This article was written by Adinah Brown from Leverate.
If you’re hoping that the conclusion of this title is going to be time machine travel or becoming Dr. Strange than you’re going to be tragically disappointed. No, the secret power of marketing automation is admittedly not as cool, but it will certainly work wonders for your brokerage’s client conversion and retention rates.
The power of automation is that it takes out the guesswork and the grunt work, of your marketing and sales efforts, so that they become far more targeted and effective. The only reason why it is a secret, is because so many executives are still to take full advantage in what marketing automation has to offer.
Irrespective of their industry, executives are perpetually on the look for that “niche” that will give them their USP (Unique Service Proposition) or an added advantage over their competitors. Whilst inertia puts that focus on tweaking services or just rebranding, in reality to achieve this, executives should really be putting their focus on technology.
A recent study conducted by Forbes showed that whilst business leaders wanted to be more data-driven, they acknowledged there is more to do. An impressive 61%, say their own companies’ decision making is only partially or rarely data-driven. Yet whilst the aspiration to tap into the full advantage of what technology has to offer is there, many executives simply don’t know how to start or where to look.
The Marketing Maze
Brokers can begin by looking right in their own backyard. To identify how you can best use technology or machine intelligence you first need to identify pressure points and weaknesses within your own operational processes. For a broker in the investment trading industry, that can be found in the ever-rising Cost Per Acquisitions (CPA). The CPA of forex brokers is at an astronomical high with signs showing that it’s only going to rise higher still.
While a few years ago the average CPA was around the $500 mark, this has gone up to an average of $900. The costs have largely gone up due to increased competition, reflected perhaps nowhere more so than on Google, where the word “forex” is the most expensive keyword. In a tier one country such as Germany, the PPC (price per click) can run into the tens of dollars per click, not per client.
Another important element of this marketing mix is the cost of affiliates, who with their aggressive payment schemes, don’t come cheap. One publicly listed broker has been known to pay $800 per client to its affiliates and another British based broker, up to $500 per client.
In this standard brokerage model, there is also the necessity for sales and retention staff to whom you have to pay not just wages, but the bonus that is attributed to them upon every trading deposit. Despite their costs, there is no denying that using all of these acquisition tools is necessary, and each forms an important component of your marketing strategy, however they each become extremely expensive when there is a dependency on any one of them as an ongoing acquisition stream.
Timing is Everything
The solution is to be found by utilizing a range of marketing resources and simultaneously building up an internal media strategy as much as possible. Research that was conducted by an industry related marketing agency over the course of three years and 15,000 leads, showed significant differences in relation to whether leads were able to be contacted and whether those leads turned into clients. The study analyzed the differences in the day of the week, the time of the day and the time duration of the contact after the initial enquiry was made.
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Interestingly, the results showed that the best day of the week to make contact with a lead was on a Thursday, however the most common day of the week for a lead to become qualified was a Wednesday, by a difference of 24% to the worst day of the week. In similar fashion, the best time of the day for a lead to become qualified is between 8am to 9am, while the worst time is 6pm to 7pm, at a proportional difference of 164%!
Yet most striking of all these measures was the time interval between the time of an initial inquiry and contact being made by the broker that determines the probability of a lead being qualified.
After the first hour of an initial enquiry, the probability of turning into qualified leads drops by an astounding 90%. If you narrow in to that critical first hour, if a lead is contacted within that very tight window of the first five minutes there is a 98% greater likelihood of client conversion. After the next 10 minutes that number drops down to 20%, after an hour there is only a 10% probability of a lead being qualified to an account.
Studies on trader psychology explain that the reason why these statistics are so striking is because it is consistent with the mind-set of the client. Their attitude is one of ‘I am looking into trading now, right now I am considering my options and need details, if you want to capture me as a client. NOW is the time to do it’. Inevitably it’s only a matter of a short time before other distractions come in, be it a competitor broker, the wife and kids, the last football match etc.
When a broker receives a stash of leads on average one third are junk leads, another third are unable to be contacted due to timing and communication and the final third potentially become qualified leads. With an automation tool, this second third who were previously inaccessible are now all of a sudden relevant and in the game, while the ability to nurture the last third produces higher conversions. This gives the broker the means to increase their revenue based on the same costs!
The Magic Lies in the Mix
While the distinct benefits of automation are clear, it is not designed to be used in isolation, but as a tool of a wider marketing strategy, making all client conversion efforts far more precise and highly targeted. For many years an Israeli broker took the approach of automating their entire marketing funnel. No longer keeping any sales or retention staff, they automated the whole process and did a comprehensive job of it, through a thorough investment in technology.
However, eventually they found their CPA was very high at around $1200, but their trader lifetime value had stagnated at around $1500. Inevitably they came to the realization that limiting yourself only to an automated process had the effect of cutting off acquisition streams. Indeed, the secret is in the mix of it all, a small size but strong sales and retention team, a pool of successful affiliates in conjunction with an integrated, automation tool. This comprehensive approach has proven to keep the total CPA low, extend the client’s LTV whilst contributing to a multifaceted revenue stream.
The Power and the Glory
A robust combination of marketing streams means that you no longer need to depend on any one highly expensive acquisition medium be it affiliates, PPC, Google keywords etc. According to Ben Richter, Leverate’s Head of Institutional Sales, this marketing combination gives your brokerage a unique service proposition and enables you to provide your clients with added service. “Once you have all these acquisition tools in place, than the key focus needs to be on increasing the client’s life time value”. To do this well you need to get into the mindset of the trader and understand what makes them tick. According to Richter this comes down to communication; alleviating their concerns as much as addressing their aspirations.
Frequent communication with a trader is crucial to extending the lifetime value of a client. Optim8’s system integration means that you can segment a trader by their level of engagement, trading history, interests and preferred trading instruments etc. The retention agent can then contact a trader at exactly the right time and say ‘there is this event that will affect your trades, this is your chance to respond to it immediately’.
That’s a quality service for which the client will be authentically grateful. Alternatively, the broker can also send short and simple messages to clients of movements in the market, whilst giving them the freedom to address it, without being intrusive at any point.
When a broker can collect quality data from their client database, they are then able to foster a creative human element of reaching out to clients in a more personal way of reflecting back to them their interests, concerns and trading aspirations.
This represents a world of difference that treats traders as people, rather than as standard prototypes. Yet, for the broker, this enhanced communication has the means to dramatically improve their CPA and trader LTV, because for the same number of leads, they end up with accounts that are significantly more lucrative. And this is the sort of superpower that every broker needs.