Do not fall into the sales trap! Op Ed
Sales and marketing in the online world is a very difficult process, and so incredibly complex due to the technologically advanced nature of our industry that failing to make the required level of impact in order to remain not only effective, but even sufficiently profitable, is almost a science. Perhaps the most remarkable aspect in […]
Sales and marketing in the online world is a very difficult process, and so incredibly complex due to the technologically advanced nature of our industry that failing to make the required level of impact in order to remain not only effective, but even sufficiently profitable, is almost a science.
Perhaps the most remarkable aspect in this is that the sales channel is the most important part of the business for most retail FX firms because, whilst being at the forefront of technology and having top of the range research and development systems is vital, without a finely honed sales process, potential customers will pass by.
A few years ago, Jordan Belfort, about whom it is absolutely possible to affirm that he has experienced extremely rapid success by figuring out other people’s business models on his own and selling to a willing audience, followed by demises by incorrectly operating the mechanics of the business, a prime example being his first real business venture, Manchester Meat & Seafoods, which he acquired at the age of 21.
Jordan Belfort then spent his time physically knocking on doors and selling, and within just a few months, increased his fleet of delivery trucks from one to twenty seven, becoming a millionaire at the age of 21, over thirty years ago during a time when a million dollars was a fortune by any standards.
A rich man? No. A great salesman? Yes.
The business failed within two years due to it being totally focused on sales and expansion, with not enough emphasis on the operational aspects, a mistake which Jordan Belfort still to this day holds out as being one of the most important lessons he learned in his entire business career.
In many respects, the FX industry is a polar opposite of Jordan Belfort’s door to door food delivery business, in that the operational and structural side of the business is complex, expensive due to regulatory and technological considerations, however in many ways it should be easier from a sales perspective to make a success, despite the low spreads and fierce competition, because, unlike legacy businesses, there is no physical product and no delivery, no purchase and resale of goods – the nearest comparison to that being the exchange of liquidity between buy-side and sell-side via an aggregator, which can be leased from many providers very competitively and connected through a centralized API, which is a world apart from the expensive and decentralized nature of Jordan Belfort’s trucks, with their individual operating costs and finite number of deliveries that they could make in one day.
What a waste!
One of the least obvious aspects that contributes to ineffective sales and high customer acquisition costs in any industry whose product is intangible is the waste of leads, as they are not visible as a physical entity. Compared to unsold food products which are highly visible when disposed of as a waste of money, it is easy to overlook wasted leads.
Bart Burggraaf, Managing Director and Partner at MediaGroup London today explained to FinanceFeeds;
“A lot of marketers simply forget about what happens after leads or clients submit that form on the site. They focus solely on acquisition and things to improve conversion, but they don’t think about how they can support sales people in the best way. The marketing team (in cooperation with sales) should be overseeing the sales infrastructure and in particular the CRM and marketing automation systems; constantly thinking of ways to make sales’ work more effective by way of automation and workflow.”
“As an example, rather than getting a huge unsorted list of leads to call, support emails to follow up on, client trade issues to sort out and much more, the infrastructure should be built so that things are prioritized. The first lead to call should also be the best quality one. The first client issue to solve should be for the most profitable clients. Support emails should be pre-sorted by a ticket system and urgency. Smart automation is the way to go, and brokers using excel sheets or an antique home-brew system are throwing away money every day” concluded Mr. Burggraaf.
Running with the heard will not protect you
Paul Orford, VP of Business Development at TopFX this morning described his perspective from a business-to-business viewpoint:
“We are often told that there is ‘safety in numbers’ and that ‘running with the herd’ will protect you from grave misfortune. However, when going into a new venture in starting your new brokerage is that the case?”
“Having spoken to many people who are looking to start up a brokerage, their default position is to select the MT4 platform with the reason often given that ‘all my clients want this’. However, if this was the case why would any new client come to your brokerage?”
“A quick search on FX BROKERAGES in google, you can see that 99% of retail brokerages are the same offering a bonus, MT4 and a trading education package. So what differentiates between the new fledgling start up, and the imposing dominance of the established brokerages” continued Mr. Orford.
“What the industry has always thrived upon is being driven forward by entrepreneurs. However by utilizing this piece of software it may be detrimental to holding your business back. With other platforms, such as Spotware’s cTrader, as an LP it is a dream to work with as it is easy to connect to the client to the liquidity pool. Also for the client they can choose multiple LP streams with great ease so he can increase the competition in the market, hopefully improving the service for them” he said.
“As an LP we are neutral in the debate, however I have often been intrigued as to why a retail client who has a basic technical knowledge of currency trading selects a certain platform. There are far more user friendly and transparent technologies on the market which are designed for a certain calibre of trader.”
Mr. Orford concluded by stating “From a personal point of view, I believe if you want to survive as a start up you will need more than the usual fair that people offer. Execution speed will soon become even more key, as the retail market has become more knowledgeable. In perhaps the next 3 – 5 years, it will be more about the tightness of the spread and execution, rather than which football team a brokerage sponsors!”
Bearing this in mind, it is therefore imperative to use the technological advantages that our industry has to good effect. FX is unencumbered by limitations which face businesses that manufacture a physical product as FX companies are able to adapt their services and offerings almost immediately, comparative to the product development cycle for a manufacturing company which includes tooling of factories, design of products and the inability to scrap it all and redesign if a drop in demand occurs.
This is why nations with highly developed electronic trading centers and which are financial technology hubs sit at the very top of the tree in terms of economic success. The interbank sector in Hong Kong, Singapore and London stand those cities out as world economic landmarks, with whose wealth even nearby cities cannot compete.
Yet despite this, common mistakes and crowd-following are rife. Dukascopy Bank is an example of a firm which does not follow the crowd at all, however despite having to internalize vast costs due to in-house development of proprietary end-to-end trading systems – not just proprietary platforms, but because it is a Swiss bank, the entire flow from liquidity systems to servers, to platforms and mobile devices, plus its unique Dukascopy Community which encompasses a media channel, the relatively small brokerage still turns a sizeable profit and indeed increased its fortunes substantially over the first half of this year at a time when some of the firms with a ‘me-too’ approach headed for obscurity.
It could be argued that it takes more than digital marketing campaigns to maintain a foothold among companies with a low-touch approach, however there are certain successful examples of companies which achieve more than the lowly 1% effectiveness rate which has become common for digital campaigns.
Mordecai Holtz, CEO of Blue Thread Marketing, had this to say to FinanceFeeds on that particular subject:
In today’s fast paced hyper social digital environment, brands are constantly challenged by the need for speed versus the need to be careful and methodical with its digital content. Unfortunately, with the need to be responsive, comes a higher propensity to produce while ignoring some common mistakes. Clearly, for a brand having a clear digital content strategy that addresses all platforms is critical. Having a clear response in the event of mistakes is part of that content strategy.
There are 3 common mistakes according to Mordecai Holtz. These are:
1. Personal vs professional content and account usage. Limit staff access to digital content only within brand authorized devices.
2. Typos are very common. If small, correct if possible or don’t bring attention to it. If the mistake changes meaning then own it and correct it.
3. Automation: very common in larger companies. The key is to know the process of stopping the automation and to be sensitive to changes in various markets.
Photographs: Top Left – Bart Burggraaf, Managing Director and Partner at MediaGroup London. Top right- Paul Orford, VP Business Development, TopFX. Lower right- Mordecai Holtz, CEO, Blue Thread Marketing.