23rd November 2018
The relationship between brokerage and IB is like
Oceans to the fishes
Sunshine to the flowers
Fields to the plants
Brokerage provides platform to the IB while IB brings back clients. Brokerage and IB are growing together and help with each other. With the development of brokerage in past five years, the traditional agent mode are not suitable with the requirement of this industry nowadays. The human resource cost of traditional agent mode is increasing, however the cost of internet platform is dropping with the development of new techniques. Therefore, it is being more and more popular that the brokerage transfers mode from IB promotion to retail mode. According to the survey of Finance Feeds, the average cost of acquiring a new customer in the global retail brokers using MT4/MT5 is between $1300 and $1,500. For some retail customers with very little capital support, the cost of getting a customer is more than $1,500.There is one broker has reduced the cost of obtaining a customer to the extreme low level in this industry, which is the UK-listed CFD provider – Plus 500. According to the annual report 2017 released by Plus 500, the average customer acquiring cost is only US$474, which is 60% lower than the US$1,195 in 2016, which is only about 1/3 of the industry average cost! And the number of new customers they get is remarkable too: 150,000 new customers in a quarter year! According to their annual report 2017, the number of active customers of Plus 500 is 317,175, an increase of 103% compared with 2016; the number of new customers acquired is 246,946, an increase of 136%, and in the fourth quarter of 2017, the number of new customers increased by 150,000!
How did Plus 500 make that reduce half of the CAC?
According to the official annual report released by Plus 500, the main methods of obtaining customers are:
Mobile application market advertising is more suitable for brokers with their own trading APPs. According to the data we have, trading APPs on mobile terminal have become the main channel for brokers under retail mode. Lean Work offers a full range of brokerage-specific mobile trading APP solutions, which can be individually deployed, fully personalized in brand information, and integrates both registering and trading for an account in this APP. For brokers who has research and development team, we also provide Open API of Broker Work, which can directly connect your trading APP with Broker Work management background, and you can directly manage the accounts from your trading APP in Broker Work.
If you are interested with open API of Broker Work, you can leave a message at the bottom of the article: I want APP + contact method + name and I want API + contact method + name.
For example: I want APP 138*****368 Mr Lee
In addition to online advertising, we have to mention that there is a way Plus 500 is promoting is affiliate plan (500 Affiliates™). 500 Affiliates™ is the official partner marketing program for the Plus 500 trading platform, which is designed to promote the Plus 500 trading system. 500 Affiliates™ is considered as one of the largest and most profitable financial affiliate marketing programs on the internet.
In their annual report, it is also mentioned that the focus of the next marketing promotion of Plus 500 is still on the online channel. In addition, the value enhancement and maintenance of existing customers are the two aspects that must be paid attention to in the long-term development.
According to the board chairman of the Plus 500, the following points show why Plus 500 has steady improvement in performance every year, which is also the competitive advantage of Plus 500:
In order to provide customers with a good trading environment, some large brokers choose to invest a lot of money to develop their own trading platform. The APP of Plus 500 ranks first in its class, with more than 75% of its revenue and customers coming from the mobile side.
Plus 500 mainly relies on online channels to obtain customers. In 2014, direct online marketing accounted for 92% of the total. Nowadays, Plus 500 adopts a more diversified marketing approach so that the proportion of affiliate programs increases. By 2017, direct online marketing accounted for 66%. The affiliate plans reach to 23% and the offline league advertising sponsors account for 11%.
Plus 500 offers customers more than 2,200 trading symbols, customers can trade a variety of assets on the platform including stocks, indices, ETFs, commodity futures, options, crypto-currencies, forex. In 2013, Plus 500 became the first broker on the market to offer Bitcoin CFDs. Although the crypto-currency CFD accounted for less than 15% of total revenue, in the fourth quarter of 2017 crypto-currency booms out, Plus500 attracted a large number of new customers who interests crypto-currency CFD, and it reduced the average customer cost a lot.
Plus 500 has a self-developed trading platform that allows them to quickly respond to regulatory changes. The existing regulations Plus 500 has include United Kingdom, Australia, Cyprus, New Zealand, Israel, and the regulatory licenses for South Africa and Singapore in 2017. Its management indicated that it will apply for more regulatory licenses in the target areas in the future. There are two purposes: one is to realize the geographical differentiation of income, avoid the risk of excessive concentration of income in a single region. The second is to use global supervision to establish a global brand influence.
Plus 500 pioneers 7*24 hours live chat and supports ten different languages. This innovation has helped them significantly increase customer satisfaction. At the same time they offer unrestricted demo accounts for new traders to experience trading.
Retail brokerage operation method
What can retail brokerage get to learn from Plus 500?
In the highly homogenized retail forex market, differentiation is an important means for a brokerage to stand out. Retail brokers need to find a "point", which is the first impression to the customer, it may be reflected in the following aspects:
For example, you own a famous brand with a wide range and great influence. This brand recognition can help you shorten your decision-making process and get new customers faster than your competitors. Or the investor education you provide is very rich or distinctive, all the new traders are willing to come to your platform to learn how to start trading. When forming a "word of mouth effect" and "positive reinforcement", this kind of investment will become your unique competitive advantage. .
Can you imagine that the average initial deposit size of a country's retail forex trading, which has never been heard before, is actually ranked in the top ten in the world? According to the latest data from Finance Magnates, the Republic of El Salvador, the Central American country, had an average first deposit of $76.83 in March 2018, ranking ninth.
The average account deposits in Brazil and Ukraine in March were $2996.3 and $2605.3, respectively, second only to the United Kingdom, ranking second and third.
Why not try globalization?
Lean Work has been serving brokers for nearly 5 years. Although we founded in China, it has always been our important mission to help brokers better achieve globalization and expand overseas markets. Up to now, Broker Work and Trader Work has been supporting several major countries around the world:
We also offer a complete new language access solution, and if one brokerage need to expand a market that requires a new language, we also offer fast matching access in that language.
We mean to help all the brokerage to realize globalization.
Facing with operational challenges in the era of big data, brokers should establish a “data-driven” development model at a strategic level, improve the data operation system, and gradually upgrade core values and competition at the tactical level, from building user portraits to precision marketing to operational optimization. Combined with the powerful data visualization analysis in the Broker Work dashboard, brokers can get strong support and service support for big data analysis technology, helping brokers to improve their data operation capabilities and drive business growth.
How do brokers do online marketing and data analysis?
What channels do the clients who obtained from internet use for online registration and deposit?
Where can the brokerage process the tasks initiated by the customers?
What CRM tools can be used to manage customers and convert potential clients?
How to manage and hedge risks?
Retail brokers need three systems to acquire new customers and maintain old customers and run risk management.
On traders’ aspect, the functions that retail brokers need include: online account registration, deposit or withdrawal channels, trader accounts, and capital management tools. Lean Work terminal user service system Trader Work can not only help traders to manage account capitals, online deposits and withdrawals, but also help brokers to take live webcast operations. Trader Work APP is simple and easy to use for all new traders.
On brokers’ aspect, Broker Work is a business/customer/agent management system which can help brokerage to handle the task processes involved in all businesses, manage customer relationships, perform agent rebate calculations or settlements and etc. At the same time, using the business intelligence tool dashboard, brokers can easily grasp the platform operation data and analyze the channel quality.
From the perspective of risk control, there are some functions in the Broker Work for brokerage to control the daily operation risk. The graphical bridge and risk control system - Dealer Work is mainly for the market risk monitoring and management of the risk control.