When is a lead a dead lead?
FX industry executives from IBs, to management consultants, technology firms and prime brokerages speak to FinanceFeeds about how leads can be maximized and what special techniques mean that there is no such thing as a dead lead
“The leads are weak” retorted a dejected Shelley Levine in the 1992 movie Glengarry Glen Ross.
His grievance was not met with a sympathetic answer by harsh and direct sales ‘motivator’ Blake Baldwin, who unleashed a famous tirade of profanity, inferring that the sales team were weak, rather than the leads themselves.
When is a lead a dead lead part 2 can be viewed here.
This particular scene of what is now a 24 year old movie has given rise to a number of firms alluding to the phrase, largely with humorous nostalgia, on the basis that even in today’s highly advanced sales departments which rely on leading edge data and customer management systems, the prospect of a weak lead is somewhat a taboo subject.
Glengarry Glen Ross, the ominous title of the movie, referred to the territories within which the fictitious real estate company Premier Properties operated, with the four salesmen featured throughout its duration being responsible for generating sales in the towns of Glengarry and Glen Ross.
Some 24 years later, sales people do not just cover one region, but the entire world, especially in online and e-commerce businesses such as retail and institutional FX.
Retail FX firms have to generate new leads on an ongoing basis, the customer lifetime value is now down to approximately 6 months for a new trader, and the average deposit amount is approximately $6,600 globally. Taking into account the larger deposits in the US due to electronic futures and options traders that operate in the retail space, and the figure is under $4,000.
Acquiring clients now costs between $1,200 and $1,500 for a retail firm.
Institutional business, whilst less “throw everything at the wall and see what sticks” in terms of customer targeting, is a different matter because those wishing to onboard brokers, or even liquidity providers in the case of prime brokerage providers, are able to seek out one or two companies per sales period, which bring all of their order flow, rather than attempting to onboard retail customers en masse and apply the same effort six months later to replace them.
Leads, therefore, are critical these days.
Moreover, how leads are generated is even more critical than ever. Ensuring that an appropriate audience is approached is critical as it counteracts dejection among sales staff, and reduces the wasteful phenomenon of what have become colloquially referred to as ‘dead leads.
Big data and machine learning have become a massively interesting point recently, and can most certainly be used in the generation of leads, as well as the interaction with active traders once they become a customer in order to retain them.
Today, Matthew Miller, Founding Partner at New York based consultancy Shift Forex explained to FinanceFeeds “From our perspective, a lead is dead only if the prospect says do not call me or unsubscribes in some fashion. if a door is left open so to speak, there may always be an opportunity down the road.”
When asked if it is more effective to have sales teams concentrate on calling existing leads in the hope of building a relationship and therefore having a ‘high touch’ approach, even though they may not convert for ages or may never convert, more effective to use some kind of big data to generate and call leads that may be relevant to a specific service, Mr. Miller said “I think that varies widely among brokers, depending on capacity.”
“By capacity, I mean number of leads and bandwidth of sales people” he continued. “If you have lots of leads, using big data to sort and get to the good ones would be great, however if you don’t, then you should be building relationships with anyone and everyone you can.”
How do IBs maintain their leads effectively, keep customers happy and engage brokers to work with them?
Speaking today to Justin Hertzberg, CEO of Forest Park FX in Boca Raton, Florida, Mr. Hertzberg explained “It amazes me the cost of acquisition that brokers have to outlay these days. If they’re runnng a legitimate B Book then thats great, but it is still very expensive and margins are so low.”
“Maybe the amount and concentration of brokers is a contributing factor to the need to streamline the approach that is being taken, and added to this level of competition, they are going after the same firms and same people” said Mr. Hertzberg.
“I’ll give you a perfect example” he said. We operate a sub-IB which provides services including custom EAs. This particular sub-IB was recently approached via email by FXGiants which is a subsidiary of IronFX, which contained marketing information stating that FXGiants is a good firm to work with because it may become listed” explained Mr. Hertzberg.
“There is no high touch in that approach, he said. “It is a pre-packaged, cut paste email and in my opinion, time would be better spent with one phonecall from the broker to talk to the IB or in this case sub-IB, get to know him and understand how his business works.”
