How to Measure the ROI of Your Live Chat Service

Adding live chat to your website is an investment that can provide immense value to your business. With the ability to immediately connect with visitors and turn them into customers, live chat has the potential to significantly impact your bottom line.

But how exactly do you measure the return on investment (ROI) of your live chat service? Calculating ROI tells you whether the money you’re spending is actually paying off.

This post explores key metrics and formulas you need to quantify the value of your live chat. With the right tracking in place, organizations can continually optimize their live chat strategy for maximum profitability.

Why Live Chat ROI Matters

ROI matters when it comes to live chat for multiple reasons:

1. Justifies the expense: With concrete ROI figures, you can clearly demonstrate the value live chat brings and justify the ongoing cost.

2. Identifies opportunities: Knowing which metrics are lagging can spotlight areas for improvement.

3. Compares performance: Tracking ROI over time allows you to gauge the impact of changes and refinements.

4. Forecasts future returns: Analyzing historical data predicts how profitable the investment will remain.

5. Optimizes spending: Determining ROI by traffic source, agent, etc. indicates where to allocate budget.

5 Key Live Chat Metrics to Track

To gain a complete impact picture of live chat, organizations must track both quantitative and qualitative KPIs. Following are the most important metrics to monitor:

1. Volume Metrics of Live Chat

• Chat volume: Total number of live chats

• Chat duration: Average time visitors spend in live chats

• Chat initiation rate: Percentage of visitors who start chats

2. Sales Metrics of Live Chat

• Revenue per chat: Average revenue generated per live chat conversation

• Chat-to-sales conversion rate: Percentage of chats that result in a sale

• Revenue influenced by chat: Total revenue from chat conversions

3. Satisfaction Metrics of Live Chat

• CSAT scores: Customer satisfaction scores from chat surveys

• Net Promoter Scores: Likelihood of recommendation scores from surveys

• Agent ratings: Customer ratings of individual agents

4. Operational Metrics of Live Chat

• Wait time: Average time visitors wait before an agent responds

• Abandonment rate: Percentage of chats abandoned before agent response

• Simultaneous chats: Number of concurrent live chats

5. Marketing Metrics

• Traffic from chat: Number of visitors driven to your site by live chat

• CTR of chat offer: Click-through-rate of chat pop-up or invitation

• Chat sales by source: Conversions from chat, organized by traffic source

The above is a mix of metrics, which highlights all aspects of your chat program, far beyond the raw conversion numbers. As we’ll explore next, these KPIs will fuel your ROI calculations.

Live Chat ROI Formulas and Calculations

When it comes to calculating the ROI of live chat, organizations need to ensure have the right formulas in place. 

Basic Calculation: Revenue – Cost/Cost= ROI

Following are recommendations on how to apply this formula to live chat:

Calculating Revenue

On the revenue side, organizations must determine the revenue directly influenced by their live chat service. There are two main ways to calculate this:

1. Chat Sales Revenue: This is the total revenue from all sales conversions within live chat conversations: Chat Sales Revenue = Number of Chat Sales x Avg. Order Value from Chat

2. Assisted Revenue: To account for the entire buyer’s journey, this approach attributes a portion of all revenue to live chat’s influence. First, determine chat’s influence rate: Chat Influencer Rate = % Visitors Who Chat x Chat-to-Order Conversion Rate. Second, apply this to total revenue: Assisted Revenue = Overall Revenue x Chat Influence Rate. For a more conservative estimate, the recommendation is to use direct chat sales revenue. But assisted revenue can demonstrate the full scope of live chat’s impact.

Calculating Costs

On the cost side, organizations have both fixed and variable expenses.

Fixed costs are what organizations pay regardless of chat volume, such as:

• Monthly live chat software subscription

• Salaries for dedicated chat agents

• Any one-time setup and integration fees

Volume costs change based on chat volume:

• Agent salaries for time spent chatting

• Chat-based commissions for agents

• Fees for third-party agents if outsourcing overflow

For cost calculation, add up all applicable fixed and variable costs over your measurement period. Second, plug revenue and costs into the ROI formula: Revenue – Costs/ Costs = ROI. 

