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Case Study: How an Online Trader Uses Social Networking to Increase Revenue, Earn Loyalty From Clients

by Jennifer Natsu  |  
September 25, 2007
  |  76 views

Company: TradeKing
Contact: Mike Massey, Director of Community Development
Location: Boca Raton, Florida
Industry: Finance, B2C
Annual revenue: Confidential
Number of employees: 50

Quick Read:

When it launched in late 2005, online broker TradeKing wanted a fresh voice that would attract online investors and help it compete successfully against larger Internet-based brokers. The company decided to create an online community that would connect likeminded traders seeking to share information and trading strategies.

The community members now make up about 5% of TradeKing's relationships—but they account for nearly 10% of the company's revenues. And that percentage is likely to grow: A July 2007 survey conducted by TradeKing found that 36% of options traders and 24% of equity traders report reading blogs either daily or weekly.

TradeKing has also been voted top discount broker for the second consecutive year by SmartMoney magazine, which specifically mentioned the broker's social-networking capabilities. The SmartMoney distinction is now being used on most of TradeKing's marketing materials to attract new customers.


The Challenge:

During the Internet boom of the late '90s, there were as many as 100 online brokers; by 2000, a wave of consolidation saw most of those brokers acquired by larger firms, such as eTrade and TD Ameritrade. When TradeKing's founders launched the company in 2005, they knew that their trading fees were among the lowest available, yet they figured that wouldn't be enough to attract a large clientele.

"People are passionate about their money," said Mike Massey, director of community development. "So what better way to attract them than to create an online community where they could talk about their investments, share strategies, and learn investing techniques from other investors?"


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