What Is Conversational Commerce?
By Carl Bleich
What Is Conversational Commerce?
Table of Contents
Conversational commerce has become increasingly important for online retailers, especially as advancements in generative AI have greatly increased the impact these conversations can now have on e-commerce.
By facilitating engagement through AI-based text and voice assistants, social messaging apps, and other innovative conversational commerce tools, e-commerce websites have a seamless way to connect with potential customers while also providing them with a personalized experience.
Natural language processing techniques turn these conversations into structured data that can be used to gain further insights into what customers are expecting from online stores. With AI-enabled chat apps and other conversational commerce tools, businesses are able to better understand their customers, provide personalized services, and even upsell and cross-sell products.
At its core, conversational commerce is about leveraging technology to create engaging customer experiences, which in turn leads to increased loyalty and satisfaction for brands over time. This makes it an integral part of any successful digital marketing strategy for online stores.
In order to reap the full benefits of a conversational commerce strategy, retailers need to make sure they have a robust plan in place that takes into account the various types of conversational commerce platforms available. They also must consider what their potential customers might be looking for on their websites or platforms and what might make online customer journeys the most seamless.
By integrating AI technology into their shopping experience, digital commerce businesses can make sure that they maximize the potential of conversational commerce and use it to enhance customer service experiences and increase sales. Brands have learned that they can engage customers and ensure they have a positive customer experience thanks to conversational commerce.
Defining Conversational Commerce
Conversational commerce is quickly becoming a key component of the e-commerce customer experience. Companies are now using conversational commerce to better understand their customers and, in turn, offer them a better experience online.
By providing end consumers with a simple way to interact, companies are able to serve customers more effectively and collect valuable zero-party data.
What Is Conversational Commerce in E-Commerce?
Conversational commerce is the process of using automated conversations and technologies with the help of AI and machine learning to create more engaging customer experiences when shopping online. It has been greatly advanced and technologically upgraded recently thanks to the advancements of generative AI.
With conversational commerce, customers can get quick answers to important questions, easily purchase items without having to navigate through entire websites, and receive helpful suggestions based on their previously collected customer data, including personalized product recommendations.
At Bloomreach, we’re keen to not forget the ultimate focus of conversational commerce when we collectively define the term — the customer, of course. We believe that conversational commerce should personalize e-commerce shopping experiences across all channels (apps, mobile, desktop, social) with the goal of providing an optimally personalized experience to end customers.
Having ample amounts of commerce data (the combination of product and customer data) makes these AI-driven conversations even more beneficial for customers and ultimately gets them to their most-desired product or service faster and more seamlessly.
How Does Conversational Commerce Work?
Conversational commerce utilizes a myriad of tools to create an interactive dialogue and experience between e-commerce businesses and their customers.
Through these tools — powered by artificial intelligence, machine learning, and natural language processing — companies are able to quickly diagnose customer demands and provide the information that customers need to solve their problems.
Conversational commerce tools also allow businesses to gather key insights from these customer conversations and use them to personalize future customer experiences. This will lead to stronger brand loyalty among customers who are engaging with the AI.
Conversational Commerce vs. Social Commerce
While they may seem similar in practice, conversational commerce and social commerce are two different strategies for e-commerce businesses.
Social commerce specifically uses social media platforms — such as Facebook or Instagram — to market and sell services or products online. This selling model allows customers to complete the entire sales cycle without leaving their social media app.
While conversational commerce is similar in that the brand’s end goal is still facilitating sales, this type of commerce specifically uses AI to generate conversations that provide customers with personalized experiences and the opportunity to purchase what they need. This doesn’t necessarily happen on social media, but it can.
The Rapid Growth of Conversational Commerce
Consider your own personal communication style for a moment — how often are you personally relying on messaging or a two-way conversation to communicate or acquire knowledge? Probably much more so in today’s world than you were a few years ago.
It’s no different with conversational commerce, and that’s why it has seen significant growth, with projects expected to grow even more rapidly over the next few years. Global spending for conversational commerce was $41 billion in 2021, but is projected to increase to $290 billion by 2025. That’s over a sevenfold increase in just four years.
One of the key explanations of the rapid growth? Convenience.
Customers no longer have to worry about picking up the phone, returning an email, or even driving to a brick-and-mortar store to complete a purchase anymore. Everything — from product discovery to payment — can now happen via two-way communication thanks to AI-powered conversational commerce.
Another key explanation? Generative AI.
Advancements in Generative AI and Conversational Commerce Strategy
Generative AI is a form of artificial intelligence that enables computers to generate content without being explicitly programmed.
Generative AI’s ability to automate customer interactions, create personalized product recommendations, and respond to customer-specific requests by mimicking natural language is the backbone of conversational commerce. It represents the future of e-commerce as brands race to offer the most personalized experiences for customers without putting all the heavy lifting on their own internal marketers and merchandisers.
