Customer retention strategies are a core element of most brokerage operations. With the competition increasing in the retail space, the ability to retain clients is more important than ever.
Chasing Returns, a specialist utilizing behavioral science research and methodology, has recently published a white paper detailing the three distinct strategies for retaining clients.
This in-depth piece provides valuable insight into the field, focusing on three specific strategies: the reward, the journey, and the environment.
Why client retention in trading is a problem
Any successful brokerage operation has managed to keep its clients coming back. There are a variety of ways to achieve this, including building strong brand loyalty and giving your clients an experience that exceeds their expectations.
However, due to the volatile nature of trading, traditional client retention strategies often yield a low impact. This is due to a variety of factors, as trading being an emotional and volatile experience.
Additionally, trading can place enormous stresses on the individual, and it is often hard for a given trader to last long-term.
Pure Markets' CEO Talks Business Model, 2020 OutlookGo to article >>
Ultimately, all brokers have a strong interest in reducing trader churn – and the paper identifies how a broker can manage to both keep traders happier and trading longer.
Chasing Returns has identified behavioral science as a key component in answering these difficult questions. Now only does this area of research help brokers better understand traders, but it can also help predict their beliefs.
Behavioral science studies how people act, rather than how they think they act, emphasizing this important distinction. For example, while an individual might think they are risk averse, they may actually buy lottery tickets.
Moreover, perhaps we might think we’re long term savers, but instead, manage to rack up credit card debt. Someone could be deeply focused on winning trades, but remain in losing trades.
A deep dive into how we think
The paper touches on systematic decision making and the ways that govern how we make tough choices. This includes both an involuntary system as well as a conscious system, both of which hold relevance for traders.
The full report can be read by accessing the following link.