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
And the last but not the least step is discussing the policies that will regulate the whole business process and help to protect your company if necessary. Your policies must be transparent and easy to understand to both you and your partners. Of course you all know about Privacy policy or Cookie policy, but there are a lot of other forex ib agreements, that should be covered:
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.
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