Advantages of live chat support
yes
More competent service: compared to phone support it's easier for your staff to "know all the answers" because they can just quickly ask collegues if they get a tricky question. The customer won't even notice it.
Instant feedback: chat is usually faster than phone support where you usually have to have to go through cumbersome menus. Not to mention email support where nobody even expects an instant answer.
Help more people at the same time: chat agents are usually able to serve three or even more people simultaneously.
No more problems with strange accents or bad lines
Absolutely no extra costs for the website visitor even when they are from another country
Convenient: Support can easily send helpful links to the customer through the chat interface and type complicated names into the chat box.
Analytics: use live analytics to find the most relevant visitors to…
…start chats pro-actively, just like the thoughtful salesman in a store you can offer your help.
Switch off chat when you are away -- if you’re a one man show, just go offline and transform the chat bar into a contact form. Big advantage over telephone support.
Quality of support can easily be reviewed to get a feeling for the support quality your staff is providing, simply by checking the log files.
Disadvantages of live chat support
no
Not all users will like it: users who aren't computer savvy will probably not be too fond of it. You should always offer at least email or phone support in addition to chat support.
Not all users will know how to use it: if your websites attracts mainly technophobes or an older generation, live chat may not be what they are looking for. However “Generation Facebook” keeps growing at a fast rate.
Not great on mobile platforms: iPhone users who are not able to type at lightning speed won't have much fun using live chat. In addition, not all mobile devices are able to support live chat applications.
“Prank chats”: Just like us you will probably get your fair share of not so serious chats. If this happens frequently you can, however, block the person or make email a mandatory field in your pre-chat form, which should reduce this kind of abuse significantly.
Chat agent must react in timely fashion: if your support fails to respond quickly the visitor may leave the site frustrated.
Interruptions: unlike email live chats cannot wait for a couple of hours before they are replied to.