Chatbots vs. Live Chat: Which is Best for Your Business?

The global market for live chat software is worth more than $866 billion, with experts predicting a growth rate of nearly 8% per year going forward. It's clear that businesses appreciate the value these platforms bring. The oft-debated question is whether a chatbot or a live chat platform has a greater positive impact on the business when compared to the other. Let's discuss.

What is a Chatbot?

Definition and Functionality

A chatbot is generally defined as a software program designed to simulate human conversations. E-commerce companies use them to provide real-time responses to queries, describe the latest products, streamline the shopping journey, and (if necessary) to redirect the customer to a human representative.

There are two primary types of chatbots:

• Rule-based chatbots
• Chatbots powered by artificial intelligence (AI)

Rule-based chatbots are traditional, older generation models, with their responses being governed by a set of predetermined algorithms. They can present as robotic, and even clumsy at times, which can lead to incorrect answers and a poor customer experience.

Chatbots powered by artificial intelligence are the latest iterations, employing advanced functionalities such as machine learning and natural language processing. Sometimes known as conversational chatbots, their answers are more organic and human-like. In other words, they're very capable of functioning as virtual assistants.

Benefits of Using Chatbots

The automation of modern chatbots ushers in a host of advantages for e-commerce companies, and we're not only referring to their ability to recognize nuances in the human language. Other useful features include:

• 24/7 availability
• Instantaneous responses
• Nuanced answers to extremely specific questions
• Scalability that matches organizational growth and goals
• Management of a greater volume of shopper inquiries, enhancing in-house efficiency and customer satisfaction

Let's look at an example. Sideshow is a specialty manufacturer and distributor of licensed and original collectible pop-culture products. Not only did their customer service team require a chatbot capable of providing accurate automated responses to niche questions, but the system needed to match Sideshow's brand identity.

After implementing the latest chatbot technology, Sideshow multiplied its conversion rates by five times, and 88% of customers provided positive feedback about their experience.

What is Live Chat?

Definition and Functionality

How does live chat compare to its automated counterparts? Live chatbot technology has existed for some time, so it's arguably the channel the average consumer is most familiar with. The main purpose of these systems is to provide a means for online shoppers to speak with a live agent in real time.

Chatbots might still be involved, such as a bot redirecting a customer to a human agent if it can't answer a specific question. But what makes live chat unique is that it always employs a human assistant during at least a portion of the conversation. Some of the most effective systems employ the best of both worlds.

Benefits of Using Live Chat

Industry experts often cite the ability of live chat to provide a more personalized experience as a key feature. Some claim that live interactions develop a sense of empathy or connection that's still not possible with even the most advanced chatbot software. Unlike chatbots, humans can leverage their sales and marketing skills during an interaction, potentially increasing conversion rates.

Additionally, live chat tends to be popular with older online shoppers who might not be comfortable chatting with a bot. A study conducted by McKinsey & Company found that 76% of respondents aged 59 or older preferred live chat services. Whether addressing simple queries, or extremely specific questions, live chat is more closely associated with the concept of personal touch.

Comparing Chatbots and Live Chat

So how do these channels stack up against each other? Let's examine a handful of important variables, and why integrated live chatbots have begun to gain ground.

Response Times and Availability

Automated interaction systems such as chatbots are available 24 hours a day, ensuring around-the-clock support. Live chat representatives are typically only present during traditional business hours. This often poses an issue for shoppers who have a question at an odd time of day or night.

This is why modern chat systems use a combination of automated support and live human agents, creating synergy between algorithmic responses and help from a real-world representative.

Personalization and Interaction

It would be a mistake to assume that the only strength of AI-driven chatbots is their ability to handle complex issues. On the contrary, the latest versions have made tremendous progress when it comes to automated personalization. Some shoppers even find it difficult to tell the difference between a generative AI-powered bot and a human, especially when addressing general questions.

Cost and Resource Efficiency

One of the most important distinctions between chatbot software and live chat involves how much more cost-effective automation is. Chatbots can tackle everyday questions that might otherwise tie up considerable time and effort from a human agent.

Chatbots also require fewer in-house resources to optimize and maintain, and they can be embedded across multiple channels. This helps to dramatically increase their presence, and provides shoppers with even more options when they need help. To put these observations in perspective, chatbots may be able to reduce traditional customer service costs by up to 30%.

Handling Complex Queries

Modern chatbots functionality have progressed significantly beyond their older, rule-based counterparts. They've made tremendous progress when addressing complex questions. From billing issues and payment options, to product details or activating discount codes, shoppers are provided with more solutions than ever before. If an issue can't be adequately addressed technologically, a human will always be standing by.

Which is the Best Choice for Your Business?

Assessing Your Business Needs

E-commerce companies should start by identifying the main reason their business requires a chatbot. Will it be used to answer questions, to promote the latest products, to complete customer inquiry forms, to drive sales, or to guide shoppers through the buying journey? Will these systems need to be available 24/7? Can the chatbot software be easily integrated with live agent services? Answering these questions will help to focus in on the right solution.

Use Cases and Scenarios

There are certain instances when a chatbot platform is the most logical choice. Handling large volumes of inbound requests, operating after business hours, handling multiple languages, and minimizing in-house overhead are some prime examples. Once again, the personalized nature of modern chatbots is just as important to remember when providing human-like responses to complex queries.

However, the presence of live chat agents can't be overstated. These individuals can be contacted if the automated chat service is unable to address a specific question. This leads to even more targeted customer support solutions, increased efficiency, and CRM excellence. Humans must always remain in the loop.

The Hybrid Model: Combining Chatbots and Live Chat for the Best Customer Experience

Scaling a Quality Customer Experience

Ideally, chatbots and human agents should coexist. The automated nature of generative AI combined with the personalized support that human agents can offer results in the best of both worlds for any company. This is also the best way to deliver customer service at scale, enabling businesses to shape these systems around current and future needs.

Adopting a Conversational Platform for Seamless Integration

Chatbots and live human agents should function in tandem. Businesses must strive to develop a delicate balance between efficiency, automation, and personalized support solutions. The ability to integrate live chatbots within an existing software stack is also the best way to ensure smooth transitions between generative AI conversations and human representatives when the need arises.

As automation becomes even more important for e-commerce companies, live chat software will enjoy the lion's share of attention. However, live agents are still a critical piece of the engagement process.

Leveraging the benefits of each will provide your organization with the ability to guarantee superior levels of customer support, increase brand loyalty, and perhaps most importantly, keep shoppers happy during every stage of the buying journey.