At a time when platforms routinely spend four-figure sums to acquire a single client, it is hardly surprising that they are tapping into traders’ community spirit to boost customer retention.

Incentives Only Complement Client Experience

‘The benefits that resonate most with clients combine tangible financial value with access to experiences and a wider community’; ‘Our loyalty programmes combine flexible point redemptions with exclusive event access’; ‘Many clients value access to events and insights’.

The above comments are indicative of a changing attitude to incentives on the part of traders, whose expectations have moved beyond standardised rewards.

“Investing can often be a solitary experience, so these opportunities allow clients to connect with other investors and engage with us beyond the platform,” says Dan Moczulski, managing director at eToro UK, who believes incentives are most effective when they strengthen the overall client relationship.

“We do not focus on encouraging more trading,” he adds. “Competitive pricing and financial benefits are important, but so are quality service, platform access, useful tools and insights and opportunities to be part of a community.”

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Dandelyn Koh, head of global marketing at VT Markets, refers to a strategic shift from rewarding individual transactions to creating ongoing value around the client.

For example, a trader may initially get onboard for a promotion but whether they stay depends far more on factors such as execution quality, platform stability, trust, education and the additional services they receive over time.

“In the long run, it is this relationship that will set a trusted broker apart from an overlooked one,” she says. “If a relationship is purely transactional, traders will naturally move when another broker offers a better short-term incentive.”

The incentives that carry the most weight are often not the ones marketed most aggressively, suggests Gerard Melia, global head of FX sales at StoneX. In his experience, line size, collateral treatment, margins and confidence in a financially robust counterparty consistently rank ahead of headline pricing or promotional incentives.

“Clients managing currency exposures alongside commodities, metals, or securities often value the simplicity and efficiency of a single credit relationship,” he says.

Client Loyalty Can Be Volatile

Cash rebates and similar acquisition incentives can attract flow. However, when financial incentives become the primary differentiator, clients are often willing to move their business again when a more attractive offer emerges.

Despite a volatile economic backdrop, FX markets have been relatively subdued, while prevailing US dollar levels have reduced the urgency many corporates feel to hedge. Unsurprisingly, volumes have reflected those conditions.

“In our view, this does not represent clients moving elsewhere,” suggests Melia. “Rather, it reflects an environment that simply requires less action. Interpreting softer activity as churn or competitive displacement risks misreading the underlying dynamics.”

Daniel Belfer, CEO of Saxo Bank, agrees that incentives now go beyond pricing, with clients also valuing features such as dedicated support, priority service, access to events and insights and trading on a platform that they can trust with their money.

“We have seen growing demand for more personalised experience, deeper expertise and greater confidence when navigating markets,” he says, adding that more firms are thinking beyond traditional activity-based incentives and emphasising the importance of understanding what different client segments value.

“Investors and traders have no shortage of platforms to choose from and pricing has become increasingly competitive,” says Belfer. “More and more clients are looking beyond price and product access. Trade-based incentives can be effective in encouraging activity in the short term but they don’t drive long-term loyalty.”

The Changing Model of More Trade for More Rebates

Historically, most brokers’ reward programmes were designed around a simple equation: trade more, get more rebates. That model still works for some high-volume traders, but it does not reflect or retain the long-term relationship that many brokers hope to build with their broad demographic of clients.

“In our reward programme planning, we are increasingly looking at broader indicators such as account value, length of relationship, capital retained and overall engagement,” explains Koh. “This gives us more opportunity to reward different types of clients, rather than only the highest-frequency traders.”

She believes the industry is moving from a short-term, one-off acquisition mindset towards a long-term, broader engagement ecosystem.

“For us, that translates into investing continuously across the client experience from trading infrastructure, platform access, AI-enabled tools, market intelligence and education to customer service and security,” says Koh. “Together with institutional-grade safety measures, these create ongoing value and give clients stronger reasons to stay beyond the next promotion.”

The terms a StoneX FX client receives are determined commercially on a case-by-case basis rather than through a standardised rewards framework.

The key factors that shape the relationship are the overall value of the client relationship (not just the metrics of any individual business line) and the client’s credit and risk profile – which influences terms in ways that no generic rewards structure sensibly could – as well as the level of service and coverage required and commercial negotiation.

“Corporations hedge to manage underlying business exposures rather than to satisfy a discretionary appetite for trading, so their activity is driven by commercial requirements and hedging schedules,” observes Melia. “Applying a uniform, tiered rewards framework across relationships with such different objectives would risk producing outcomes that fit the framework rather than the client.”

For clients, access means credit capacity and product capability more than it means access to a trading platform. A client that cannot obtain the credit line or execute the strategy required to manage its exposure gains little from attractive pricing on business it cannot transact.

According to Melia, bonuses paid for placing more trades are less compelling because they reward an outcome that is largely outside the client’s control and only loosely connected to the strength of the relationship.

“The more durable differentiator, particularly at a point in the cycle when a number of specialist providers have come under visible strain, is the strength of the counterparty,” he concludes. “Clients consistently tell us they value balance sheet strength and the stability of the institution behind the relationship. Unlike rebates or promotional incentives, those attributes cannot simply be matched or outbid.”

This article was written by Paul Golden at www.financemagnates.com.Retail FXRead More

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