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Screenshot of a breaking news alert e-mail from Q2 2017
In 1988, Cypriot regulatory authority CySec began offering an attractive regulatory structure for retail FX firms, with just two companies established. By 2014, over 150 firms had established their headquarters on the island, a dynamic which increased exponentially since the introduction of EU regulatory passporting. As the landscape of the retail FX industry becomes increasingly crowded, not just in Cyprus, but all over the world, the price of customer acquisition becomes more and more competitive.
Retention marketing offers a far less costly strategy for forex and binary option brokerages to quickly grow and increase the transactions of one-time or infrequent traders and convert them into long-term, high-volume traders. After all, these traders already showed interest in trading by depositing money or opening a demo account. They just need to be enticed to return again to trade, and maintain their relationship with one brokerage, which is an increasingly challenging task these days.
To gain further insight into the modern methodologies behind retention marketing in the forex and binary option industries and how brokerages can improve customer retention, Pini Yakuel, founder and CEO of Optimove, an advanced retention automation platform, spoke candidly to LeapRate.
Mr. Yakuel has over a decade of experience in analytics-driven customer marketing, business consulting and sales. His passion lies in understanding what drives customer behavior, therefore providing his perspective on customer behavior in the forex and binary options industries.
How severe is the rate of churn in the forex and binary options industries?
The numbers aren’t good, I’m afraid. From our in-depth research and customer data among a range of forex and binary options brokerages, we know that approximately 50% of traders churn (leave the site, never to return) within two weeks of making their first deposit. Many forex and binary option brokerages, however, aren’t doing much to capitalize on this missed opportunity for customer retention.
Some traders don’t churn from trading, but from a particular brokerage, thus customer loyalty is a huge challenge for these businesses. A significant percentage of forex and binary option traders are active on 2-4 different forex sites simultaneously. This signals that traders who abandon the site of an FX broker haven’t abandoned forex or binary options trading, just a specific brand. The right retention strategy is therefore key to fostering better customer loyalty.
Why do traders churn and can brokerages proactively prevent repeated churning and increase lifetime value?
Traders churn for many reasons, some of which cannot be determined or controlled. A trader’s financial situation can simply deteriorate, and brokerages can’t necessarily see this in a customers’ behavioral data.
Sometimes, however, a brokerage can determine the reason from analysis of a trader’s behavioral data. For example, traders who invest too much, too quickly, and get wiped out too rapidly are at a risk of churning because they’ve had a negative trading experience. These traders leave behind a trail of online behavioral data that can easily be tracked.
If a brokerage can identify such traders before they churn, it can take a proactive approach. By leveraging the behavioral, financial and demographic data, brokerages can significantly increase trader longevity and trade volumes via personalized proactive retention campaigns.
What kind of customer data strongly correlates with trader churn?
Great question! Again, it’s important to note that traders churn for a variety of reasons, whether financial hardship, brand disloyalty, a negative trading experience, or a host of other factors. Traders who have had a negative trading experience, however, can be easily identified by their behavioral data. We’ve analyzed large amounts of data across the industries and we’ve seen that certain behaviors throw a spotlight on traders who are at high risk of having a bad experience and therefore churning.
One example is traders with a low winning percentage, typically a 33% lower rate than traders who remain loyal. Another example is traders who consistently invest a large portion of their current balance, typically 25% or more, in a single transaction. When these, as well as many other identified behavior patterns, are discovered it is important to take action to prevent the likely loss of the trader.
How can Optimove help brokerages improve customer retention?
Optimove is the leading retention automation software in the forex and binary options industries, empowering dozens of online businesses to prevent churn and maximize customer value.
Trusted by leading forex and binary option brokerages, including Easy Forex, 24Option, Banc de Binary, and eToro. Optimove is able to determine which marketing action will have the greatest retention impact on each customer at every point of the customer lifecycle.
Based on the knowledge and experience we’ve gained from the online gaming industry – which have relatively mature customer retention strategies – we’ve successfully applied what we learned to the forex and binary options industries. Brokerages using Optimove already see excellent results, and enjoy long-lasting relations with loyal traders.