Bonuses have traditionally been the bread and butter of financial trading brokerages.
For years, the war on acquisition has been fought through the offering of the highest bonus and up until now, it worked like a charm.
Traders have had little to no loyalty for the brokerage they do business with and would leave a brokerage for the offering of a better deal from a competing firm. Little did brokerages care about offering good customer service to traders, because well, money buys happiness, and by simply throwing more money on the table, they could fix anything.
However the traditional modus operandi is about to change. In the recently released CySEC circular, the regulator effectively put a ban on bonuses, prompting other regulatory entities throughout Europe to follow suit. This change, which follows a long and hard tightening of rules by the Cypriot regulator, has more than one brokerage shaking in fear, and no doubt this fear is warranted.
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If you have been doing business based solely on getting traders to switch their business over to your brokerage in exchange for higher bonuses, your magic bullet has just been rendered ineffective, and if you find yourself out of bullets, you are dead in the water.
It’s not all bad news though. We are here to give you some new ammunition to continue to fight this battle, only on a cleaner field. It is true that this change, along with additional restrictions imposed by CySEC, and other regulators across Europe including FCA and Bafin, have contributed to putting many brokers out of business. But those who are able to adapt will succeed and thrive.
Higher bonuses might have brought more sales in the past, but by being unable to provide them, brokerages will be forced to bring in new sales by differentiating themselves from the competition. Their re-orientation could involve focusing on building a solid brand that provides value to customers, establishing a loyal relationship with traders and by giving better customer service. These techniques all have the means to generate higher volumes, to convert your customers into ambassadors of your brand and to lengthen lifetime values.
While not being able to provide bonuses will affect the market in the short term and make brokerages struggle with conversion, it will make the industry a more level playing field and more conducive to building trust. Brokerages that are successful in turning this challenge into an opportunity will reap the benefits of running a brokerage that prides itself on its products and services. The proof being more loyal traders than ever before.