Why Old Hats Need New Tricks: Customer Value Management in the Trading Market

By Adinah Brown, Leverate.

Undeniably the online trading market is changing, but whether it’s changing for better or worse depends on who you ask. For your executive marketing professional at your standard forex brokerage, the challenge to stay alive is far more acute than what it has ever been before.

Heightened regulation standards across the globe have done away with a lot of catch phrases used to attract clients to bonuses or high leverages.

The extreme requirements for reporting have put significant pressure on brokers that are already operating within a crowded and aggressively competitive market. The fall out has already started to unfold, with many smaller brokers closing up shop or significantly changing their financial offerings. In this climate, the marketer’s job is not easy and old tricks, just won’t hack it.

The competitiveness of the forex industry means customer expectations have grown considerably. It is up to brokerages to determine if they are up to the task of meeting those expectations by providing a satisfying experience to clients in order to grow their revenue.

So, what is Customer Value Management? Widely known as CVM it is the employed use of machine learning based analytics which provides actionable research that is applied through the use of real time marketing tools. For those seeking to keep their brokerage firms operational and even thriving, there is no underestimating the value of this two tiered feature of CVM.

On the one hand it represents the ability to understand what it is that your clients want and are willing to pay for and on the other hand, it provides clients with the solution or offering that will address that need, in the moment it is being sought.

Let’s break down these two elements of analytics and real time contact;

1. Understanding your client’s behavior is no simple task, but if the methodology is right and data is analyzed correctly, it can be a veritable gold mine of information. To ensure that accuracy of the analytics, the points of focus should be on the needs of your consumers; what do they want to get out of your service? And what is the best way to communicate with them?

2. The real time communication is about getting all that data to work for you. Now that you’ve taken the time to understand you clients, communicate it to them. Propose that offering that they have demonstrated an interest in, at a time when it is still relevant and useful to them.

The obstacles brokers face in maintaining their revenue is due to numerous developments, that when compounded together challenge the viability of existing business growth strategies. While many brokers are still working on their acquisition strategies, the reality is that as CPA increases, new leads are becoming scarcer, while high quality leads have taken an almost mythological-type status.

However, not only is there a dramatic shortfall of new leads, but many brokers have also complained about the lowered LTV of existing clients, as they experience very high churn rates. The high churn rates that have continued to hamper revenues has been steadily increasing with the more aggressive competition between firms and simultaneously the increased boundaries placed on them by regulatory authorities.

For Amir Haimpour, Senior Product Manager of Optim8, the solution lies in the ability to increase the ROI of existing clients in a seamless process.

Since the prospect of reaching out to new clients seems to be reduced day by day, the alternative of reaching out to existing customers by addressing their needs more comprehensively, appears to be the most assured way out of this industry crisis.

This focus of enhanced retention entails the necessity to improve the quality of services. It is a fact that traders will stay with a broker for longer if they feel they are providing quality. Not only will they continue to actively use your services, but they will also advise other customers to come in from competing brands, as they recommend the advantageous quality of your brokerage.

In this context, brokers need to understand the elasticity and inelasticity of their clients, they need to know exactly what their clients are willing to spend their money on and what they’re not. This is where the benefits of machine learning and analytics become pertinent.

In order to induce sales, brokers need to understand how all their different clients behave and be able to follow their respective preferences.

By applying big data to the full network of systems, be it the CRM, the trading platform, the broker website etc, you can implement methods such as predictive analytics in order to help you form the whole picture of what your client’s want.

With tools that will enable you to understand their behavior with real time data visualization, sales managers can easily identify what will be perfect for your customers. It completely takes out the guess work of what your traders’ want, and replaces it with data, that is clean and clear.

The proof is in the precedent and for that reason we have collected statistical results from companies who have already applied a CVM approach to their sales and marketing strategies.

Brokers that had exposure to real time data experienced a 26% increase in their retention funnels.

Brokers that had implemented the data available from their enhanced analytics, saw a 15% increase of money deposited into trading accounts.
Over time the effect of engaging with clients on a level that was more relevant and useful to their interests, resulted in a 40% increase in revenue.

The study has also found that 67% of all clients that left a broker, would have considered staying if their issue was resolved in the first interaction of when it was raised.

70% of clients reported that they decided to trade with a particular broker based on how they felt they were treated by the company.
Analysis of broker revenue showed that by improving customer retention by 2% equates to reducing costs by 10%.

The successful implementation of a CVM strategy necessitates a change of mindset by broker executives.

Haimpour insisted that “once brokers understand what their client’s want and prefer from amongst their offerings, than they need to follow it up with the right personalized message that addresses those specific interests. It won’t just be your clients who will be thanking you, for the improved service, but your bottom line will speak wonders”.

Image: Amir Haimpour, Senior Product Manager, Optim8.