What Is Conversational Commerce? AI Has Entered the Chat

“Hey Siri, find me the best-rated wool winter coats.” This is just one example of how conversational commerce is changing the digital shopping experience. Customers can now use chatbots, messaging apps, and even voice assistants to discover new products and make purchases online. This allows businesses to connect with shoppers in a way that feels organic and fits in with customers’ everyday lives. With conversational commerce, shopping feels more like chatting with a friend. Thanks to AI, the experience is quickly becoming more personalized, intuitive, and easier than ever.

Here’s everything you need to know about conversational commerce.

Table of contents

• What is conversational commerce?
• What are the different types of conversational commerce?
• How does AI fit into conversational commerce?
• The benefits of conversational commerce
• Common pitfalls and how to avoid them
• Communication enhances the entire customer journey
• How can you gauge your success with conversational commerce?
• What will conversational commerce look like in the future?

What is conversational commerce?

Conversational commerce is a way to grow sales through direct communication with your customers. And it’s more than just automated conversation flows. It also includes sales and service reps chatting with customers via text or through direct messages in social media apps. Ultimately, conversational commerce is about building meaningful, personalized connections with customers. It combines the convenience of digital communication with the warmth of natural, human language, enabling businesses to grow sales and foster long-term loyalty. 

What are the different types of conversational commerce? (Hint: It’s more than chatbots)

Messaging and chat apps (like WhatsApp, Facebook Messenger, and more): Communicating directly with a brand, asking specific questions, and getting recommendations through messaging apps makes the service feel personalized and human. In some cases, sales and service agents can send shoppers Pay Now links, so they can purchase directly through the chat feature. This helps shorten the sales cycle and gives the whole transaction a more organic feel, like chatting with a cashier or store clerk. These conversational commerce experiences are gaining traction: In 2023, 36% of shoppers made a purchase through a messaging app, an increase of 227% since 2021.

Chatbots and AI: Thanks to the power of AI, chatbots are getting smarter. Trained on product descriptions, sales data, and reviews, chatbots can now ingest more information about a brand’s entire catalog of products and services, including detailed, specific customer questions. The result? Automated, personalized service that feels human — without stretching your customer support team too thin.

These digital experiences are becoming table stakes: More than half of shoppers (55%) have used AI-powered chatbots to resolve self-service issues, with 61% of shoppers stating they prefer this autonomy when dealing with issues that can be quickly resolved. Chatbots are an excellent solution for businesses in the midst of scaling operations. 

Copilots and concierges for shoppers: You can think of copilots and concierges — like Commerce Cloud’s Copilot for Shoppers — as the next generation of chatbots. Copilot capabilities go beyond answering run-of-the-mill questions like, “Where’s my order?” or “What’s your return policy?” Thanks to generative AI, copilots trained on large language models (LLM) offer intelligent, custom solutions. 

Picture this: A shopper with very specific dietary requirements can use Commerce Copilot for Shoppers to get product recommendations from a snack food company. They might type, “Show me gluten-free snack bars, 300 calories or less, that don’t have chocolate or nuts.” The concierge can reply with links to top-rated bars that fit the description, and also offer a personalized discount based on the customer’s historical sales data, preferred price points, and more. 

Voice assistants: Have you ever enlisted the help of Alexa, Siri, or Google Home to make a purchase? It’s a growing trend: 17% of consumers have used voice assistants to reorder items and 60% of shoppers make daily or weekly purchases using a home voice smart assistant.

How does AI fit into conversational commerce?

Thanks to AI, conversational commerce will continue evolving and transforming the way businesses interact with customers. According to Jon Jessup, founder of 1440, “The key to successful conversational commerce comes from understanding consumer intent to purchase and guiding them through the purchasing process with conversational AI.” What gives businesses the ability to understand consumer intent? Two key aspects: Natural language processing (NLP) and machine learning. Here’s how it works.

NLP analyzes and processes text or speech. NLP is the technology that makes interactions with chatbots feel more like human conversation. It can extract meaning, intent, and context, which allows chatbots to understand customer inquiries and provide relevant responses or take appropriate actions. If a customer asks a virtual assistant, “Does this jacket run true to size?” AI trained on product reviews and return reason codes can give an accurate, helpful answer. For example, a chatbot could communicate: “Based on past reviews from over 700 purchases, this item runs small. If you’re in between sizes, best to size up!”

