Why you should compensate your sales people based on customer satisfaction and not just sales

customer satisfaction

With regulators cracking down on compensating employees based on FTDs (first time deposits), how must forex brokers adapt? Adinah Brown, content manager at Leverate, discusses.

With the new regulations from Cysec, some of the rules of sales are going to have to be rewritten, and some old, successful (and maybe even lazy) habits are going to have to be broken. Two main selling points have been taken away, once formerly able to be offered as a competitive advantage, bonuses and leverage.

To clarify, the new Cysec regulations have capped leverage at 50:1 for experienced traders. Gone are the days of high leverage offerings that increased like an auctioneer’s sales pitch (can I hear 400:1? 500:1, 500:1, 500:1…. 1000:1! Going once! Going twice!). And with it will go some traders with ultra low equity accounts.

The other new change is a big one……. Drum roll…….No bonuses. At all. None! In the past you could simply hide the extra bonus amount in leverage, after all, that’s what it ends up being at the end of the day. But with the new leverage cap in place, that option is now severely limited.

For sales managers in particular, this represents something of a moment of truth. How many of you suspected that your sales agents would not be very good without the ability to offer a bonus? Usually it was the ones that constantly wore a sour expression when there wasn’t a super high bonus promotion and complained loudly that management wasn’t providing competitive bonuses. Now you get to see what those agents are really made of.

But, as good sales agents and sales managers will have figured out already, this is a significant blessing in disguise. With the playing field levelled, the competitive offering moves towards service and the quality of the offering. No longer are you in a bidding war to provide the highest bonus for the satisfaction of the bonus or leverage hungry high risk traders that chase the opportunity to get more bang for less buck. Not only will sales agents find this a blessing, but retention agents time won’t be filled with haggling over follow up bonuses as the competition provides seemingly endless kamikaze bonuses to pull traders away.

Ultimately, this will ensure that traders will have to provide more bucks in order to make the profits they want, which will change the prototype trader, to lower risk and higher net worth. So although counterintuitive, there is likely to be larger deposits overall as the new leverage ratios needs demand.

But, not necessarily for first time deposits (FTD’s). And this will be a problem for sales agents, who live by FTD’s.

In many cases bonuses were used to incentivize first time deposits. That is why the first time deposit bonus was so large, to have people put in more because they knew that they could not get an equivalent amount at a later stage. Without it, there will less likely be as significant FTD values as there is no financial incentive or urgency to do big FTD’s.

Because of this, not only will sales people have to adapt significantly, but sales remuneration will have to change to make it equitable for sales agents. The lower risk, higher capital clients that will be available now, and the focus on competitive offering will likely drive sales agents more towards service facilitators. Should this be the case, there is a strong case for changing the remuneration to one that reflects the ongoing activities of a trader, like ongoing deposits and volume, rather than percentages based on FTD’s.

Although this will impact the activities of retention agents somewhat, it is likely to be an issue that will need to be addressed in remuneration.

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