Companies can also use generative AI to analyze customer behavior and use that analysis internally to develop potential areas of improvement for their own business practices. SaaS companies have begun to integrate generative AI — including Open AI’s LLMs — with their platforms to offer a more seamless experience for users of the software, thus making users more efficient.
Prior to the incredible recent advancements in generative AI, conversational commerce was limited in the types of interactions it could offer to customers. The AI may have been able to match some of the keywords, but that didn’t always guarantee a relevant or helpful response to customers as the technology was not yet fully mature.
For example, searching with stilted language such as “make a return” would likely produce much better results than searching “can you please help me return these jeans that I bought last week?”
Now, thanks to generative AI, those issues pop up far less frequently. Generative AI facilitates actual conversations in conversational commerce and helps brands deliver on the actual promise of being conversational in their strategies.
There is so much data informing the process and generative AI has such a deep understanding of how human beings speak that you can now interact in the two-way messaging as you might with a friend or colleague. As a result, conversational commerce can be much more personalized and actually feel like a real conversation.
These advancements mark a seismic shift in the e-commerce marketplace. Conversational commerce has been completely changed and upgraded because of generative AI, with innovations far beyond what could even previously be imagined.
As OpenAI and LLMs reshape the internet, it may also radically reshape how we think about e-commerce websites, the role of the search bar, and all of the one-way communication online that human beings are accustomed to today. Generative AI makes it possible for conversational commerce to become a part of the experience any company offers its customers, creating new ways for brands to build relationships with shoppers.
That being said, the need for controls around this will still remain, and brands will maintain an important role in ensuring their AI-powered commerce experience is accurate and consistent with brand standards.
Examples of Conversational Commerce
Now that you know how it works, consider these examples of conversational commerce. Have any of your favorite brands used these channels or tools? If so, how was your experience with them?
The rise in popularity of social commerce for marketers working in e-commerce marketing automation does intersect with conversational commerce. Companies are now using the two-way messaging offered by Facebook Messenger and other social media platforms to communicate with customers in a more personal and engaging way, and to also offer personalized product recommendations.
Chatbots are quickly becoming arguably the most commonly seen component of conversational commerce. They are used by businesses to make customer interactions more efficient. Chatbots can be used to quickly provide customers with helpful information, share product recommendations, and answer inquiries.
SMS marketing lets marketers use text messaging as an additional marketing channel. Building an effective SMS strategy should absolutely involve conversational commerce. Being able to have two-way conversations with your customers via text can truly elevate your brand’s personalization pursuits and the customer experience it can offer.
Sending media files that SMS can’t support is what makes MMS marketing so valuable to your brand. Being able to have a two-way conversation after sending those multimedia messages to opted-in customers? Even more valuable.
E-Commerce Search Bars
Is this a new one to you? Our interactions with the search bar may grow to include options for two-way conversation thanks to the impact that ChatGPT and other generative AI tools will have on commerce search. In addition to its traditional one-way use, businesses may now also offer a two-way conversation prompted by a customer’s search.
The Benefits of Conversational Commerce
The ultimate benefit of conversational commerce is that it provides customers with an easier and more efficient way to purchase products online. It gives them the ability to participate in two-way conversations with brands in a natural and conversational manner. This ultimately leads to a better shopping experience.
But what about the benefit for brands? Think for a second about your omnichannel strategy. Would it benefit from not only customer engagement but also customer interaction? That answer is likely a resounding yes.
Conversational commerce facilitates the ability to send an SMS, get a response, then follow up via email. Or, you can create a conversation to reengage a shopper with an abandoned basket campaign. It’s an open flow of communication fueled by more personalization — created with less effort.
Additionally, conversational commerce is another avenue for brands to leverage customer data to increase customer satisfaction and keep customers coming back to buy again. Using generative AI to automate customer interactions makes everything on the customers’ end more user friendly.
The last major consideration point? E-commerce personalization.
E-Commerce Personalization and Conversational Commerce
E-commerce personalization has been a desire of customers all over the world for as long as e-commerce has existed. And at the same time, it has been a pain point for digital commerce companies for the same amount of time.
Consider these incredible statistics before you just tune out another digital lecture about personalization.
- Shoppers are more likely to buy from a company that offers personalized experiences. In fact, 80% of them said this.
- 78% of customers are more interested in brands that offer personalized experiences.
- 83% of consumers are willing to share personal data in order to facilitate more personalized experiences.
In short, if your brand is striking out on personalization, you’re leaving a lot of revenue on the table.
But investing in the right conversational commerce technology can help bridge the gap with e-commerce personalization. This is because conversational commerce naturally helps personalize customer experiences. The two-way nature of the AI-generated conversation helps you identify exactly what customers want and deliver that item or service, as well as store the customer data for future use.
Conversational marketing is a very similar trend to conversational commerce. AI-driven tools are now being used to provide an optimally personalized experience for customers via marketing channels.