Machine learning analyzes customer preferences, purchase history, and browsing patterns. Machine learning is how computers can learn new things without being programmed to know them. This is the technology that enables chatbots or virtual assistants to make intelligent recommendations, suggest relevant products or services, and guide customers through their purchase journey. It can power natural language, image-based, and data-driven interactions to simplify product searches, provide personalized responses, and simplify purchases for a smooth shopping experience. 

Thanks to AI like large language models and machine learning, businesses can create truly bespoke experiences for shoppers at every stage of the journey. For example, a shopper can upload an image of their favorite celebrity wearing a trendy outfit and ask a digital concierge to recommend similar items. Shopping online just got a lot easier and more entertaining.

Conversational commerce and social commerce: A perfect pairing

Conversational commerce is uniquely positioned at the intersection of many dominant and rising channels, such as social, mobile, and embedded commerce. In fact, global social commerce sales are estimated to reach $2.9 trillion by 2026. Social media platforms are spaces for community and connection — and conversational commerce gives businesses the ability to build more meaningful connections with shoppers on a channel embedded in their daily lives.

How do you develop a winning approach for conversational commerce on social? Take advice from Jessup: “Success comes from understanding the platforms’ unique ecosystems, being creative and authentic in your approach, and maintaining a focus on personalized and interactive customer experiences. For example, leveraging the DM’s on Instagram and the new TikTok Shops Chat.”

Connecting with shoppers through direct messages and TikTok Shops Chat gives an authentic, organic edge to your communication. Even better? It allows your customers to interact with you on their terms and increases the chances of conversion.

The benefits of conversational commerce

Conversational commerce is more than just a trendy new way to make a sale. It can act as the glue that brings all your other channels together and it can be a key differentiator for your business. 

Improve customer service: Conversational commerce allows your brand to answer customers’ pressing questions quickly and easily in a single, intuitive interaction. This is especially useful for high-touch products — think home appliances or other big-ticket items — that often require more consideration before purchase. Customers can dive deeper into specs, discover more details about your products, and even make purchases through messaging apps. 

Boost customer loyalty and retention: Conversational commerce — and the improvements it can make to your customer service initiatives — has the potential to build and strengthen customer relationships. A whopping 94% of shoppers say that good customer service makes them more likely to buy from a brand again. With convenience and ease of use, conversational commerce contributes to positive experiences, which encourage repeat purchases and build loyalty. Instant responses, personalized recommendations, and service experiences that feel human signal to customers that they are heard and valued. 

Reduce support-related costs and increase revenue: Conversational commerce powered by AI can free up valuable time for your service and sales reps to focus on more complex tasks that move your business forward. By empowering sales and service reps with embedded commerce apps — like Pay Now links and the ability to place orders on behalf of customers — you can transform your service center into a revenue generator. In fact, 38% of digital leaders view customer service as driving a substantial amount of incremental revenue.

Differentiate your business: Ecommerce is more than a digital storefront; it’s no longer enough to depend on one channel to influence sales. Customers want the ability to interact and transact on their terms. More and more, this means through messaging apps and direct messages on social media. Conversational commerce is an extension of your brand and allows you to communicate with customers in a deeper, more meaningful way. By making it easy for shoppers to connect with your business in a way that feels natural, you give customers more power over their experience and elevate your brand above the competition. 

Common pitfalls and how to avoid them

Well-executed conversational commerce feels like an organic exchange between a customer and a friendly, helpful service or sales rep. When it’s not? It can feel clunky and overly automated. Here’s how to avoid common pitfalls and make sure your strategy is a success: 

Every interaction should feel human: When customers have a pressing question, they want to know who — or what — they’re talking to. Although chatbots are an excellent solution for some inquiries, there are still those that require a human touch. Be transparent with shoppers — let them know when they’re talking to a chatbot, and make it easy to request to speak with a human when necessary.

