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The ability to identify new revenue streams and capitalize on them successfully — and, ideally, early — is a key indicator of which retailers and brands can compete in an increasingly fragmented and competitive digital landscape. And once in a while, there is a new revenue opportunity that comes to define the next generation of retailers. Such is the case with chat. More than 2 billion people use messaging apps to communicate with one another and with businesses. The most innovative retailers are capitalizing on this reach and accessibility by transforming chat into a key channel for sales.

Chat represents the future of brand communications with customers and will overtake e-mail as the primary channel through which they can interact with, assist, market to and deepen relationships with their prospects and customers. The usability, functionality and customization that is possible in chat surpasses any of the other digital sales channels, and early indications are that chat will become the primary vehicle for mobile sales; already through chat, companies are boosting online sales by 5 to 35 percent.

As an initial matter, it’s almost impossible to overstate the vast scale of chat apps in an otherwise distracted society. Two billion people communicate through chat; almost 1.5 billion of them are on Facebook Messenger, which has the most robust marketing and commerce capabilities of all the chat platforms. According to the analytics firm Flurry, Americans now spend more than five hours per day on mobile devices, and 19 percent of that time is spent on Facebook and its messaging apps — Messenger, WhatsApp, Instagram. So if your brand wants to reach people where they are spending time, especially mobile time, it’s inside of chat.

What can brands do inside chat that makes this such a huge opportunity?

Directly follow up with your web traffic

For companies looking to boost direct e-commerce sales, recovering unconverted web traffic is a major objective. A new feature of Facebook Messenger enables chat to become a seamless, high-volume channel for personalized, direct retargeting communications. Using the Facebook Messenger checkbox plugin on-site, a company can add a seamless and automated opt-in to their product pages that enable the brand to proactively follow-up with the user via Messenger after the visitor has left the site. The plugin typically captures 60 to 65 percent of web traffic; for a typical e-commerce company that has e-mail contact information for roughly 7 percent of web visitors, this effectively opens up direct-message marketing and retargeting funnels by more than 800 percent.

In the past, the only way to reach the 93 percent of web visitors for whom a company doesn’t have an e-mail address was with ads; now, retargeting ads can be supplemented with a direct, personalized message delivered straight into a person’s inbox. Think about that for one second — the person instantly goes from being an anonymous web visitor to an individual who can be proactively messaged in a channel they check throughout the day.

Because of the power of this delivery mechanism, messages from brands are seeing open rates of 73 percent and conversions of 5 to 15 percent on messages, which can include a number of campaigns: abandoned cart or browse reminders, refill notifications, alerts for price drops or restocks, post-checkout receipts or confirmations, incentives for reordering or sharing, loyalty rewards, soliciting post-purchase reviews or customer feedback, and anything else a brand might want to automate and deliver through chat.

While lucrative, these high-impact retargeting and marketing messages are only the tip of the iceberg for what brands can accomplish through chat. Once a person begins interacting with a brand through chat, it opens up a world of one-to-one engagement opportunities for a highly captive audience. The most effective of these experiences are those that assist a user in identifying the right items for them, and those that offer easy customer care.

Chat-based guided selling and virtual styling

Assisting customers in reducing an inventory catalogue to the few most relevant items takes the cognitive load out of shopping. When done through chat, it can create an intimate, highly personalized experience that grows brand loyalty and engagement while generating additional sales.

A great example is the Saks Fifth Avenue Holiday Gift guide. Saks launched a holiday gifting experience in Messenger that asked questions about the people on a user’s gift list, and then recommended the best gifts for them from the Saks inventory.

Another great example is the Ouai Haircare experience in Messenger. Ouai — founded by celebrity hairstylist Jen Atkin — has a deeply researched hair quiz that asks questions about a user’s hair type and then recommends the absolute perfect product regimen for them from among thousands of options, with quick-shopping capability linking directly to individual products or the entire bundle.

The data used to process these product recommendations can come from on-site behavior and customer profile data as well as from data offered by the user during the in-chat experience. Infusing these experiences with artificial intelligence that chooses products enables a scalable experience that captivates users and connects them intimately with a brand. Beyond increasing sales, this type of personalization goes a long way in building a close relationship with customers.

Answer FAQs automatically

Chat channels provide a keen opportunity for automatically answering the most frequent user queries without having to devote human bandwidth to it. When people interact with a brand in chat, algorithms can be applied to detect keywords and/or analyze the user’s intent. Many retailers report that 55 to 65 percent of customer service queries are repetitive and can be resolved by providing reference to the company’s FAQs. Intelligently and quickly surfacing the right FAQs takes the human dimension out of many of those, reducing costs while enhancing usability and customer experience.

Chat is the channel of the future

Digital retail is increasingly about identifying the human behind the consumer and reaching them with the message that most resonates with them. And just as important is delivering these messages through the channel most likely to reach them. One major common denominator uniting basically all customers — existing and potential — is that they use chat platforms to communicate numerous times per day. By opening up customer communications to chat channels, brands position themselves to expand their reach, drive more engagement and sales, and resolve more customer issues in a cost-effective and high-impact way. The ability to engage with, and sell to, customers through chat apps represents a massive opportunity that will shift the paradigm of e-commerce irrevocably. And the companies that have identified this already are reaping outsized rewards.

Caroline Klatt and Dana Gibber are cofounders of Headliner Labs.

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