Conversational marketing is a type of marketing that engages customers through two-way communication in real-time conversations. The goal of conversational marketing is to engage buyers and move them as quickly as possible through the journey of buying the product.
Conversational commerce and conversational marketing both involve leveraging conversation-based technology to interact with customers. The primary difference is that, while conversational commerce focuses more on the sale of products, conversational marketing’s goal is to create consumer awareness and engagement.
Is Conversational AI Right for My Business?
Conversational commerce should be powered by conversational AI, specifically defined as software that is computer-powered by artificial intelligence and creates human-style conversation with users. In short, conversational AI is technology that can talk to humans.
But how do you know if conversational technology is right for your business right now? Ultimately, the answer is dependent on your business’ current goals and situation. But consider exactly what conversational AI can help your company do when making this decision:
- Boost customer satisfaction, engagement, and retention rates — These key metrics can be impacted by allowing customers to communicate with your brand naturally like conversational AI allows for.
- Create personalized experiences for customers — Enabling customers to have personalized experiences with your brand can have a significant impact on key retention statistics.
- Analyze customer behavior — Having access to the behavioral data generated by these AI-driven customer interactions can lead to a better understanding of customers. As a result, you can offer them a better experience with your brand in the future.
If your business is looking to improve upon or double down on any of the above, a conversational commerce strategy is what you need.
Generative AI is also having a massive impact on conversational marketing. Omnichannel marketing efforts can be easily scaled by integrating generative AI tools into your SaaS platform. This can save your commerce-driving team time and money when creating marketing campaigns, and will also ensure that the assets being created for those campaigns best fit the segments they’re targeting.
How a Conversational Commerce Strategy Increases Customer Satisfaction
Having a conversational commerce platform would enable your business to use conversational AI to generate an in-depth strategy to better serve your customers.
The goal of your conversational commerce strategy should be to create more meaningful interactions with customers. While a sale is always the ultimate goal for brands, using conversational AI to meaningfully engage with customers helps facilitate those sales more more quickly and easily.
Bloomreach Chief Strategy Officer Brian Walker discussed this exact topic on the Commerce Experience Podcast with special guest Michael Ricci, Senior VP of Strategy at Sinch.
“I’m a believer that there are going to be a larger number of consumers that love the self-service aspect of this,” Walker said on the podcast. “There are going to be consumers who want this type of engagement and will find it to be a far more efficient experience. The convenience of this is something that makes it fit really nicely within many consumers’ lifestyles.”
Ricci pointed out on the podcast that the first companies using a conversational strategy to care for their customers were not actually companies trying to sell their products online. Conversational care — or using conversational AI to facilitate customer support — was perhaps the original conversational use case as it saved consumers time (calling into customer support) and companies money (having customer support personnel on staff).
Now, as Ricci pointed out, e-commerce companies have gotten on board after seeing success in the conversational care realm.
“This is where commerce is now pivoting towards,” Ricci said. “Both web-assisted e-commerce as well as mobile or social e-commerce experiences.
“When consumers have problems or they are seeking help, they prefer a conversation. Why? Because they get more reactive responses. It’s a way of minimizing customer frustration and poor customer experiences.”
The Future of Conversational Commerce
The future of conversational commerce is being shaped and molded by the incredible advancements made in generative AI. The future? Almost unimaginable, at this point in time.
“The significance of this moment in e-commerce cannot be understated,” said Raj De Datta, co-founder and CEO of Bloomreach. “E-commerce is on the edge of seismic change, with generative AI unlocking innovation beyond what we’ve previously imagined.”
One thing’s for certain — conversational commerce has a prominent spot at the table when discussing the future of AI in commerce and marketing. Customers will eventually become accustomed to the ease and convenience conversational commerce provides, and will expect that all brands they interact with online can provide equally personalized experiences.
Will your brand be ready for that day?
Bloomreach and Conversational Commerce
As the popularity of conversational commerce soars online, Bloomreach has prioritized conversational commerce use cases and product features to offer our customers the ability to offer their consumers more personalized experiences online.
At Bloomreach, our teams on both the Engagement and Discovery side have been working on incredible new innovations powered by the latest advances in generative AI. While AI has always been integral to who we are, we believe that the recent advancements in generative AI are going to open incredible new doors for e-commerce.
We’re looking into many different ways that our offerings can help brands interact with their customers in truly authentic, conversational, brand-appropriate ways — whether that be through commerce search, marketing channels, or elsewhere.
Can you imagine a limitless future for commerce that’s powered by AI? At Bloomreach, we can. We believe we’re on the edge of something massive and that digital commerce is set to embark upon a massive shift thanks to the recent developments in AI.
Ready to learn more about what the future holds for AI in commerce and marketing? Save your seat today for our Edge Summit ‘23, a workshop that’ll prepare you for where e-commerce is headed and equip your business with the knowledge it needs to stay ahead of the curve as a new era of commerce emerges.