Proactive Trader Retention: The Next Growth Engine for Retail Brokerages

What is proactive retention?

In any industry, customer retention starts with a great product and great customer service. Beyond these basic factors, which always encourage customers to return more frequently and spend more, in the retail trading industry, marketers should also engage in “proactive retention” efforts.

For example, offering relevant incentives and promotions to traders can dramatically increase trade volumes and frequency. The key is successfully delivering the most relevant and effective offer to every trader, at the right time, every time.

Why engage in proactive retention efforts?

Trader acquisition is very expensive and competitive; to remain profitable, brokers need to ensure that they are doing everything they can to keep traders active as long as possible.

Unlike new visitors who arrive at your site, those traders who have already made one or more deposits on your site represent low-hanging fruit for you to grow into long-term, high-volume traders. It is well-known that approximately 50% of traders churn within two weeks of making their first deposit. That is a lot of low-hanging fruit for brokers to pick!

Furthermore, a significant percentage of traders are active on 2-4 different Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term or binary option sites during the same period. If traders abandon your site, it doesn’t mean they’ve abandoned trading, just your site. So, if you are doing proactive retention better than your competitors, you will be capturing a larger slice of the pie.

The online casino industry has relatively mature customer retention strategies, having been focusing on this area for some years now. Although forex and binary option brokers may not have as much flexibility as online gambling sites in the variety of incentives they can offer, it is time for more online brokers to get into the retention game and discover their next growth engine!

Why do traders churn?

There are, of course, many reasons why traders don’t return to your site, most of which cannot be determined or controlled. For example, a person’s financial situation can deteriorate. However, there are other reasons which can be determined by analyzing a trader’s behavioral data.

For example, traders who invest too much, too quickly, get wiped out rapidly and, as a result, do not enjoy the experience. Data from scientific experiments clearly shows that heart rates and dopamine secretions differ among different types of traders.

Enjoyment and excitement levels from financial trading are fundamental factors in whether a particular trader will continue trading or not. In other words, when you can identify that a particular trader is behaving in a manner indicating a particularly bad experience, you can take action to encourage the trader to return and try again, perhaps with a different strategy.

The secret to increased retention is in your data

Analysis of large amounts of trading data across a number of forex and binary option firms indicates that there are common behaviors which throw a spotlight on traders who are at high risk of having a bad experience – and therefore of churning.

One example is traders with a low winning percentage, typically 33% lower 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, and many other identified behavior patterns are discovered, it is important to take action to prevent the likely loss of the trader.

Innovative software technology can provide marketers with the sophisticated data analysis, customer segmentation and predictive Analytics Analytics Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision making. In the trading space, analytics are applied in a predictive manner in an attempt to more accurately forecast the price. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analyt Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision making. In the trading space, analytics are applied in a predictive manner in an attempt to more accurately forecast the price. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analyt Read this Term tools required to identify at-risk traders while there is still an opportunity to positively engage them. Furthermore, these systems can determine which marketing action will have the greatest retention impact on each trader at every point of the customer lifecycle.

By leveraging the behavioral, financial and demographic data you already have on your traders, you can significantly increase trader longevity and trade volumes via personalized proactive retention efforts.