Worth its "wait" in gold: the "what" and "why" of music and message-on-hold (MMOH) systems, and how they benefit marketing. (Fundamentals).

Visualize a potential customer--We'll call her "Janet." This woman has received a targeted mailing about an investment fund and finds that it suits her needs exactly. What happens when she follows up and calls your bank?

If we accept that 70 percent of calls to a business are put on hold or transferred, then it's likely that Janet's call will receive the same response.

If Janet hears dead air while she's on hold or in queue, there is a 70 percent probability that she will hang up within 40 seconds, and a 34 percent chance she will never call again. All of that investment in segmented direct mail is lost - and Janet now has a bad impression of your bank. She may go elsewhere.

At some banks, Janet might hear a radio station during her time on hold. While hearing some sound will reassure her that her call has at least not been dropped and will likely make the wait time seem shorter for her, this still doesn't do anything for the bank's image or marketing goals. In fact, while Janet is on hold she may hear a commercial from a competing bank. (Additional note: A bank can get into trouble for retransmitting a commercial radio station through the telephone system without first paying a licensing fee for the copyrighted music.)

In other instances, banks could give Janet some "elevator music," which helps pass the time but has few other benefits.

A better solution is to provide callers with music and message-on-hold (MMOH) recordings that mix music with short messages about the bank's offerings. This approach helps keep Janet on the line and informs her about other products and services the bank offers. In addition, affordable MMOH technology is now available to provide customized messages to Janet's particular market segment.

Don't forget that marketing people need to be involved in the selection of a MMOH system. In too many cases, banks leave decisions regarding these systems to their information technology or telecommunications people. These people are more interested in designing a system that meets the bank's technological--rather than marketing--needs.

To see the value of an MMOH system, compare this medium to other marketing media. While on hold or in queue, our client Janet can't change the channel to skip your message. She can't flip past the page, or throw out your mailer. She's a captive audience, and her response rare to your offers is likely to be higher than it would be in response to messages in other media.

Also, remember that she is the one who called your bank, so this is the best possible time to present her with new ideas. The efficiency of the bank or call center staff taking Janet's call will rise because Janet will already be an informed customer.

MMOH strategy needs to be integrated with the bank's overall marketing strategy. When it comes to presenting new products or services, these must be front-and-center in your MMOH programming.

One study has found that for every 1 percent of added sales revenues generated through MMOH, there is a 4 percent improvement in client profits. Also, for every 1 percent of added margin a bank can command, it gains a 9 percent profit improvement.

Power through segmentation

Perhaps the biggest "killer app" for MMOH comes from the power of segmentation. Segmentation allows the bank to tailor messages to a narrowly defined group and to offer services designed exclusively for that group. Segmentation, if done properly, can result in response rates of up to 30 percent

Here are some examples of segmentation with MMOH systems. One toll-free number, advertised on college campuses to students seeking loans or credit cards, might carry current music hits, entertainment news and budgeting tips. Another line, for homebuyers seeking mortgages, might play jazz and suggestions on saving for a child's education. Lines for Spanish speakers would provide appropriate music, with information in Spanish.

Ultimately you can provide a blend of music genres and information that gives the client the feeling that you have developed a program just for him or her. This can be a powerful advantage for your bank, because everyone wants to feel they are being treated in a special manner. The result can be a message tailored to each demographic you want to reach, producing the same intimate experience that commercial radio provides.

Another opportunity to segment also comes through affinity credit cards. A holder of a card affiliated with auto racing, for example, might be presented with updated, public-domain race results, news on drivers and teams, and schedules for upcoming events. This builds client loyalty and a feeling among users that this really is "my bank."

The bank can go one step further with its MMOH programs and develop co-operative advertising arrangements with its alliance members and other companies. This might include having a moving van company running ads on the mortgage line or using the high-net-worth segmentation of platinum cardholders to promote high-end vehicles. This allows the MMOH system to become a revenue source for the bank.

As with any investment, you must perform a cost-benefit analysis. In the case of MMOH, our experience is that by playing an excellent, constantly refreshed sales message, most firms see an average of 25 percent increase in product inquiries, reaching as high as 60 percent gains.

A responsive, flexible medium

One of the great advantages of MMOH is that the messages can be changed quickly and easily, perhaps more than almost any other marketing medium. Today's technology provides for functionality of central message management that is designed to respond to the desire of banks to manage the overall corporate image, and to bring MMOH into the same tightly held practice and norms that banks impose on their radio, television, newsprint, magazine, direct mail and Internet campaigns.

MMOH systems can be used to market special offers on a limited-time basis, and to respond in real time to changing circumstances, such as a new branch opening or altered bank hours. Today's more advanced systems have scheduling capabilities able to meet even the most strenuous of advertising campaigns and timetables.

Choosing on MMOH solution

You should look for these factors in choosing a system:

* Prebundled with royalty-free music and substantial professionally prerecorded messaging on hold content.

* Large play-list capability and shared messaging among different channels.

* Message scheduling based on time of day, with limited-time offers.

* Simple installation: a turnkey package ready to plug in.

