Both the online retail trading of forex and of binary options are especially competitive environments and both markets feature a plethora of brokers for existing and aspiring traders to choose from. One of the main problems that brokers are faced with however is the difficulty they have in retaining customers. In fact, many market analysts agree that retaining a customer is extremely more difficult and demanding than winning that initial account opening.
So, what could brokerages do to best deal with the reality that most traders tend to switch brokers in the same casual manner with which they change their outfits? Well, the first issue to address here is the fact that the vast majority of brokers offer very attractive welcome bonuses in order to attract customers. This is a double edge sword, since it means that it is difficult to outweigh the benefit and lucrative prospect of a generous welcome bonus. As a result, customers have a strong motive to abandon their existing broker, for the eyes of another offering them a huge initial bonus.
The real gist of the retention problem is the lack of adequate differentiation in the offering of brokers, as customers view and experience it. Since most brokers are seen as offering more or less the same trading experience what is stopping traders to abandon them and start a new account with the next broker that puts up a catchy campaign to lure in new customers? Therefore, the best way to effectively achieve customer retention is if as a broker you manage to differentiate your offering clearly and in an obvious manner. A truly differentiated offering will make you stand out and will make your clients feel that they can’t get what you are giving them elsewhere and thus they will be much less willing to abandon you for the sake of another broker. In short, if you want to retain your existing customers you need to be able to present them with a strong enough unique value proposition and be able to demonstrate a differentiation of high value and level.
Having said that, we are aware that offering such a differentiated trading experience may not be easy or even possible to achieve. So, what are other retention boosting methods and tools that you could use, besides or instead of differentiation? Improving trader retention may well be achieved through clever and well-targeted marketing tactics, however in order to be able to design and implement them you will need to engage in data intelligence and make the maximum use of technology.
To be able to target your efforts correctly and effectively you need to be well aware of exactly why your customers are leaving and are taking their custom elsewhere. To identify the causes that lead them to abandon you make sure that you survey every lost client and that you collect and deal with customer feedback in a prompt, committed and serious manner. Customers need to feel and see that their concerns concern you and that their opinions, comments and requests matter, so make sure that you have the right people in your customer support department to effectively deal with customer feedback issues.
Achieving higher retention rates also entails being able to accurately track and measure your retention performance and obtain the necessary data through the web analytics software that you are using, which will indicate whether you’re getting better or worse over time in terms of being able to retain your customers. Actively measuring your retention performance will help you direct your efforts accordingly, while another type of data that you could get hold of through your platform provider, predictive analytics, showing inter alia which customers are becoming inactive or showing similar signs of disengagement, which could mean that they are preparing to ditch you for another broker, could be automatically alerting your sales team in order to take the necessary measures. In fact, by tracking and analyzing customer behaviour one could say that would even be able to predict if a client is pondering about switching brokers even before they actually make the conscious decision.
A final tip on retaining retention is to try to raise the stakes, i.e. make the customer’s decision to move elsewhere have some kind of consequences. This would entail managing to become more than just their broker and could be achieved either by building solid relationships, based on trust and respect, with customers or, better still, taking advantage of the new tools offered by social trading. Indeed it has been recorded that brokers offering social trading achieve higher retention rates than those who don’t, because social trading creates a collaboration venue and means becoming part of an online community. Therefore, a customer will think twice before leaving since they would not only be abandoning their broker but their fellow peers, members of the same online community as well. The stronger the connections and bonds created between the customer and the brokerage, directly or indirectly, the higher the retention rate will be.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.