In our many years of industry experience, we have dealt with referring brokers of all shapes, sizes, and colors, each with its own business model and unique operational objectives. Regardless of the huge diversity amongst the candidates, we found that the key to success was really quite simple. It was so simple, in fact, that you might say, "It can't be just that!" But trust us, it is. In life, the best solutions are usually the simplest.
We call the key to running a successful IB business "Q2" (pronounced "Q-squared").
Q-squared, which can be rewritten as Q x Q for you math buffs, stands for Quality times Quantity. And NO, we were not ingesting any hallucinogenic substances when we wrote this.
The First "Q" – Quantity of Leads
First, let's deal with the first Q: the QUANTITY of customer leads. Let's face it, NO Leads = NO Business. At the same time, it is obvious that not every business or individual that wants to become an IB will have an overabundant number of leads on the first day of operation, but if they don't have a way to generate a good source of qualified leads over time, then there is no point in getting started.
In the prior section we provided a list of businesses that, from our experience, can generate a good number of leads. As a result, these businesses have a fair chance of making it as introducers in FX. But regardless of the nature of the business, the amount of leads generated is important. As the cliché goes, "The more, the merrier." The more qualified leads to which an agent has access, the more of these leads he or she will be able to convert into clients. This is not rocket science.
However, even though the Quantity of leads is important, it's not the most important variable in the success equation. What is, then?
The Second “Q” – Quality!
What's your edge? What will make your Forex referral business stand out in the crowd? What is the valuable product or value-added service you will be providing your customers? What is your irresistible offer? In other words, what Quality do you bring to the table for your potential clients?
Having a website with general information on currencies and a neon banner flashing "SIGN UP…SIGN UP…SIGN UP" is not our idea of quality.
You need to put your business on the map somehow by providing your clientele with something they really appreciate or find useful — a service or product for which they will always come back to you. When clients rely on you for something, that is when your business will truly take off and produce a well-deserved windfall of profits. When we're having consultations with individuals or institutions who are considering making the jump into the IB world, we always stress the importance of providing something valuable to their clients. If candidates don't know, we ask them to dig DEEP and come up with some possibilities. It is crucial that they do. Otherwise, the rate of conversion for their leads will be very low.
Here's another way to look at it.
Isn't it obvious that the higher the "Quality" of what a referring broker's clients receive, the higher the rate of conversion will be? Of course it is.
In fact, Q x Q takes on a new meaning when we think of Quality as the "Quotient of Conversion" (just a fancy name for conversion rate, which conveniently also starts with the letter "Q"), or what percentage of leads are converted to clients or accounts.
An IB business that provides a quality or valuable service to its customers may have a conversion ratio (or "Q") of 10%, meaning that they convert 1 out of every 10 leads into clients. By contrast, a website with lots of traffic or leads, but offering no real value or incentive to potential clients, might only have a Q of 1%, with only 1 out of 100 leads being converted. The latter would need 10 times the leads of the former to generate the same number of clients. Furthermore, the value-added business would probably build a more loyal and longer-term client base than the high-traffic business example, because customers would rely on their service.
It is obvious that the amount of leads an Introducing Broker can convert into clients will not depend entirely on the quality of their offering (we'll discuss other important factors later), but quality does play a huge role in the process.