Selling Islamic Finance to Non-Muslims 2011-01-20 We have seen how one should brand Islamic finance products to sell to non-Muslims, now we turn our attentions to the matter of how to market and sell such products to this non-Islamic market. Is Islamic finance currently doing enough on the marketing and selling front? What type of marketing strategy is necessary? Which sales promotions can convince non-Muslims to try sharia'a-compliant banking products and services? From Market Research to Marketing Strategy What Islamic finance, according to Joy Abdullah, is failing to do is to take the importance of market research seriously. The brand strategist points out in the article 'It's what THEY think a BRAND is' that whilst research on particular consumer segments has been carried out by Islamic finance entities, these companies are yet to collate general data on overall needs, perceptions, beliefs and values of the consumer market in relation to Islamic finance instruments. Why exactly is market research so important to devising an effective marketing strategy? The Islamic finance industry needs to be clear on this: Market research is not an option, it is a necessity. It is the only way to gain information on:

the type of consumers that would be interested in your product the type of companies and institutions that will be your market competitors in selling the product the size of your consumer audience the type of marketing methods your target market will respond to how long consumers will take to buy your product

Armed with this information, you can then create a marketing strategy that helps define:

þ who you’ll be marketing to þ how you’re going to beat the competition þ what share of the market you’re aiming to obtain þ how you’ll be promoting your product

þ the timescale for the achievement of this. Without this level of understanding, you will be trying to market and sell to a consumer market you do not know. How can you sell anything to anyone if you do not know what they buy, how they buy and why they buy? Issues particularly pertinent to the non-Muslim Islamic finance consumer market should be researched thoroughly, before attempting to market and sell to this market. Below is a table showing questions that could be asked, through field and/or desk research, to the non-Muslim consumer market to extract information relevant to the marketing of your Islamic finance product:

Question Why Ask?

What do you think of when you hear the terms 'Islamic finance' or Sharia'a Law'?

This immediately identifies the perceptions, preconceptions and misconceptions that non-Muslims might have regarding Islamic finance products. You can then work at dispelling any misconceptions in the marketing of your product.

Would you ever consider buying a financial product or service compliant with Sharia'a Law?

Determines whether or not the person, or group of people, you are questioning would be interested in your Islamic finance product.

If so, why would you choose a sharia'a-compliant product over a conventional one?

Identifies what the potential customer is looking for in an Islamic finance product that they cannot get in a

conventional one.

Do not be afraid to ask questions of potential customers. They would prefer that you find out what they want and need before you start bothering them with ineffectual, poorly-researched marketing and sales campaigns. Marketing to the Market Although no consumer wants to be bothered by a marketing campaign irrelevant to them, that is not to say potential Islamic finance customers are not expecting the industry to market its products in a way that actually explains the products in a way relevant and accessible to the uninitiated. Islamic finance may be a fast-expanding industry, but it cannot expect customers, especially non-Muslim customers, to come to it just like that. It must endeavour to take on more of the legwork through targeted, relevant and informative marketing campaigns. When it comes down to it, Islamic finance is an industry with several, easily-marketable Unique Selling Points:

1. Sustainability: If the near collapse of the global financial system in 2007 proved anything, it proved that conventional finance is not as sustainable as some so-called experts thought it had become. Certain analysts and political advisors were certain that conventional prosperity within the finance sector could be sustained without fear of any further 'busts', so inevitably characteristic of previous 'booms'. They were wrong. As a conventional system that had arrogantly taken one risk too many came crashing around the experts' ears, ordinary customers and investors started seeking an alternative form of financial system that took more cautious steps to sustain itself. Islamic finance is such a system, but it must continue to market itself as such as memories of the credit crunch fade and consumers begin to return to conventional finance.

