October 06, 2021
Imagine a customer having a brand concierge in their back pocket, someone who knows them well and is always ready to help. There’s no lengthy set up process, no downloading an obscure app. This mobile concierge will talk to customers over a popular messaging app, say, WhatsApp or Facebook Messenger. (That is, of course, if the apps aren’t down like earlier this week.)
We’re giving this emerging digital channel of customer engagement a name: “Chat Commerce.” Finally, marketers will be able to shed their product-pushing garbs and put on the warm and welcoming concierge coat. It’s the start of nurturing real customer relationships.
Does the customer want to place an order and make a payment? No problem. How about tracking a delivery? That’s easy. What about resolving issues and engaging with a live agent? Let’s make resolution happen right now. Through relevant, prescriptive or suggestive messages, Chat Commerce turns irritation into helpful conversation in a fast and frictionless way.
This story gets even better; a massive opportunity awaits marketers who jump on this early. Chat Commerce is a grassroots movement on the precipice of explosive growth. There will be 3.5 billion messaging app users worldwide by 2025, and brands are only beginning to tap into this digital channel of engagement.
In less developed markets, for instance, mobile smartphones are the only game in town. Free messaging apps are some of the most heavily used. Chat Commerce has the potential to ignite a revolution of customer-to-customer commerce, or C2C, whereby people with goods, talent or knowledge can offer their products and services over these apps.
Case-in-point: WhatsApp is piloting a business directory in São Paulo, Brazil, that lets customers search for local shops and services. WhatsApp also reported that over 175 million people globally use the service daily to message a WhatsApp business account.
In more developed markets, the younger generation of consumers prefer popular messaging apps over email and traditional channels when interacting with brands. Gen Z, for instance, does not put much importance on communicating with a live person, the CMO Council found. More than 20 billion messages are exchanged between businesses and users monthly on Facebook Messenger, which is the most popular messaging app in the United States.
But we wouldn’t be doing our job if we didn’t highlight Chat Commerce’s risks. For starters, there’s the risk of popular messaging apps going down like they did earlier this week. Small businesses that rely on Chat Commerce took a pretty big hit, according to the New York Times.
Also, if marketers make the same mistake of merely pushing products and not being a helpful concierge over Chat Commerce, there will be backlash. In other words, don’t spam the app with useless promotional messages. People love their mobile devices and apps and will take action in the form of brand blocking and brand abandonment.
Done right, though, brands can achieve something truly special. Helpful interaction after helpful interaction nurtures a customer relationship that can be measured by a lift in customer lifetime value, or LTV. This is the holy grail of marketing.
It should be noted that LTV is painfully elusive to achieve. In a recent study, the CMO Council found that the majority of CEOs (53%), heads of sales (49%) and line-of-business leaders (44%) leverage LTV to drive strategic decisions. Yet, 47% of marketers admit to tracking LTV slightly well or not at all, while 68% rate their customer acquisition cost to LTV ratio as only average, below average or very poor.
The bottom line: Chat Commerce can build trust and rapport that customers and brands jointly crave, which will lead to repeat business and higher LTV. That’s why Chat Commerce should be a crucial part of your channels of engagement. When used correctly, it will foster a superior customer experience. For more, check out our strategic brief Instant Interaction Driving Business Traction.
Tom Kaneshige is the Chief Content Officer at the CMO Council. He creates all forms of digital thought leadership content that helps growth and revenue officers, line of business leaders, and chief marketers succeed in their rapidly evolving roles. You can reach him at firstname.lastname@example.org.
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