Will live chat and chatbots transform customer service?

Like so many recent technical innovations, online live chat and chatbots were once feasible for only large corporations with large budgets.

A rapid increase in computing power and a sharp drop in its price has made these customer service technologies available and affordable for even the smallest of businesses.

Next generation customer service

Both technologies allow the customer to “chat” with the company, perhaps to ask questions about its products or to place an order. A small pop-up typically appears in the bottom of the customer’s screen, where they type questions and receive answers.

Live chat, is as its name suggests, a chat with a real live person at the company.

Short for chat robot, a chatbot uses a computer program to simulate human conversation. They use artificial intelligence to mimic regular chat and some learn as they go, increasing the array of questions and problems they can deal with.

A digital solution?

Both technologies offer another channel for customers to contact the company, beyond the usual phone and email channels. They also respond to the perceived expectation of customer service anywhere, anytime and an increasing preference towards digital channels.

Chatbots can free up staff and let them deal with more complicated customer requests or orders. And even though live chat requires a real person, it can also free up staff, because instead of being stuck on a phone call to a single customer, service agents can deal with more than one query at a time with live chat.

But neither is a magical solution, as each comes with its own drawbacks.

Live chat

Small business can access live chat software for less than $20 a month.

One of the drawbacks of live chat is that it can be very time consuming and keep small business owners and their staff tied to their computers. If customers type in a question they expect a prompt response and they will go elsewhere if they have to wait or receive a message telling them no one is available.

Therefore, you have to consider whether your business has the resources to have someone available at all times to answer questions from customers. It doesn’t mean the staff member can do only this, but they have to be readily available.

Also, you would have to consider how many hours a day you would want to offer live chat. Consumers increasingly expect to be able to transact through digital channels at a time of their choosing, be it in the evening or on weekends. And even if you do limit live chat to Australian business hours – 9am to 5pm – in summer that is 11 hours per day from the east coast to the west.

You also need to consider how your customers typically get in touch. Millennials will be more comfortable with digital channels than older customers who might still prefer to telephone. And if many of your customers access your website with their mobile phones, then the utility of live chat will be limited by how fast the user can type on their mobile phone and whether their phone supports live chat options.


Microsoft and Facebook are both investing heavily in chatbots for use on Microsoft’s Skype platform or Facebook Messenger because they see huge potential for business. This short video of Burger King’s Facebook chatbot shows how it works.

When Facebook launched its chatbot application in April, CEO Mark Zuckerberg said bots would do away with the need for people to call customer service.

Certainly, the idea of a customer service robot who will charm your customers, answer their questions and increase sales while you get on with something else is an enticing idea for any small business owner.

For now, at least, the reality is somewhat different, as the following two examples from US businesses show.

Fynd’s Fify helps you search for fashion products, while 1-800-Flowers.com lets you order flowers. But even a cursory try of these sites (you will need to sign into Facebook’s messenger app if you want to try this) reveals their limitations.

1-800-Flowers.com, for instance, can take orders but any more complicated questions – what flowers should I choose for my wedding? – are met with: “Can you send that address through again? Number, street, city, state, and ZIP, please.

To have specific questions answered you need to request a live customer service agent who “typically replies within a few hours”.

The above examples are from well-funded companies, and they call into question what a small business with limited time and budget could achieve. Certainly, this effort from an amateur shows how hard they can be to get right.

What’s best for your business?

Chatbots and live chat offer advantages for business and they now are affordable for even the smallest of companies. However, any business should tread with caution before diving in. If either solution is implemented poorly, there is