result of all this, more companies are implementing live chat services, making it an integral part of the customer experience. However, is it right for your business? Here are a few metrics to include when measuring the effectiveness of live chat services and calculating your return on investment.
Forecasted Live Chat Volume
As with all company investments, the ROI of implementing live chat support is directly impacted by economies of scale. Generally speaking, the more customers you expect to engage with live chat support, the more support agents you will need. The more support agents you need, the higher the cost, which has a negative impact on investments.
However, as conversions increase, this should offset the cost of agents, thereby generating a high ROI. In short, when live chat volume continues to rise, the ability to maximize ROI will depend on keeping the cost of the live chat support low. If the cost of implementing live chat services increases parallel to the revenue it brings in, ROI will be negatively impacted.
Another initial investment that will affect economies of scale and ROI is technology. This can be for better or for worse, depending on efficiency, the human element and how it is applied. For instance, some companies have mastered the art of creating live chat bots.
These bots speak with customers and allow them to respond by selecting from a list of predetermined answers. If the bot is unable to assist, the customer may be forwarded on to a human agent via live chat, email or even phone. Some bots are so advanced that they can respond to typed responses. This type of implementation reduces costs drastically after the initial investment.
Other technology costs may include furnishing a department with new computers and licensing software to run your live chat support service in-house. This can be very expensive, leading many companies to outsource the function.
Value of Average Sale
In order to calculate if conversions are high enough to offset live chat costs, you must look at the value of an average sale. The higher the value of an average sale, the better the opportunity to maximize ROI, even with a large team of agents to field multiple ongoing queries. However, small sale volumes mean that more agents will eat into company profits.
The good news is that live chat offers the perfect opportunity for upselling and cross-selling i.e. increasing incremental sales. When customers purchase without engaging with the brand, they may choose the least expensive option. However, live chat agents may be able to persuade them to purchase more expensive options or a few add-ons to increase the value of the sale.
Monthly Website Traffic
Another way to measure ROI is through monthly website traffic. However, you can look at more than just the number of visitors to measure the true effect of live chat services. Here are some of the metrics you should take into consideration when measuring ROI based on website traffic:
- The percentage of visitors retained from the week or month before
- The average length of time a customer spends on your website
- Most active times of day
- The conversation rate
- The bounce rate
Gross Sales Margin
There are many different elements to consider when looking at ROI. However, the final calculations are perhaps best described by the gross sales margin. The gross margin is calculated by subtracting the cost of goods sold from the net sales revenue. What is the purpose of the gross sales margin? It signals to a business how much of each dollar that the company makes actually remains inside the company as profit.
Returning to the concept of economies of scale, it’s well to note that if a company is efficient, this dollar value will increase over time. As discussed earlier, the cost of live chat support services should not increase parallel to the revenue obtained through conversions. This helps to widen the profit gap as more and more conversions are made over time.
Inc. states that 51 percent of customers prefer live chat so they can multitask while problem-solving, and an additional 21 percent prefer live chat support so problem-solving doesn’t interrupt their shopping. Moreover, when customers use live chat services, 92 percent are satisfied with the feature.