What Is Conversational Commerce?

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? 

Social Messaging

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

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

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. 

MMS

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. 

Enhanced Customer Engagement

Enhanced customer engagement is byproduct of your e-commerce business investing in conversational commerce.

By leveraging a conversational commerce strategy, businesses can provide instant support, personalized recommendations, and seamless transactions, leading to higher customer satisfaction, increased sales, and stronger brand loyalty. This approach not only enhances the overall customer experience but also helps in building long-lasting relationships with the audience.

Improved Customer Service

Conversational commerce enhances customer service by providing instant and personalized assistance to customers. This real-time interaction allows businesses to address customer queries promptly, offer tailored product recommendations, and guide users through the purchasing process seamlessly. 

Increased Sales

Conversational commerce drives increased sales by offering a seamless shopping experience that guides customers through their purchase journey with personalized recommendations and instant assistance.

By engaging users in real-time conversations, businesses can address customer questions promptly, overcome purchase barriers, and provide tailored product suggestions, ultimately leading to higher conversion rates and a boost in sales. This personalized approach creates a sense of trust, convenience, and satisfaction that encourages customers to make informed purchase decisions, thus contributing to revenue growth.

Streamlined Shopping Experience

There is no easier way to streamline a shopping experience in the age of generative AI than adopting a conversational commerce strategy. 

Businesses can address customer queries in real-time, offer product information, and facilitate transactions seamlessly, creating a more efficient and convenient shopping journey for users. This approach reduces friction, enhances user satisfaction, and increases the likelihood of completing purchases, thereby optimizing the overall shopping experience for customers.

Data Collection and Insights

Conversational commerce facilitates better data collection and insights by gathering valuable customer interactions, preferences, and behaviors through chatbot conversations and messaging platforms.

This data-rich environment allows businesses to analyze customer feedback, purchase patterns, and engagement metrics, leading to a deeper understanding of consumer needs and preferences. By harnessing this data, businesses can make informed decisions, optimize their marketing strategies, and personalize the shopping experience, ultimately driving growth and enhancing customer relationships.

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 Commerce Use Cases

How exactly should e-commerce businesses be using conversational commerce to personalize experiences for customers? By meeting customers where they are in the journey with their brand and going above and beyond to offer and magical experience through conversational AI. 

Here are some of the best strategies and use cases to optimize your customers' experiences with conversational commerce. 

Customer Support

For customer support, leveraging conversational commerce enables the brand to provide instant and personalized assistance to customers, addressing their queries promptly and effectively. By adopting chatbots and messaging platforms, the brand can offer a seamless support experience that is both efficient and tailored to individual needs, fostering customer satisfaction and loyalty.

Personal Shopping Assistants

In the realm of personal shopping assistants and AI-powered personal shopping services, conversational commerce proves invaluable by guiding customers through their shopping journey with tailored product recommendations and expert advice. This personalized approach not only enhances the shopping experience but also builds trust and rapport with customers, leading to increased engagement and a higher likelihood of conversion.

Order Placement and Management

Conversational commerce streamlines the process of order placement and management by enabling customers to make purchases, track orders, and receive updates in real-time through interactive conversations. This convenience enhances the overall shopping experience, reduces friction in the transaction process, and fosters efficient order handling, ultimately leading to higher customer satisfaction and retention.

Payment Processing

With conversational commerce, brands can offer seamless payment processing options within chat interfaces, making transactions quick, secure, and hassle-free for customers. By integrating payment gateways into chat platforms, businesses can streamline the checkout process, enhance user experience, and instill confidence in customers, resulting in increased conversion rates and overall sales.

Feedback and Reviews

Utilizing conversational commerce for feedback and reviews allows brands to collect valuable insights and customer sentiments through interactive conversations. This direct communication channel enables businesses to gather feedback in real-time, address concerns promptly, and leverage positive reviews to enhance brand reputation and credibility, fostering a customer-centric approach and continuous improvement.

Appointment Scheduling

Conversational commerce facilitates appointment scheduling by offering a convenient and efficient way for customers to book appointments, receive reminders, and manage their schedules seamlessly. This interactive approach simplifies the booking process, reduces no-show rates, and improves customer engagement, leading to enhanced operational efficiency and a more organized customer experience.

Product Recommendations

Through conversational commerce, brands can deliver personalized product recommendations to customers based on their preferences, purchase history, and interactions. Businesses can offer relevant suggestions, cross-sell or upsell products, and enhance the shopping experience with tailored recommendations that resonate with individual tastes, driving higher engagement and sales.

Post-Purchase Support

Conversational commerce can play a vital role in post-purchase support by assisting customers with order tracking, returns, exchanges, and addressing any post-purchase queries efficiently. This ongoing support ensures a positive customer experience post-sale, builds trust and loyalty, and encourages repeat purchases, contributing to long-term customer relationships and brand advocacy.

Subscription Management

Using conversational commerce for subscription management enables brands to engage with subscribers, offer personalized content, manage subscription preferences, and handle renewals or cancellations seamlessly. This interactive approach enhances subscriber retention, reduces churn rates, and fosters a sense of community and loyalty among subscribers, ensuring a positive and consistent subscription experience.

Conversational Marketing

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? 

The Impact of a Conversational Commerce Platform

With Bloomreach, your brand will be ready for that day.

At Bloomreach, we understand that a conversational commerce platform allows companies to use AI technology to identify customer needs faster than ever before, which ultimately leads to a more optimized customer journey and less work for your customer service team.

With these benefits and more in mind, we have launched Bloomreach Clarity, a conversational commerce tool that will put your customer and product data to work to deliver personalized customer experiences at scale.

Powered by the latest advancements in generative AI and large language models (LLMs), Bloomreach Clarity engages with shoppers to deliver personalized, human-like product expertise straight from their favorite brands. Businesses connect these conversations directly to their product catalogs, and can seamlessly integrate individual conversations across every channel, including website, chat, SMS, and more.

With Bloomreach Clarity, e-commerce companies can prioritize customer loyalty. They can take customer relationships to the next level by having intelligent customer service interactions powered by generative AI. This will help turn curious onlookers into loyal customers and build brand loyalty.

Bloomreach Clarity is built upon a powerful real-time customer data engine and trained on more than a decade of commerce data. This gives it a unique understanding of how customers shop and how products perform — globally, based on Bloomreach’s rich data and smart AI, and at the individual level, based on a business’s real-time data.

As a result, while Clarity is showing customers relevant information and products, it’s also prioritizing what it knows they’ll actually buy — helping businesses drive fast growth. 

Clarity also offers control and optimizations for business as they introduce this conversational experience to customers, including:

• The ability for merchandisers to combine their instincts with the scale of AI in order to provide best fit recommendations 
• Real-time targeting that allows Clarity to prompt conversations based on a customer’s current journey or specific segment
• Personalized conversations even for unknown visitors based on browsing behavior 
• The ability to refine conversations using brand guidelines and tone of voice

Bloomreach Clarity and Conversational Commerce

Generative AI is changing e-commerce forever. Don't get left behind — invest in the power of conversational commerce today.

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