Self-Managed Chat Converts 54% Less Revenue Than Vendor-Managed Chat

A Case Study

👋 Hey, Jon here! I wanted to make sure I snuck in a newsletter this week for everyone before I go on PTO and head up to State College to watch Penn State take on Ohio State this Saturday. Tonight’s newsletter is based on a question I got from the previous article analyzing revenue converted by chat tools: “Do you have performance data about types of chat tools? Specifically the difference between chat tools managed by the contractor versus the vendor.”

Prior to SearchLight, I worked in the automotive industry for nearly 10 years with car dealerships all over the US as well as major OEM brands.

I witnessed first-hand the rise in popularity of adding live chat tools as a feature to car dealerships websites and the question quickly went from Should I have chat on my website? to What type of chat tool should I have on my website?

When that shift happened, 3 distinct types of chat tools emerged:

(1) Self-managed - you answer the chats yourself

(2) Managed chat - the vendor you purchase the chat product from answers the chats for you

(3) AI/bot-answered chats that collect lead information and forward them over to your team

There were BIG debates about which type worked best, but not a lot of data to back it up.

But our platform has this data for the home services industry, so I wanted to take a deeper look into the performance of specific types of chat tools and how they compare in between the following metrics:

• Match Rate

• Booked Job Rate

• Average Ticket

Let’s dive in!

The below data is based on 3 months of revenue flow analytics measured by SearchLight from PPC and Facebook conversions.

Breaking Down The Performance of Self-Managed Chat Tools

Self-managed Chat Definition: A live chat tool placed on your website that requires you or someone from your team to the respond to the inbound messages.

In a 3-month period, we tracked 274 PPC + Facebook leads that converted via a self-managed chat tool.

Match Rate: 33.9%

About 34% of PPC and Facebook leads that converted via chat ended up in the CRM with a revenue opportunity attached to it.

To put this in context - phone calls had a match rate of 31.4% and form leads had a match rate of 31.6%, so self-managed chat outperformed both in this category.

Booked Job Rate: 22.5%

22.5% of PPC and Facebook leads that converted via chat ended up converting to a sale. So, for every 100 leads that converted using a chat tool managed by the contractor, about 22 of them became paying customers.

Phone calls had a slightly higher booked job rate at 23.2% and form leads had a slightly lower booked job rate at 20.7%.

Average Ticket: $6,180.0

The average ticket (service, maintenance and installations) can vary by contractor, so this carries less weight, but nonetheless, customers who converted via a self-managed chat tool ended up spending an average of $6,180.

But now let’s take a look at how managed chat tools performed in comparison.

Breaking Down The Performance of Vendor-Managed Chat Tools

Vendor-managed Chat Definition: A live chat tool placed on your website with vendor-supplied agents responding to the chats on your behalf.

In a 3-month period, we tracked 302 PPC + Facebook leads that converted via a vendor-managed chat tool.

Match Rate: 71.8%

7 out of 10 customers that converted via this chat tool (from PPC + Facebook advertising) matched to a sellable opportunity in the CRM.

That’s 37.9% higher than self-managed chat.

In this sample, 217 chat conversions ended up in the CRM with a sellable opportunity.

If the match rate performance had been the same as self-managed chat (33.9%), only 104 chat conversions would have ended up in the CRM with a sellable opportunity.

That’s a difference of 113 opportunities!

Now let’s look at booked job rate:

Booked Job Rate: 49%

Booked Job Rates for vendor-managed chat tools were 26.5% higher than self-managed chat tools!

Nearly 1 out of every 2 PPC and Facebook leads that converted via vendor-managed chat turned into a paying customer.

That’s 148 booked jobs.

If the booked job rate performance were the same as self-managed chat (22.5%) it would have only generated 68 booked jobs.

That’s 80 fewer jobs than the vendor-managed chat tool solution.

Average Ticket: $4,596.60

With vendor-managed chat, the average ticket was 25% less but we can use the data to make inferences about the revenue performance difference between the two chat types.

Vendor-Managed Chat Added $367,728 in Sold Revenue vs. Self-Managed Chat

Vendor-managed chat converted 148 booked jobs from PPC and Facebook leads at an average ticket of $4,596.60, which is $680,296.80 in sold revenue.

But what if it were a self-managed chat solution?

Using data from the sample of self-managed chat conversions, we know the average booked job rate is 22.5%.

At a 22.5% booked job rate on 302 leads, we would get 68 booked jobs, which is $312,568.80 in closed revenue based on the $4,596.60 average ticket.

That’s 54% less revenue than managed-chat.

Same amount of leads converted by chat, different booked job rates = significant difference in sold revenue.

Keep in mind, this is a sample of data and there are a lot of variables to consider, but this scenario illustrates how significant the impact match rate and booked job rate can have on sold revenue.

So What?

Chat was responsible for converting 4.1% of leads in our last study, but generated 8.5% of the total sold revenue from PPC and Facebook leads.

This is a large enough number to warrant a thoughtful decision about the type of chat tool you are using.

We have seen anecdotal examples of self-managed chat perform almost as well as vendor-managed chat, so this article is not to knock any of those tools, but the key takeaway is this:

Based on our data from this sample, if you have a chat tool and are managing it yourself, if you and your team are not 100% dialed in to responding, qualifying and booking chat leads in a timely manner, you are more than like missing out on revenue and it could be as much as 54%!

To simplify this even further, if you convert 100 chat leads per month today, increasing your booked job rate by just 5% would result in 5 additional booked jobs.

If your average ticket were $4,000, that would be an additional $20,000 in revenue from a 5% performance increase from chat converted leads.

The small wins can add up to big differences to your bottom line, something worth considering when you evaluate the different types of chat tools available to you.

Until next time,

Jon