* Access to real-time content such as stock market trends.

* Secure remote access that allows your bank or an outsourcing firm to perform all system functions such as support, play-list changes and downloading of new and custom produced messages.

* Scalability that allows for growth and expansion into several different tracks, which might include:

Channel 1: Executive and administrative targeted messages

Channel 2: Teen-targeted music and information

Channel 3: Financial literacy and education

Channel 4: Senior citizens

Channel 5-16: Variations of channels 1 through 4, in Spanish, French and Mandarin.

A complete 16-channel turnkey system, activated and ready to install and including server, software, licenses, 90 minutes of base messages and five hours of royalty-free music is less than $30,000.

Most system providers can develop additional message packages, customized messages, annual site management, additional languages and annual service contracts.

Beyond the telephone

MMOH systems can provide the same benefits in other contexts as well. ATMs, for example, can provide music and messaging services that start when someone inserts his or her card or when the screen goes up. Drive-through locations can likewise offer music and messaging service while the driver is in line or waiting at the window. In the same way that music and messaging can be segmented on the phone, you can segment your offering according to the customer's PIN or account number, and also according to the neighborhood where the ATM or bank branch is located.

In summary, music and messaging technology can move well beyond a 'nice-to-have" into a strategic advantage. By using this technology today, banks can get an advantage over their competitors in the struggle for client loyalty.

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Considerations for Community Banks

By Randall Hinton

The first, and most important, factor in adding message-on-hold to your community bank's telephone system is to determine if the phone system itself is capable of handling message-on-hold (MOH). If you currently have MOH on your phone system, then you're home free. However if this is a new venture, you may be facing your project's first challenge.

Some telephone systems already have the necessary circui""y that allows insertion of looping audio, be it "" message, while others have to be "car""ed" to make it possible. ""arding means that you will need to purchase a circuit board from your telephone equipment provider (not the MOH equipment ""olk) and insert it in the telephone switching equipment. It's possible that an audio jack may have to be added as well. The card would then permit the telephone switch to utilize whatever audio is pro"" through the audio jack. Depending on whether or not your phone equipment vendor wants to take you to the cleaners, this can be a pricey propostion! It is also entirely possible that the circuit board insertion will require a shutdown of the entire telephone system, which could possibly involve some reprogramming of the system once the power is restored.

Do it in-house or use an outside vendor?

The next consideration in the message-on-hold process is for you to decide if you'd like to contract with a MOH provider for equipment and message service or whether you'd like to do it in-house. There are many types of MOH players on the market but you'll probably find that MOH equipment through a service provider will probably be something that requires a special memory card or some type of computer down-load for the messages that makes you beholden to them for anything that you need.

If you're on a budget you might want to consider a simple cassette-to-digital memory type of player and then record your own cassette or have it done for you, perhaps at a friendly radio station. While rates for equipment and the monthly service fee through a provider will vary greatly the actual MOH equipment is not expensive. Standard MOH players that can be obtained from any number of companies will average between $250 and $600 depending on the amount of memory and the quality of the audio output.

Should you elect to purchase an MOH player and produce your own message, the final consideration must be given to the music, if any, used behind the message. The use of conventional music requires payment of a licensing fee to the music publishers, so you may want to seek out some type of original music that doesn't require the expense and hassles "" licensing. An Internet search should yield you "" sources for "royalty-free" music. Keep in "" though, that a music background is not absolutely necessary. You might just opt for some simple verbal announcements from a soothing voice.

An MOH service company is your more expensive but less troublesome option. For whatever fees are charged, a vendor can provide the MOH player and regular updates of the messaging. A customization of your phone system equipment wouldn't be included.

What kind of messages?

After deciding if your messages will be done in-house or by a service, you must determine what message or messages will be included. You don't need several minutes worth of rambling or as my mama says "talking just to hear your head rattle." All you really need is to fill in the blank. In this case, the "blank" is that time between pushing the hold button and routing the caller to silence and picking up the line and resuming your conversation. Use some quick blurbs to promote new banking services or features and maybe mix in some community events.

But do me one personal favor, do not use the phrase "Your call is very important to us." If that was the case you wouldn't lessen the caller's priority by putting them on-hold in the first place, and you certainly wouldn't use a disembodied voice to make the apology.

Message-on-hold can be a beneficial addition to your bank's marketing and, in most cases it a nominal cost. But just as with any other advertising, you must make a commitment from the start to keep the messages current and timely.

Randall Hinton is the owner of The WeatherFone, L.L.C. , in Atlanta. The company manufactures and markets digital announcers for time-of-day, message-on-hold, point-of-sale and other information needs. Telephone: [phone]; e-mail: [e-mail].

Jamie Thibault is President of Radio 1 WOHN, a division of JBGL Technological Innovation Group, Inc. ([e-mail]). Richard Corey is president of The Pinnacle Group ([e-mail]). Simona Wambera is a Certified Management Consultant with Q5 Group ([e-mail]). Radio1 WOHN, The Pinnacle Group and Q5 Group apply sophisticated MMOH systems in complex business environments.