2. Corporate Social Responsibility: A 'buzz phrase' for the 21st century, Corporate Social Responsibility (CSR), refers to the socially responsible attitude adopted by many modern corporate entities towards the environment, the global community and society in general. Benevolent concern for and positive action regarding these areas can of course come from conventional financial institutions, but the principles upon which CSR is based upon are similar to the sharia'a principles fundamental to Islamic finance. Whilst CSR may be a conscious, 'on-trend' choice for conventional companies, genuinely Islamic ventures have always followed the path paced out by CSR guidelines as a matter of course. Now that CSR is a hot acronym, Islamic finance should play upon the fact by drawing attention, through its marketing, to its own CSR credentials rooted in and authenticated by its emphasis on its

compulsory compliance to sharia'a law. 3. Ethics: Both CSR and Sharia'a Law are of course ethical systems. In the case of Sharia'a Law, the principles it is set upon are what

make Islam and therefore Islamic finance so ethical. The ethical nature of Islamic finance is demonstrated in its refusal to put unnecessary pressure upon the debtor by charging interest; its practice of leniency

4. and, in extreme cases, debt forgiveness towards debtors; its routine support of charitable causes through zakat and investment in civic infrastructure and its abstinence from business activities and industries widely perceived by many worldviews as immoral. These qualities are so obviously attractive to many non-Muslims as well as Muslims that more must be done in Islamic finance marketing to highlight them.

The Expert's View If anyone knows about Islamic finance marketing, it is top Change and Marketing Consultant, Alun Williams. Currently consulting independently, Mr. Williams has previously worked with the two major brands of Islamic Bank of Britain (IBB) and Salaam Halal Insurance. His independent consultation work over the past year has seen him supporting initiatives around Islamic leasing; working alongside specialist Islamic finance consultancy IFAAS; and providing consultancy support to an agency of the UK Treasury in regards to Islamic finance opportunities in the UK. In an interview with Global Islamic Finance Magazine, Mr. Williams tells us what attracted him to the Islamic finance marketing sector; what it takes for a marketing strategy to be successful; why the development of the Islamic Bank of Britain and Salaam brands was so important; and what marketing and selling to target consumer segments involves. Why did you become involved in the change and marketing sector, and then the Islamic finance segment of that sector? I like changing things, and being able to look back and say “I did that”. As a result I got myself involved in change projects and marketing. Once I found out about the creation of Islamic Bank of Britain, I was desperate to be a part of it for a number of reasons: it was the UK's first start up independent retail bank in living memory, and being part of that would be exciting and a great challenge; it was an opportunity to learn about a new (to me and the market) way of banking and new products; and, it was the opportunity to learn about the various Muslim communities and their attitudes and behaviours, as a precursor to developing marketing and sales strategies. Subsequent to Islamic Bank of Britain I became involved in the creation of what was known at the time as British Islamic Insurance

Holdings. This subsequently became Principle Insurance Holdings, and launched under the Salaam Halal insurance brand. I spent two years there, as a full time consultant. The concept is basically the same in that you should engage with your target customers and communicate with them through the means that they want, via media that they ‘consume’. In execution this means that to target Muslim consumers an Islamic financial institution needs to do everything that a conventional financial institution does, and more. The ‘more’ being a greater need for educational activities in order to build awareness, knowledge and understanding of what Islamic finance is, and also getting into the communities and building your brand at a grass roots level. These days a new mainstream financial company can launch itself as a direct only business supported by a large marketing push, whereas the dynamics of many Islamic communities makes a face to face presence within key community areas critical for credibility, and empathy. What, if any, are the main differences between a successful marketing strategy for a conventional financial institution and a successful marketing strategy for an Islamic financial institution? The concept is basically the same in that you should engage with your target customers and communicate with them through the means that they want, via media that they ‘consume’. In execution this means that to target Muslim consumers an Islamic financial institution needs to do everything that a conventional financial institution does, and more. The ‘more’ being a greater need for educational activities in order to build awareness, knowledge and understanding of what Islamic finance is, and also getting into the communities and building your brand at a grass roots level. These days a new mainstream financial company can launch itself as a direct only business supported by a large marketing push, whereas the dynamics of many Islamic communities makes a face to face presence within key community areas critical for credibility, and

