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It’s always surprising to hear recurring stories of brokers who fail to get off their feet simply because of the poor quality of their leads. Rather, the surprising factor is the brokers’ inability to identify adequate affiliates, or even IBs, in the vast pool they have from which to choose.
Whether you are a forex or binary options broker, investing in marketing campaigns with quality affiliates can really do wonders for your brand. Too many brokers focus on other aspects of their business while neglecting the importance of getting their name out to as many channels as possible. This includes promoting your brand on a third-party media channel, maintaining a strong social media presence, and working with various IBs in order to sustain a consistent flow of leads as well as increasing your retention rates.
Broadly speaking, an affiliate can be considered as an IB who solely relies on website traffic. An Introducing Broker typically has an office and maintains a more institutionalised approach whereby potential leads benefit from a more personal connection, while an affiliate runs one or more websites through which its visitors will then be redirected to the broker’s website or landing page.
The redirection is monitored with the help of a tracking link, so that the affiliate can keep tabs on which client has visited the broker’s website. As a broker, you can opt for one or the other – or even both. Commission and payment schemes vary from one Affiliate/IB to the next and from CPA, RevShare, to Hybrids. It is then up to the broker to identify the most profitable opportunity.
While some lead providers prefer to be paid for each referral with prices up to $25 per lead, you constantly run the risk of receiving poor leads which have little to no chance of being converted.
A cold lead could sign up on a landing page with fake details, and you’d still be under obligation to pay the lead provider for the referred lead – something to look out for. Naturally, the next question points to which one of the two is most beneficial to the broker.
Let’s look at it this way. Your goal is to promote your brand, get quality leads and yield the best ROI possible. Regardless of whether you go through an affiliate or an IB, my suggestion is to firstly make sure that your leads are qualified.
Are you being sold leads which understand what trading is about, or are you running the risk of getting a trader who deposits $100 on your platform, loses it just as fast, and vents their frustration over your broker on forums? Everyone obviously wants the best leads available, but that’s what you’re ultimately looking for.
Some affiliates run call centres with the sole purpose of qualifying the leads before selling them to you, at a slightly elevated price compared to their competitors – of course. However, that’s what you want.
You can even tell the affiliate what questions to ask those leads when they do the cold-calling for you. Your sales team will then be able to convert them more easily and over the course of their lifeline, your retention team will get more out of them than they would with “lower-quality” leads.
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IBs typically work like more of a store-front business, in the sense that they maintain a much more personal approach with the traders that they refer to brokers.
One of the key points is that IBs maintain a personal approach with their leads, which contributes to a higher level of trust between broker and trader – something which is perhaps undervalued by most brokers.
Typically, an IB is someone with a certain level of trading experience and competence, and is someone who can trade on behalf of the client. That last part is important to stress, as it dramatically changes the game for brokers.
Unlike an affiliate who simply refers the client and moves on to the next one, the IB keeps an eye on his portfolio of clients and, in most cases, trades on their behalf through a power of attorney or a similar declaration of permission. What does that mean for the broker?
An A-Booking broker’s primary interest is for the trader to keep on trading for as long as possible – a larger trading volume ultimately benefits the broker. In this sense, it would be more beneficial for the IB to trade on behalf of the novice trader that they have just referred.
Additionally, retaining the client for future, larger deposits is a much more achievable target in this scenario. If the trader is a beginner and loses most of his/her funds in a short amount of time, he/she would be discouraged and would most likely not deposit funds again.
Conversely, an IB trading for a trader is likely to enlarge the trader’s portfolio by winning a few trades, thereby encouraging the trader to not only stay with the broker, but also re-invest winnings into his account.
A B-Booking broker would obviously prefer that a newbie deposits funds and loses them in a short amount of time. In that case, perhaps an Introducing Broker might not be the preferred option for a broker.
As mentioned above, the ideal solution for a broker would be to identify a consistent source of qualified leads for both conversion and retention purposes.
Though it is easier said than done, and certainly does not come as cheap as one might hope, investing in marketing campaigns and acquiring verified leads will go a long way towards putting all of the chances on the broker’s side in terms of converting potential clients and extending the lifeline of those clients.
Ultimately, what you’re going for is achieving a healthy return on your investment, while increasing your revenue as much as possible. This all starts with the quality of your leads.