Affiliate programs for Forex brokerage: how to start and set up
If you have carefully read our step-by-step guide on opening your own brokerage business and have followed the entire algorithm of actions, now you probably already have your own brokerage firm (if not, then close this article, immediately tap the link and read the previous one). If you are still here then it is time for an upgrade of your startup – starting a good affiliate program.
Affiliates can make $5 000, $10 000, $50 000 and more per month. It depends on a target. If you want to expand your FX brokerage business, increase traffic to your website and find new customers, you surely need to run a kind of partnership program. First, let's have a general look at what types of programs exist.
The most common are:
1. Affiliate programs, where partners (affiliates) get reward for each client they attract.
2. Referral programs, where sales come in through referrals, often generated by current customers with the help of coupons or discounts as incentives to bring in new clients.
3. Reseller programs, where the reseller sells products as if they are his own. Client gets services from the reseller and doesn’t deal with the main company at all.
Today we will focus on the first type, namely introducing broker programs, since this is the easiest and the most effective way to attract new customers with minimal costs.
What is an Introducing Broker
An introducing broker (IB) is a person who acts as a middleman between a client and a brokerage firm. Introducing broker looks for new clients and has direct relationships with them, but delegates back office operations to the brokerage in exchange for commissions. IBs in Forex deals with the clients better than the brokerage firm since they are local, and customer service is their primary goal. They not only recruit new customers but help them with onboarding as well as keep them engaged in trading. This kind of partnership is a win-win and risk-free situation for both sides.
How to start an affiliate program
Hopefully, we have convinced you of the necessity and usefulness of introducing broker programs. Now let's take a closer look at how to launch such a program for your business.
1. Hire managers
First, you need to hire 1 or more (depends on the size of your firm) affiliate managers to run the program. Don’t underestimate the amount of work they should do as well as the amount of time this work requires. There are quite a lot of procedures you need to go through to make the program work and bring you real profit.
2. Check your competitors
Explore multiple partnership models that other brokers use, their working conditions and introducing broker fees. Make sure your commission is average on the market, fair but not overpriced. Good IBs interested in well paying programs, but assess your capabilities realistically.
3. Set up an affiliate management software
When it comes to managing an affiliate program, you have two paths: go with one of the ready made software solutions or build your own. At the very beginning we advise you to choose one of the ready-to-use solutions with basic functionality, since it will be much cheaper and easier. The software must help you scale, but not eat up all the revenue from the affiliates.
4. Recruit affiliates
Probably, the most difficult and time-consuming step. Many brokerage firms have the majority of their sales from only 10-20% of their affiliates. This means that in some ways, recruiting the right IBs is a numbers game. The main problem here is that you can choose partners very carefully, but there is still no guarantee that they will bring you profit. On the other hand, you have nothing to lose in case of a bad choice, since IBs are only paid for each client they attract. You are in a risk-free situation as we already said before.
We offer you 4 strategies to hire introducing brokers:
1. Approach your own customers
2. Reach out to influencers, experts, and educators
3. Find competitors’ affiliates
4. Paid advertising
5. Affiliate sign-up, onboarding and teaching
After you hire affiliates and agree on working conditions, you need to conduct training for them. No matter if you are hiring experienced IBs or newcomers, you still need to provide them with all the necessary instructions and information about the program and your company as a whole. Tell them about your main corporate values and goals.These people will speak on behalf of your company and should not damage your reputation in any way. Continue to keep in touch with your affiliates after the onboarding period. Good communication is a crucial point in building a successful business strategy, make sure to invest in it.
6. Define the commission structure
Сhoosing the commission structures to pay your IBs is a highly important issue. There are several of them:
1. A percentage of the sale (You pay a percentage of referral purchase amount as commission to the affiliates)
2. A flat fee (IB gets a flat fee for each purchase, regardless of its amount)
3. Recurring commissions (You pay your affiliates as long as their referral stays a customer)
4. Product credits (You pay your affiliates with product credits. Usually this model works only if your IBs are your own clients)
Take the choice of an introducing broker fees system seriously, to maximize your profit.
This choice should be based on the types of activities and results you want to get from your affiliates.
