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What is live chat and how does it work?

TLDR: Live chat is a method of real-time communication which allows visitors to chat with a business representative via a chat window which appears onsite. They are able to type and send messages which are immediately sent to the live agent, and the live agent can reply instantly.

Popularity is growing for live chat, but what exactly is it and how does it even work? We cover everything here.

While previously customers were restricted to contacting a company through email or phone, they now often have the option of live chat.

Due to time zones or working hours, phone calls just simply don’t suit everyone, and emails often have a long response time. Although self-service options and FAQs are improving, they are still unable to cover all scenarios… in comes live chat with a solution. With 53% of US adults refusing to make a purchase onsite without finding answers right away, it makes sense that live chat should be offered.

So what exactly is it?


Live chat is a method of real-time communication which allows visitors to chat with a business representative via a chat window which appears onsite. They are able to type and send messages which are immediately sent to the live agent, and the live agent can reply instantly.

live chat window box

Live chat is a simple, efficient solution for answering customer queries as well as handling issues and support questions, however, it’s also a great tool for lead generation and driving sales.

How does it work?

Setting up live chat on your website involves installing a chat widget to appear to site visitors, but the hard work comes next, in your chat strategy and live chat agents.

Software installation
There are numerous free live chat software providers out there, offering a totally free widget to install on your website. There are also paid chat software providers, as well as the option of outsourcing the entire operation to a team of experts who can handle everything themselves.

Installing a chat box is simple, just add a piece of code to your website and it’s done. Many providers offer the chance to customise your chat window, allowing it to match your brand and blend in with your website.

You can decide whether to allow the user to simply click on the window and chat, or whether you would like to add a pre-chat survey to take information such as names and emails.

Set up
The balance between having your chats appear natural and real or too scripted is a tricky one to master. You need to come up with a knowledge base for live chat agents, as well as a conversation flow. This doesn’t want to read like a script, but more like general prompts to guide the conversation in the right direction.

Proactive and reactive chat

The difference between proactive and reactive chat is really quite simple and is a key part of any chat strategy.

Reactive chat simply means that the window will not pop up obviously with a message to the user, it will simply sit in the corner, waiting for them to interact with it.
Proactive chat is a strategy where you dig into your data to find where most customers are leaving your site, or any popular pages, and you create a message to actively pop up to the user, inviting them to chat.

Agent side

Many businesses think they can just put their phone team on chat, or even worse, anyone at all within the business, but that simply won’t work. Getting the conversational skills right is absolutely key, or you won’t see the results you want.

Training a team of chat agents (if you decide to go in-house), shouldn’t be taken lightly. Creating conversations that are actually going to make a difference for your business requires a specialised skill set.

The chat agent will work from an interface, where they can see the current conversations and be able to switch between them to answer questions. It depends on the software you use, so make sure it suits your needs.

User side

The user side couldn’t be more simple, all they need to do is click on the chat window, enter their question, and hit send. You decide how much or little information you would like them to give, and they simply sit back and wait for your response.

Uses for live chat

Live chat can work to suit any need you may have a business, whether that is handling support queries, driving more sales or collecting leads.

Customer support
Whether it’s a technical issue, a question about an order or something else entirely, having someone on chat to be able to speak to can make the world of difference when it comes to customer satisfaction and retention. Outsourcing chat can also give you out of hours support, so you can assist customers while your in-house time sleeps.

Lead generation
Live chat can provide not only a higher quantity of leads but also a higher quality. Live chat breaks down trust barriers through personalised conversation, and allows site visitors to feel comfortable enough to hand over their personal information.

Sales enablement
People who refer to live chat on a website are 85% more likely to become customers than those who don’t? By using a carefully tailored proactive strategy to target the right people at the right time, live chat agents can speak to people who are in the decision stage and assist them without being pushy. They can answer any last-minute questions, offer product suggestions, upsell and reassure site visitors, turning them into satisfied paying customers.

laptop and ipad with marketing statistics - pie chart and graph

Final thoughts

Live chat can seem overwhelming. Installing a free widget with an untrained team may be an easy option but it won’t give you the results you want. A proper live chat strategy requires careful planning and skill. If you’ll like the advice of an expert, or are thinking of outsourcing your chat operation, get in touch with us.