Social engagement and loyalty: Set course and engage

By Nicc Lewis, VP Marketing, Leverate

The two main themes dominating the financial trading industry right now are the rise of competition leading to higher marketing costs and the growing popularity of Multi Account Managers (MAMs). One key solution that addresses both these issues is the rising trend of Social Trading. We will assume that everyone is familiar with the concept of Social Trading and Copy Trading and will look at how smart brokers are implementing this.

It is easier to start in reverse order with MAMs and how social is allowing Multi Account Managers to manage their clients who use Social. By setting themselves as Masters, they allow their clients to copy their trades automatically. Their clients, in turn, can log on at any time to see how their funds are being managed and the overall performance of their Money Manager.

Some MAMs are sensitive to exposing their clients to their competition, especially in the APAC region. Social Trading platform providers who cater for these MAMs, simply “ring fence” them into micro communities so that followers of the MAM can only see the MAM itself as a Master and not anyone else in the wider community.

As competition stiffens and acquiring new traders becomes more difficult and expensive, the ability by brokers to provide this tool to MAMs, is an effective way of bringing in new traders in bulk by acquiring networks operated by Multi Account Managers.

This brings us very neatly onto how Social Trading assists with the increasing marketing expenses involved in acquiring new traders. If the top line expense grows then in order to get equivalent or even better Return on Investment (ROI), logically you need to work on the “Return” part of the equation. The over-riding factors to increase income per Dollar/Euro/GBP/RMB… spent is to increase the following: conversion, retention and lifetime value.

Many have already spoken about the benefits of Social Trading in conversion, as the potential trader has an easier transition into the world of financial investment, by copying other already successful traders. I want to look at the retention and lifetime value side.

The key words to look at are: engagement and loyalty. Regardless of your business, a client who is engaged will be more loyal to your brand and spend more money over a longer period of time. The same is true of financial trading. Social Trading engages Traders throughout their lifetime increasing their activity and their life span, ultimately meaning higher lifetime values for the broker.

For novices and newer or smaller traders, the ability to search for Masters to copy boosts confidence to trade in larger amounts. The trader simply searches for successful traders with similar attributes to them like risk strategy and instruments traded. As a platform provider, we see how traders spend time analyzing other traders in a way similar to how they would analyze the market and the charts before trading.

As the trader grows and becomes more established, Social Trading provides a different form of engagement. Do you know what the most used button on LinkedIn is? It is the “Whose viewed my profile?” button. As other traders begin to follow and copy them, they become more engaged and responsible, becoming brand ambassadors.

There is one more use of Social Trading that even surprised us. Because the platform provides in-depth analysis of traders’ performance, traders are using the platform to analyze their own performance over periods of time.

As the market matures, so do the traders. The search for information becomes more critical in assisting consumers’ buying decisions. Combined with the need to engage clients, Social Trading is becoming a key weapon in the broker’s arsenal.