Consider omni-channel experiences: The customer journey is no longer a linear path. Shoppers visit multiple channels — like your website, apps, and social media — to research and browse your products. Depending on the situation, 71% of customers prefer using different channels to shop. That means it’s important to ensure seamless, omni-channel conversational commerce at every touchpoint. It should be just as easy for a shopper to chat with a rep or a bot on desktop as it is on mobile. And a conversation that’s started on one channel should easily carry over to another, so your customers don’t have to re-explain themselves or ask the same question multiple times. 

Converse in your own brand voice: Voice and tone are critical aspects of conversational commerce. This is often what makes the difference between an experience that feels human and one that feels robotic and stiff. Train your chatbots and concierges on your company’s branding guidelines, top-performing content, and key messaging. This will ensure that any AI-powered conversations maintain a consistent communication style and align with your brand’s voice. This is especially crucial when you consider that consumers’ top frustration with organizations is disconnected experiences, and 55% of customers feel like they’re communicating with separate departments rather than one company.

Communication enhances the entire customer journey

Conversational commerce isn’t just about sending quick, automated answers when customers ask about your return policy or want to know where their order is, although that’s certainly part of it. Ongoing, meaningful communication with customers is key to building relationships at every stage of the shopping process. Here are key moments to consider as you implement a conversational commerce strategy: 

Product discovery: As customer expectations rise and AI evolves, shoppers are beginning to ask increasingly complex questions and expect more from conversational commerce in the answers they receive. Intelligent solutions can handle more than just simple inquiries like, “What’s your return policy?” or “Where’s my order?” Now, shoppers can ask questions like, “Can you help me plan outfits for an upcoming trip I’m taking to Tulum? I’ll be there for seven days and the weather will be 75 degrees. I don’t like wearing crop tops.” Thanks to large language models and natural language processing, chatbots can now act as personal shopping assistants, helping customers discover products in a fresh, delightful way.

Purchase: Conversational commerce can also elevate customer experiences when they’re ready to make a purchase. Service agents and chatbots can send payment links straight to customers through text messages, email, or messaging apps, making it easy for customers to complete a transaction. Now, service and sales reps don’t need to direct customers back to a website or payment portal to close the deal. They can simply send over a link — wherever the conversation takes place — and the customer can pay. 

Post-purchase: The customer journey doesn’t end at the buy button. Shoppers want to track their orders from your warehouse all the way to their doorstep. The benefits of conversational commerce when it comes to post-purchase are twofold: They can enhance customer support ‌while allowing your brand to gather valuable feedback. 

Direct messaging and check-in emails provide an opportunity to reach out to customers who might need additional support with complicated products or services. You can reach out to customers with open support cases and provide proactive customer service, something that only 33% of shoppers feel brands do well. 

Collecting feedback through natural conversations is more effective than traditional web forms. Using tools like in-chat surveys after an issue is resolved allows you to gather feedback in real-time. Immediate feedback collection increases your chances of finding valuable insights and understanding your customer needs while they’re still top of mind.

How can you gauge your success with conversational commerce?

When conversational commerce is properly implemented, you’ll notice an effect on several key metrics. These include customer satisfaction levels, average order value, the number of open customer support tickets, the time it takes to close those tickets, and number of returning customers. 

Compare the cost effectiveness of conversational commerce tools against your traditional customer service channels. See if there are reductions in support costs or increases in your company’s ability to handle a higher volume of inquiries.

And, of course, monitor customer feedback and online reviews. Positive feedback and reviews indicate a successful and satisfying customer experience. See how they compare before and after you’ve implemented conversational commerce tools. As you gather data and discover areas where you can improve, you’ll be able to further refine the quality of your customer service and deliver a better shopping experience.

What will conversational commerce look like in the future?

As technology continues to evolve, business leaders will likely infuse conversational commerce into different touchpoints and processes to make commerce more intuitive, organic, and convenient for customers. Service and sales reps will use chatbots to augment their work, finding a new balance between automation and human touch. Chatbots will be able to handle increasingly complex issues and more personalized support. 

Ready to get started with conversational commerce? See how Commerce Cloud can help you increase sales and collect revenue on any customer touchpoint with AI and automation.