Mr. Hertzberg maintains that the cost of keeping a high touch, customer focused model is not only favorable to clients, but also cost effective. “Nowadays, everyone uses live chat applications, Whatsapp, Skype and various other voice over IP solutions that mean there is no cost in calling customers around the world, and picking up phone is cheap.”
“I am cut from a different cloth than brokers that hire a room full of people who send multiple emails with no follow up. One thing im trying to do now, and that I believe has tremendous merit involves what I consider to be some of the low hanging fruit, which is for me as an IB to assist in the regeneration of dead leads within the brokers” – Justin Hertzberg, CEO, Forest Park FX.
“I am intending to gain a marketing orientated approach toward what brokers may otherwise consider to be dead leads” said Mr. Hertzberg.
“Many brokers have a litany of dormant clients, or leads that have never been converted due to lack of interest or unsuitability to certain products, therefore we can help brokers pitch a new product, whether it is a money management program, or automated trading solution, or education packages. This also does not involve any up front costs to brokers because the service providers such as educators would be paid commissions according to the reinvigoration of accounts. We try to make the most of what we have got rather than go out and buy market share” he said.
Currently Mr. Hertzberg is beginning to work with brokers on this basis. “We have a great network of educators, portfolio managers and ancillary service providers, and the brokers get the clients that they can start up again. No buying leads. No email blasts – we have not sent one since 2014. For me the high touch model works” he enthused.
When asked about the viability of using big data to target specific services toward leads, Mr. Hertzberg said “Using big data can be expensive, but it does not have to be. It depends on the developer and how sophisticated it needs to be. A drip campaign for dead leads should be inexpensive and the revenue gained outweighs the cost” he explained.
“Another thing that benefits brokers that I think IBs can offer is offline conferences. I think that in general, the industry has almost swung too far with the online-only approach. I think the broker conferences can do well. We have been sponsoring educators and service providers, and have been getting a very good return. At such conferences, it is entirely possible to convert 80% to 90% of the 200 to 250 attendees because we managed to shake their hand and speak to them, as well as engage them by bringing very interesting panel speakers” said Mr. Hertzberg.
Mr. Hertzberg concluded by explaining that he had spoken to a couple of newer brokers that start up their operations and have 30 people on staff from the outset. “Can you imagine how much capital these firms burn up? They are employing people in client services, trading desk and risk management positions, as well as relationship managers and executive teams. Even if each is paid $50,000 a year, thats a tremendous amount of capital outlay on day 1.”
Natallia Hunik, Global Head of Sales at Advanced Markets and Fortex today told FinanceFeeds “Bringing quality leads in B2B FX is a challenging task.”
Ms. Hunik, who is a very seasoned professional in the prime brokerage and broker technology sector, explained
“In a B2B environment, the entire process, starting with prospecting, qualification and closing is much more complex and requires investment of time and effort from the salesperson” – Natallia Hunik, Global Head of Sales, Advanced Markets and Fortex.
In order to avoid sales team spend time qualifying unqualified leads, the company needs to focus on bringing the right audience to its website. Educational content targeting specific sector, explanatory videos, white papers, guides – all of these are helpful to attract the right type leads.”
Ms. Hunik then explained how technology provided by broker solutions providers can provide automation tools and pre-qualify clients.
“In order for the leads to flow down the qualification tunnel, progressive companies like Fortex deploy marketing automation tools that help pre-qualify clients before they get the sales person. We score leads, assign “lead persona” depending on the product or products that they have looked at, automate demo account creations, integrate demo analytics into the sales CRM and try to guide the client properly towards the conversation with the sales person” Natallia Hunik, Global Head of Sales, Advanced Markets and Fortex.
“When marketing pre-qualification works properly, by the time lead is ready to speak with the sales person, he/she already equipped initial information and knowledge about company and product. Sales person, in its turn, has all the relevant info about the lead provided” she concluded.
24 years is a long time indeed, and the way that interactions between customers and sales departments take place today bear very little resemblance to the days in which Shelley Levene famously considered the leads to be weak. Indeed, the scope is now global, instantaneous and highly competitive, needing a very complex and efficient modus operandi, QED.
Photograph courtesy of Wilgengebroed