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Study talks up business chat

Businesses should consider adding chat functionality to their Web sites to allow consumers to communicate directly with them, a new study says.

Businesses should consider adding chat functionality to their Web sites to allow consumers to communicate directly with them, a new study said.

"Service-related chat" will greatly affect the competitive positioning of commerce sites and online marketers, according to the study, "Revenue Prospects for Online Chat," released this week by research firm Jupiter Communications.

The report said these publisher-to-user chats will foster better client relationships and also can aid in marketing products, closing sales, and building communities.

"While there is significant interest in social chat environments, the chat market is growing in different directions," said Kate Doyle, an analyst at Jupiter Communications and author of the report. "Social chat has a definite place as a value-add on niche-interest Web sites and large aggregators. However, this application is also becoming a great asset in terms of improving customer service and promoting cross-sell opportunities."

Social chat, while adding incrementally to publisher revenue over time and bringing positive returns in overall site traffic, advertising, and commerce, is not likely to draw growing audiences, the report warned. Jupiter predicted that by 2002 social chat will be used by only 30 percent of the online population.

In addition, the report predicted that sites using chat as a primary content offering, such as The Globe, will have limited market potential since they lack the traffic of aggregator sites (e.g., America Online's Web presence) and the built-in-community audiences of niche-oriented venues such as sports or entertainment sites.

Those findings resonate with recent moves by some chat sites to form strategic partnerships to draw traffic while providing chat facilities to content aggregators. Recently, Talk City entered into such a deal with newly relaunched search engine Infoseek. (See related story)

Early adopters of customer service in chat are mainly technology and financial services companies, Doyle said.

Chat developer ichat, which makes interactive, Net-based software, offers a Customer Interaction Suite for building chat rooms and threaded discussion areas for customer support. Among its clients are Columbia HCA Healthcare, which uses ichat software to host online forums and Q&As for its customers to interact with specialists about various diseases and treatments; and Pristine Capital Management, which offers its client investors in 32 countries real-time trading ideas, market commentary, and periodic Q&As with the site's editors after the market's close.

SpryNet, the ISP arm of online service CompuServe, already has a 24-hour live tech support chat in place. That receives roughly 1,500 to 2,000 visitors per month and is growing, according to Doyle

Although the goal is 24-hour customer support online, Doyle said Jupiter recommends that companies begin by offering these periodic forums and online events with live customer support online during certain hours, specifically where transactions take place.

Though she sees service as a strong part of the future of chat, Doyle said it will not become a substitute for other means of support. "This is not going to replace call centers or email [for giving customer support], but it can serve as an ancillary customer support channel. The average user at home has only one phone line--it's sometimes hard to go offline to call an 800 number to get help and then go back online to fix a problem. Also, people are used to social chats, so in that sense it's a seamless way to add customer service. Plus, it keeps the site live and active and not static."

Another advantage to implementing live online customer support is that it "could alleviate some fears about e-commerce," Doyle noted. "Studies show that human contact, can help to close sales."

The growth of instant-messaging applications is affecting the evolution of chat as well, the report noted. Almost one-quarter of the online audience use these applications today, Jupiter said. According to AOL, more than 130 million "buddy" messages are sent every day on its service. AOL recently joined forces with Netscape for a feature that will tell registered users of the next version of Netscape's Navigator or Communicator software when someone on their specified list of "buddies" also is online and then let them contact them.

Jupiter predicted that instant-message usage will grow dramatically in the next few years, surpassing that of chat rooms on Web sites, which gives commercial sites using chat as an added value even more reason to turn to the consumer-publisher dialogue.

Senior writer Tim Clark contributed to this report.