Proactive Customer Retention: The Next Growth Engine for Forex Sites
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, marketers should also engage in “proactive retention” efforts. For example, offering relevant incentives and promotions to forex traders can dramatically increase trade volume and frequency. The key is successfully delivering the most relevant and effective offer to every trader, at the right time.
Why engage in proactive retention efforts?
Customer acquisition is very expensive and competitive, whereas people 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 (leave the site, never to return) within two weeks of making their first deposit. That is a lot of low-hanging fruit for forex brokers to pick!
Furthermore, a significant percentage of forex traders are active on 2-4 different forex sites during the same period. If traders abandon your site, it doesn’t mean they’ve abandoned forex trading, just your site. So, if you are doing proactive retention better than your competitors, you will be eating a bigger piece 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 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 forex 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 forex 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 forex trading data across 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 now provide marketers with the sophisticated data analysis, customer segmentation and predictive analytics 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.
I just read the article and I’m wondering about what kind of “Innovative software technology can now provide marketers with the sophisticated data analysis, customer segmentation and predictive analytics tools required to identify at-risk traders while there is still an opportunity to positively engage them”. Maybe you can be more specific and name a few.
The main technology I had in mind when writing this was our own Optimove software – it does exactly what I describe, automatically. All the other approaches I have seen to this challenge involve home-grown solutions developed by in-house analysts, statisticians and advanced CRM departments.
It can also solve problems customers didn’t even know they had by alerting them to something they may be missing out on and offering a way to fix this. Sending an email to a customer a couple months before their two year subscription renewal is due offering a 5 percent discount to thank them for their business is likely to seal their desire to renew. It also means the customer doesn’t have to call or email to renew themselves, which prevents any lapses in their subscription and ensures their continued satisfaction.