empathy. In your time you have acted as Marketing and Sales Strategist for both Islamic Bank of Britain PLC and Salaam Halal Insurance. What were your initial aims in creating the respective strategies for these two entities? The strategies were quite different, but were both brand driven. The emphasis upon developing each brand was so important because these were new financial businesses offering new products. It was essential that consumers could trust the brands and have positive experiences and perceptions. The challenges were made even greater, in particular for Islamic Bank of Britain, by memories of some consumers of banking failures such as BCCI, despite this predating the rigorous regulatory regime that banks and other financial institutions operate under in the UK these days. Taking Islamic Bank of Britain first, this business was going to be the first Islamic bank in the Western world, and in the UK was launching into a market where there was little knowledge of Islamic finance beyond basic awareness that interest is Haram. Islamic Bank of Britain is a British bank (later becoming listed in the UK stock exchange) and was going to offer products and services which were designed to meet the requirements of the Islamic faith. It wasn’t a foreign bank, and it was important to convey that. As such the use of a very clear, almost simplistic, name was important – a British bank offering Islamic products and services: Islamic Bank of Britain. The bank is now using the acronym “IBB” more and more. Many customers have referred to the Bank as IBB for years, but it was important for the Bank not to do this initially so that the brand could be established. If it had launched and used IBB from the start, how would this have identified the business as being any different to any other small Bank using initials, and it would be somewhat close to BCCI. As I mentioned earlier, the insurer was initially set up as British Islamic Insurance Holdings, and this was appropriate during the initial development phase for the business, but was never going to be right for its launch. The Islamic finance market had developed in the UK, thanks to IBB and the subsequent activity from other Islamic finance providers in the market, such as Alburaq, HSBC Amanah and Lloyds Bank, and there was therefore scope to launch a brand that was more consumer orientated, and less of a mouthful. There was also an opportunity to create a brand strategy that would enable the business to extend its proposition in the non-Muslim market.

It was important when the insurer launched into the market that the brand identified itself as being relevant for Muslim consumers, otherwise it would have simply been one of a raft of new insurance brands, and would be ignoring it’s key differentiation of offering Halal insurance. Therefore a brand overtly targeting Muslim consumers was required, but there was also a desire to be able to offer Takaful to non-Muslims. Some non-Muslims would be comfortable buying a product from a Muslim brand, but others wouldn’t be. So we wanted to be able to have a multiple brand strategy, where there was the opportunity to offer the same basic Takaful product, but under different brands, with the Muslim brand focusing on being Islamic, and the other brand focusing on the ethical and mutual nature of the offering. This didn’t preclude the potential in the future to merge these brands into one, once the nature of the propositions are clear, whether it be using the Islamic brand or the non-Islamic brand. The upshot of this approach was the use of a neutral, some might say traditional or staid, brand for the holding Company, Principle Insurance Holdings, but an overtly Islamic brand for the initial product offering, Salaam Halal insurance. The use of the descriptors ‘Halal’ and ‘insurance’ were about taking the same approach as at IBB, making it very clear what the proposition is i.e. Halal insurance from Salaam. There is then the potential in the future to drop the use of ‘Halal’ as the brand becomes better known and Salaam becomes synonymous with offering Halal insurance, and if the business was to offer financial products other than insurance, over time ‘insurance’ could be replaced with the alternative product e.g. ‘investments’, and, with further product diversification ‘Salaam’ as a brand could be positioned as the one-stop shop for Islamic finance products. Do you have separate strategies for marketing/selling to non-Muslims and Muslims, or is the strategy targeted at the consumer market as a whole? All the Islamic finance providers in the UK want to be seen as being inclusive and offering their products to all, and not just Muslims. This is supported in research amongst Muslim consumers as well, as they want everyone to be able to participate, and they don’t wish Islamic finance to be seen as ‘exclusive’ to them. However, notwithstanding the above, marketing is driven by market segmentation, and prioritising the target segments. The Islamic offerings are tailored for a specific group of consumers, who want Islamic finance products, and who are the most likely adopters of these? Muslim consumers, of course. As such marketing strategy is designed to target Muslim consumers, and if non-Muslims respond to it, then great, but they are not the priority. Islamic finance is targeting a specific niche in the market. Normally businesses segment their customers into homogenous groups with

similar needs, attitudes and behaviours, so as to make their targeting more efficient, and their business strategy more focused. Targeting Muslim consumers reduces the size of your target market, but does nothing to reduce the diverse range of personal circumstances, needs, attitudes, understanding of financial products, wealth or behaviour. By targeting the Muslim segment, you have reduced the size of the market significantly, without creating much homogeneity, and you’ve added further complex dynamics such as understanding of Islamic finance, attitude and understanding of faith and cultural diversity. With this added complexity businesses targeting Muslim consumers would find it hard to justify the cost of actively promoting their offering to non-Muslim consumers until they have got critical mass amongst their own niche of the market. Source: Business Media Group Jan 20, 2011