You can pay your affiliates automatically through the CRM system. For example, UpTrader CRM support all popular methods of payments, so it would not be a problem.
7. Create affiliate policies
1. Approved and forbidden traffic sources
2. Usage of the company’s materials and trademark
3. Usage of discount codes
4. Providing clients with accurate information on prices, affiliate tracking etc.
Consistently and carefully following all the steps, you can attract decent partners to your business, thereby expanding it and significantly increasing profits. You have already done a great job of starting your own brokerage firm. Now it's time for your partners to work for you.
Find out more about forex affiliate program
In the previous article, we wrote that UpTrader Forex CRM has a useful system for controlling fund deposit and withdrawal. In short, it allows you to flexibly configure the approval settings for withdrawal requests though a variety of parameters. The system lets you control the requested amount, the departments that approve the withdrawal, which managers are allowed to approve the requests, whether account details are mandatory, whether or not the CEO approves the requests and many more. All these settings are extremely useful and allow the broker to protect themselves from many unpleasant situations. Only a few of our clients take advantage of these features, while they are available in UpTrader Forex CRM completely free of charge. We highly recommend using them! As an illustration, we would like to share with you a recent case from one of our clients’ operations. Thanks to a well-configured withdrawal control system, the broker team noticed that something was wrong, quickly reacted to an unusual situation, and prevented a large-scale case of fraud.
The company asked us to change the names of the client and the manager and not to mention their own name, but allowed us to tell their story in detail.
John is a professional trader who regularly withdraws profits from Company X. That is why no one was surprised when he sent another request to withdraw his profit for the previous month. The finance department was ready to approve it, but the withdrawal control system was set in a way that all large requests over $10,000 must also be approved by the client's personal manager.
When Casper, John's personal manager, contacted him, he immediately suspected that something was wrong. John's voice sounded unusual. Casper always builds relationships with each client, so he started the conversation with small talk and asked how John's children were doing. John replied that everything was okay and that they were at school. But Casper knew perfectly well that John's youngest child was born only a few months ago, which meant that he was talking to somebody else!
A few days later, it turned out that the hackers were able to create a duplicate of John's SIM card and used it to hack into his account. Thanks to the fact that his broker used the UpTrader withdrawal control system, John was able to keep his monthly profit, and the company prevented reputation losses. It allowed the company to maintain a trusting relationship with their clients and to ensure the safety of their funds.
"The Planet of Vogons"
In this user case, we will talk about a medium-sized Ukrainian broker who has been working in forex for many years, has an extensive departmental network and a complex withdrawal control system. Before adopting the UpTrader withdrawal control system, the company processes were barely automated.
The broker N started working on the Ukrainian market many years ago. At that time, the broker only had clients from Ukraine and the CIS. The withdrawal approval was coordinated by two people: the dealer and the CFO. The process was manual but smooth and fast. Then the broker began to grow, got foreign clients, then foreign partners, and launched several types of affiliate programs.
Each affiliate program has its own conditions for the accrual and payment of affiliate fees. In some cases, additional conditions can exist for different partners within the same program. The broker also allocates bonuses for the deposits. It means, for instance, that if a client came to the broker through a Vietnamese partner who works for the lots, and deposited 5,000 dollars to the account, they get a bonus: + 100% of the deposit for 1,000 dollars. According to the terms of the bonus, for every 100,000 units of currency traded, they kept $3 for themselves. The broker then must pay the bonus for this client to the partner without taking into account the bonus funds and the funds received from the bonus trading, remove excess lots and draw up the balance. Imagine then that such a client requests a withdrawal.
All the numbers were compiled manually. As a result, 6 departments, the secretary and the CEO of the company were engaged in approving requests for the broker. First, the withdrawal had to be approved by the client’s personal manager to make sure that the request was not a scam. Then the request fell in the partner relations department’s lap, because they needed to make sure that extra lots did not get into partner payments. Then, in some cases, they had to contact the dealer to make sure that everything was traded according to the rules. Next, the application went to the compliance department, which may find that the client has not fully completed KYC and that they need to finish the process (the client corrects errors and resubmits the request, and it follows along the same path). Then the application went to the finance department, which once again verified the numbers. And finally, the secretary manually collected problematic requests and took them to the CEO for final approval.
