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Bonuses, rewards, prizes and perks are pretty much the bread and butter of Forex and Binary Options brokerages and for good reason; even though just 12 to 15% of customers are loyal to a brand, that small group of customers may generate between 55 and 70% of sales (retail, hospitality, banking, investment and insurance industries combined).

Rewards and loyalty programs help a brokerage acquire new traders, increase their deposits, increase the frequency of deposits and improve the natural attrition rate and they have become so common in the industry that clients have become conditioned to expect them.

With most or all brokerages providing traders with “baits”, how do you make them irresistible to traders? Incentive programs are a science and implementing them correctly can help a brokerage maximize the investment. Let’s look at some factors you should consider when implementing rewards, bonuses and loyalty programs:

How much?

How much money should you invest in total, per trader and per incentive is almost a magical number. In the FX and Binary Options industry, the magical number is between 10 and 20% of a trader’s profit for the entire basket (cash back, bonuses, rewards, prizes, etc) and 4% for rewards only. It is important to note that the incentives should be based on a perceived value and not necessarily face value.

Once you establish an ideal amount destined to incentives, you need to determine whether you want to prioritize immediate action and/or long-term loyalty. Some programs encourage redemption, while others pray for breakage because the program itself cannot afford redemption. This scheme may attract first deposits, but does not build loyalty.

How often?

Breakage occurs most often because customers either forget they have accumulated points or get tired of waiting for points to accumulate so they can redeem them. Instant gratification has been cited as a factor of great importance amongst Forex and Binary Options traders. Offering some kind of incentive 2 to 3 times per week is advisable in the FX and binary industries. After establishing the frequency in which you will offer incentives, design a mix of incentives that are immediately redeemable with some that are redeemable conditioned upon a certain action (deposit X and redeem Y when you achieve Z)

Personalization

Each trader is different and personalizing your incentives program can go a long way.

  • Some traders may appreciate sign up bonuses while others may want rewards that accumulate overtime.
  • Giving prizes and rewards that match a trader’s lifestyle or hobbies will show your clients you truly care.
  • If you know a trader deposits every Monday and cashes out or runs out of funds by Thursdays, offering an incentive mid-week can boost that trader’s activity.
  • Make the offer to your customers by telling them a story that connects with them, using examples of how they can benefit or how others have benefited from your offer.

The whole package

The way in which you package or present your offer can make all the difference in differentiating your company form the competition. Present traders with the offer by communicating your unique selling proposition in a creative way that makes it easy for them to try your service.

When T-Mobile entered the competitive music service industry, it got creative in the “packaging” to compete with giants like iTunes and Pandora, by offering playlists tailored to different occasions, like “Run till you drop” for runners and “Time for another drink” for bars during happy hour. This way of packaging their music made it easy for users to try their service.

Do the math

Make it easy for traders to see the benefit of your offer by calculating and including the amount of the savings in your offer. Analyze the long-term effect of your discount to make sure it benefits the customer without cannibalizing your full-priced service.

Ask yourself if the currency of your incentives fit the trader and his/her transaction size and frequency.

Create a sense of urgency

Setting limits to your offer, such as time limits or “only the first 10 callers” will encourage customers who are on the fence.

Travel booking websites have a “3 tickets left at this price” button for example and this creates anxiousness in the client and encourages them to take action.

Implementing an incentive program goes well beyond “buy one get one free”. It is both an art and a science and doing it right can help your brokerage stand out from the competition. In an industry such as FX and Binary, you have the incredible advantage of being able (and in cases required) to gather client’s personal information and with time you have the opportunity to build rapport. Take advantage of this and use your knowledge about a client’s location, family status, profession, whether they travel often, etc, to tailor your incentive program.