5 Ways to Track Chat ROI in Your Live Chat Software

Now that you know the key metrics and formulas, the next step is setting up tracking in your live chat software. Having the ability to easily pull reports on these KPIs is crucial. Following are some tips for tracking live chat ROI in your platform:

1. Use Attribution Tracking 

Relate chat conversations to subsequent goal completions like form submissions or purchases. This tracks conversion rates and assisted revenue.

2. Integrate with Your Analytics

Connect your live chat and analytics tools. This provides fuller context with data on traffic sources, behavior flows, etc.

3. Survey Chat Visitors

Prompt visitors to rate satisfaction and likelihood to recommend. This captures CSAT and NPS.

4. Organize Reports

Build custom reports combining chat volume, sales, and operational metrics. Schedule for automatic emailing.

5. Track Over Time

Compare week-over-week and month-over-month to identify trends. Look at differences across campaigns, seasons, agents, etc. Investing time in gaining visibility into the data will allow you to continually refine live chat’s ROI.

Continually Evaluating Live Chat’s ROI

Measuring live chat ROI shouldn’t be a one-time activity. To get the most value from your investment, it’s important to monitor metrics on an ongoing basis. Following are some best practices for continual evaluation:

• Review live chat ROI metrics weekly or monthly and look for trends

• Set up automated reports to have key data sent on a schedule

• Track ROI by different segments—traffic source, agent, campaign, etc.—to find opportunities

• Compare chat ROI to your other sales and marketing channels

• Set goals for ROI levels and conversion rates

• If numbers dip, investigate issues and refine your live chat strategy

• Share results with agents and stakeholders to align on value

With regular analysis, organizations can spot any lags in live chat profitability early. Addressing problems quickly ensures organizations continue reaping maximum returns.

5 Ways to Optimize Your Live Chat Investment 

Delivering a high-value live chat service entails more than just doing the math. You also need to create the optimal conditions for ROI. Following are some additional tips to drive higher profits from live chat:

1. Promote Your Live Chat

Place chat invitations and pop ups strategically throughout your site to increase volume. Highlight chat in top navigation menus.

2. Train Your Agents

Ensure agents have the skills to qualify prospects, nurture leads, and close sales. Conduct coaching sessions to improve performance.

3. Set Service Level Standards

Reduce wait times and abandonment by defining goals for speed of response, max queue length, etc. Add more agents as needed.

4. Personalize Chat Experiences

Use visitor info like company, past purchases, page views, etc. to segment and tailor conversations.

5. Follow Up on Chats

Continue engaging via email after chats to build relationships and remind visitors about your brand.

Live Chat Delivers a Measurable Boost

Both B2C and B2B customers want quick, convenient conversations. Live chat, as a result, delivers immense opportunities to connect and convert. By implementing thorough ROI tracking, organizations can conclusively demonstrate chat’s positive impact on their bottom line.

On-demand services such as Davinci Live Web Chat provides organizations with a solid foundation on which to build ROI outcomes quickly and easily. Live chat on your website is staffed by specialists in digital interactions who enable you to focus on your business. Further, armed with data-driven insights, you can confidently invest in live chat services like Davinci Live Web Chat as a profit center for your business. The value delivered by optimizing chat far outweighs the costs. Use the framework and formulas provided above to quantify your live chat ROI and maximize returns. Get more detail on Davinci Live Web Chat here. 

About Patrick Spencer

Patrick Spencer (Ph.D.) is the President and Founder of TIRO Communications that helps companies develop, build, and manage content, customer, advocacy, and demand-gen programs. Included in its offerings is TIRO Cognition Insights, a data analytics tool that enables B2C and B2B businesses to pinpoint what their customers and competitors’ customers are saying and to identify corresponding actionable product, services, competitive, sales, and marketing intelligence. LinkedIn Profile: LinkedIn Website: www.tirocommunications.com