Thus, one request could take 5 days, 10 days, or two weeks to get approved. Needless to say, everyone was tired of it. Not only did this situation take up a lot of time and resources, it still did not prevent the company from making mistakes. Ultimately, the broker adopted the UpTrader withdrawal control system. It helped automate calculations, divide clients into groups, set conditions for calculating an affiliate program for different groups, and automate some of the withdrawals that do not require additional attention. A system of quick notifications pinging the team about new requests was set up, and the request statuses became visible in the CRM.
Now even the most complex requests take 1-2 days to approve. At the same time, the number of errors in calculations decreased significantly. As an additional bonus, the broker was able to take a closer look at the terms of affiliate programs and, in some cases, it became obvious that it was extremely unprofitable for them to continue working under the conditions they previously set themselves. The broker removed all unprofitable programs, freed up a lot of resources, and significantly increased their income from affiliate programs.
Launch market analytics feed in your Forex CRM
Which extra services do you offer your clients? If you think that a trading terminal, fast fund withdrawal, and copy trading services are enough to keep your clients loyal and satisfied, then you may not know your clients very well or have never tried to offer them something else.
One of the UpTrader brokers broadcasts a daily stock market analytics feed and technical analysis to its clients right in their personal account. Its CEO kindly allowed us to analyse their data for 2021. We considered two client groups: those who read analytics and those who do not. The results speak for themselves.
In 2021, customers who read analytics deposited on average 15% more per customer compared to those who did not use this tool. The median bill was 25% higher. At the same time, their trading volume increased by 230%!
Do you want the same results? Easy-peasy!
Daily up-to-date market analysis available in the trader’s room might increase the trading volumes of your company, resulting in more potential profit. This tool is already integrated into the UpTrader Forex CRM, however, only a few of our clients use it for additional sales.
Every day, market experts collect information, prepare materials, and publish technical and fundamental market analysis used by thousands of traders around the world.
This tool is already available to you in UpTrader Forex CRM. To begin broadcasting the feed, contact our support team, and you will gain access to an excellent tool for increasing sales and loyalty of your customers starting tomorrow.
Withdrawing funds from trading accounts is a very important part of business, because there are plenty of underlying issues that can cause serious reputational consequences for a broker and stress for clients. Fraud, stop-outs, withdrawal requests for a bigger amount than available equity, mismatch of payment details, problems with payment systems, KYC/AML non-compliance and a lot of other problems.
To avoid these problems and make withdrawals without risks for a broker and fast for a client, it is better to follow a certain procedure, where every step is under control of your departments. Your Forex CRM must have flexible settings of an approval withdrawal system.
The UpTrader team has developed a flexible withdrawal approval system that is integrated in UpTrader Forex CRM. For example, you can set it up so that your CEO will be making final approval of withdrawal requests of certain big amounts. You can set up this rule for all requests or only for those that are already approved by lower-ranking staff. It’s up to you. It is very important to verify your client with a KYC check, confirm payment details, to do this just direct all requests through a Compliance department. In some cases you might need requests approved by a phone call, so that you are sure that requests are submitted by a real client, not a scammer, so you can set up obligatory manager calls.
All these settings can be easily added in UpTrader Forex CRM.
UpTrader Forex CRM has the following settings you can use:
1. Approval depending on request amount
Withdrawal control is a standard and necessary procedure for financial broker security, but this doesn't have to prevent traders from withdrawing and depositing money quickly. For example, you can allow to withdraw all requests under $100 without additional checks. It means any withdrawal under $100 will occur automatically, but in a case you want to manually approve any amount, you can do it.
2. Know your client system in your Forex CRM.
Establish a rule that requests of any amount are directed to a Compliance department to complete KYC procedures.
3. A withdrawal amount is larger than the client’s deposit
If you hedge risks and use a hybrid model and a bridge, you probably need to control trading activity especially in an important market news period to control financial risk.
If you have special needs related to withdrawal approval procedures, write to [email protected] and we will see what we can do for you.
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