Increasing Chat-isfaction: Creating Positive Customer Experiences through Chat

We all spend more time online and behind a screen than ever before, and our shopping habits reflect this. And we’ve all been scrolling down a website only to have a small chat window pop up offering help. Online chat is now a key communication tool businesses use for interacting with their customers now that so many face-to-face marketplaces have shifted online.

Dialogical interaction within online chat (DIOC) denotes real-time, back-and-forth communication between customers and company chat agents. Understanding how customers use, prefer, and have positive encounters via chat has become a crucial priority for companies. Current scholarship, however, does not provide a precise understanding of why, when, or how chat interactions can contribute to customer satisfaction. Recent research from the Walton College’s Judith Anne Garretson Folse seeks to fill this gap.

Folse and her coauthors, Dora Bock (Auburn University), Stephanie Magnus (Baylor University), and Kristina K. Lindsey Hall (Louisiana State University), demonstrate that DIOC can significantly boost satisfaction among customers in “Online chat encounters: Satisfying customers through dialogical interaction.” In particular, their research emphasizes how important real-time, reciprocal communication can be for organizations in early-stage online interactions with customers.

Through six experiments in both real-world settings and in controlled environments, the researchers examined and measured the lasting impact online chat interactions have for consumers. As such, their findings hold significance for marketing, management, psychology, communication or related disciplines examining topics related to the customer satisfaction.

Understanding Dialogical Interaction with Online Chat

Online chat allows businesses to enhance their online customer sales along with heightened digital service functions. In these chats, agents for the firm can properly address customer preferences in the moment.

Text-based chats, whether human or chatbot, reveal themselves to be important digital tools that grant consumers the ability to personalize shopping experiences. Furthermore, these chats, especially if made at the top of the marketing funnel where product and brand awareness are still developing, allow for reciprocal communications that are essential to moving consumers through a positive shopping journey experience. They even play a role in helping nudge consumers further down the marketing funnel to consideration, intent and purchase decision stages.

Prior research highlights the importance of when to use chatbots versus human agents. While there are advantages to having a competitive edge by adopting new technology, efforts can still fall short of matching human agents’ understanding of the stages in the sales process — from evaluating buyers’ needs to providing unique context solutions. 

However, if a business is able to provide highly capable chatbots with fast and accurate issue resolution, this investment would enhance the flexibility for customer engagement around the clock that human employees may not be able to provide. The best version of these tools depends on the users and the business providers’ needs and access.

Although it is clear that online chat is effective as a firm strategy, there continues to be a need for better understanding as to why, how, where, when and for which customer populations this form of communication is most effective.

When Does Chat Increase Customer Satisfaction? 

Chat has come into its own as a means of addressing the needs of a customer, or potential customer. What remains to be seen, though, is under what conditions it is most effective: is it better used when customers want to make the interaction more transactional or does it add more or equal value when customers are wanting to enjoy the shopping experience and may not appreciate “being quickly shepherded through interactions”?

Many service encounters only involve a brief interaction, especially those services provided online. Thus, online chat often gives a glimpse into this initial transitory encounter in the pre-purchase phase and is critical to managerial relevance in understanding how to best engage customers at this stage. Understanding when and under what conditions consumers want a more structured, "do x then y” approach versus when they want a less structured experience that uses these interactions to enhance or deepen their shopping experience has the potential to increase customer satisfaction in a variety of ways.

Some consumers’ motivations revolve around emotional experiences, such as the level of enjoyment, independent of the task. The study refers to these types of consumers as having hedonic motives, as they are using online chat to enjoy and enhance their shopping experience, not speeding it up. Other consumers are more utilitarian and task-related, and they simply want to obtain information, increase exchange efficiency, or reduce purchase uncertainty. In other words, speaking about products purchased for fun generates higher choice satisfaction than writing about choice alternatives, whereas the opposite is true for products sought for practicality.

When customers’ utilitarian motives align with what is provided by firm agents’ support, there is a higher likelihood of customer satisfaction. For example, in the study, agents who continued to help customers narrow down their preferences during the back-and-forth interaction produced more satisfying customer chat experiences. For hedonic customers exchanging the higher volume of preferences with the agent, there was no effect on satisfaction. Hedonic customers are less focused on efficiency and the task’s completion than the overall process.

Another key factor is the type of chat agent, namely human agents or chatbots. Decision makers must balance the use of human agents that generate higher training and compensation costs versus the use of chatbots. But what Folse and her coauthors show is that task-focused customers tend to be equally satisfied with either chatbots or human agents whereas more hedonic customers find that a human agent creates a more enjoyable shopping experience. For example, if I’m looking for a travel mug that doesn’t spill my coffee when I’m driving over roads that are rough or under construction, I may not find a verbatim script of its specifications or a summary of what customer reviews have said that compelling. I may simply want someone who has used the product or knows someone who has used the product to vouch for it or talk about their personal experience with it. That human touch might be more of a difference maker for me in my product decision.

At the very least, chat protocols should incorporate motive-identifying questions so that customers are routed and categorized appropriately and as early in the funnel as possible. Knowing their customers’ goals will thus help firms remain cost effective and act in a manner that keeps customers satisfied.

What Should Your Firm Do?

Businesses will need to fit existing personal characteristics — such as those goals and demographics — to align with the environment of firm services provided and firm agents available. Demonstrating active participation in dialogic, co-creative online chat with high levels of preference sharing exchanges can enhance satisfaction during the pre-purchase phase.

Firms should keep in mind, though, that the effects of online chats are contingent on the motives of and the similarity between the online chat actors and the nature of the exchange. Thus, the value of co-creation in these interactions is necessary for utilitarian customers, and the firms must facilitate this process in order to truly satisfy customer needs.

While chatbots improve efficiency, human agents are still preferred for certain customer needs. If your products and services attract consumers who value this sort of shopping experience, take note, as you may always need to keep a human in the loop to some degree. Firms will likely need to integrate both chatbots and human agents in order to handle initial inquiries consistently, allowing human agents to step in when necessary.

This personalized communication helps firms identify customer motives early in the chat and can tailor the communication accordingly. Utilitarian customers benefit from structured, problem-solving interactions whereas hedonic customers prefer a more social and engaging conversation through online chats. Since customer-agent similarity detracts from information sharing goals for utilitarian-motivated customers, understanding these differences is essential for the firm to best optimize customers’ experiences.