Direct Marketing Definitions

Shown below are common Direct Marketing term definitions. These definitions can also be found in "Strategic Catalog Marketing" by Stephen R. Lett.

• A/B SPLIT TEST – When a group of buyers and/or prospects are divided into two equal groups on an ever-other-name basis for testing purposes.
• AFFINITY MODEL – Analyzing item level purchases in other catalogs/lists looking for product specific purchases related to the your business. Targeting a specific type of product buyer.
  • Also help to profile your customer base in terms of age, income, geographic location, and other markets/clusters from which they are purchasing.
• APPENDING E-MAILS – The process of adding email addresses to customers on your housefile that do not already have an email address listed.
  • This can also be used to update email addresses which bounce or are undeliverable.
• ATTRITION RATE - Number that details how many customers do not order within a given year so that these buyers can be replaced at a minimum.
• AVERAGE ORDER VALUE – Total gross sales (before customer returns and allowances) divided by total orders.
• BACK END – The final segmenting totals for each mailing after the merge/purge.
• BENCHMARKS – A set of performance standards for a specific task.
• BEST CUSTOMER MODEL – Customers who have purchased multiple times, spent more than the average and have purchased at least within the last 12 months.
• BOUNCEBACKS – Catalogs you pack with every outgoing order. It usually includes a promotional offer meant to encourage a repeat order from a very recent buyer.
• BUYER – Someone who has purchased from a company just one time.
• CALL RESPONSE TIME – The average time it takes your contact center reps to answer incoming calls.
• CANCELLATIONS – An order that a customer cancels prior to shipment.
• CERTIFIED ADDRESS STANDARDIZATION (CASS) – The process of comparing your customer records to a US Postal Service database containing all deliverable addresses and restructuring them to be in the most accurate and deliverable format possible.
• CO-MAILING OR CO-MINGLING – The process of combining different catalog titles into one mail stream to generate more carrier rout discount prices.
• CONTRIBUTION – The amount of money left over to contribute to overhead expenses after you deduct for the customer returns, cost of goods sold, direct selling expenses and variable order processing costs.
• COOPERATIVE DATABASES – These contain the transactional data (e.g., product purchase information, amount spent, purchase date) on catalog buyers from different companies in all merchandise categories. Catalogers belong to co-op databases, such as Abacus, Next Action, I-Behavior, etc., and share customer transactional data with fellow merchants in order to prospect more effectively.
• COST OF GOODS SOLD – The net cost of the merchandise, less any and all discounts including freight-in expenses.
• CROSS-SELLING – Selling a customer a product that is somehow related to what he or she just ordered from you (e.g., selling a printer to someone who just bought a desktop computer, or jeans to someone who just bought a t-shirt).
• CUSTOMER – Someone who has purchased from a company more than one time.
• CUSTOMER SUPPRESS DROPS – Names that were dropped due to a match with a customer supplied purge file.
• DATA CARD – Information showing the breakdown of a company’s housefile and suggested charges for the purposes of renting and other marketing avenues.
• DELIVERY POINT VALIDATION (DPV) – This process compares and validates customers’ street addresses against the US Postal Service’s database, thus ensuring the addresses are mailable.
• DIRECT SELLING EXPENSES – Include catalog design, production, printing, paper, bind-in order forms, postage, lists, merge/purge, etc.
• DUPE GALLEYS – These show examples of what the merge/purge considered duplicates and which duplicate survived (i.e. became the output record).
• EMAIL APPENDING – Email addresses of customers on your housefile are provided to you by a third party.
• EXCHANGE BALANCE – The balance of names you owe a given list owner or the number of names that list owner owes you.
• FINDER FILE – A finder file helps to easily access prospect names. The file is used when the net names from the output of a merge/purge are loaded onto your system at the time you mail your catalogs and before those individuals have made a purchase from you.
• FULLY ABSORBED BREAKEVEN POINT – Includes variable, as well as fixed, operating expenses. And it applies to mailings to a current customer or housefile. It’s formula is: Fully Absorbed Breakeven Point = Net Sales – Cost of Goods Sold – Variable Order Processing Costs – Direct Selling Expenses – Fixed Costs.
• FRONT END – The initial segmenting totals for each mailing before the merge/purge.
• GROSS INPUT NAMES – Total number of records received prior to conversion and file hygiene.
• HOTLINES - Any orders or inquiries since the last file update.
• HOUSEFILE – A consolidated database containing each customer’s name, address and summarized order information. Also known as a “customer list”. Does not include anyone from cooperative databases or rentals who have not previously ordered from you.
• HURDLE RATE – This looks at how well a product sells based on breakeven for the amount of space it occupies.
• INCREMENTAL BREAKEVEN POINT – The formula is: Gross Sales – Merchandise Returns = Net Sales – Cost of Goods Sold – Direct Selling Expenses – Variable Order Processing Costs.
• IN-HOME DATE – Occurs when the majority of the catalogs being mailed arrive in customers’ homes within a 3-day window.
• INK JET MESSAGES – Messages printed on the back of a catalog to entice the customer to reorder, sometimes containing promos, or statements such as feel good statements.
• INPUT QUANTITY – Total gross number of input records processed in the merge/purge.
• INQUIRIES - Catalog requestors.
• LIFETIME VALUE (LTV) – The value of all of the purchases a given customer has made to date, plus the value of the purchase this same customer is likely to make (discounted for present value) over time.
• LIST CONTINUATIONS – Prospect lists you’ve previously used.
• LOCATABLE ADDRESS CONVERSION SYSTEM (LACS) – Converts rural postal routes into locatable addresses.
• MAIL DATE – The day a mailing is to begin. The mailing generally takes place during a five-day period (if it’s in a mail pool drop-ship program) beginning on the specified date.
• MARGINAL LIST OPTIMIZATION – Models a mailer’s marginally performing rental or exchange list to rank names from least likely to respond to most likely to respond.
• MATCHBACK - Process by which internet and miscellaneous non-traceable sales that are made without using a particular source code are assigned to a segment for purposes of allocating sales and analyzing RPC.
• MATCHCODE – A value calculated based on a combination of each customer record’s name and address attributes.
• MERCHANDISE MODEL – Where statistical modeling is done based on the type of merchandise someone has purchased in the past.
• MERGE/PURGE – The process that eliminates duplicate names from one list to another.
• MODELING - Statistic modeling used to identify buyers and prospects that are most qualified and likely to order.
• MULTI DROP – Number of records dropped due to duplication against a segment of higher priority.
• MULTI-BUYER – Net number of surviving names that match another segment in the merge/purge.
• NATIONAL CHANGE OF ADDRESS (NCOA) – A service that allows you to match your name and address file against a large database compiled by the US Postal Service containing all individuals for families who have moved during the last 36 months.
• NET OUTPUT – The customer and prospect names leftover after duplicate names have been eliminated from your mailing lists through the merge/purge process.
• OPTIMIZATION – The process used to identify mail-order buyers on a rental list, and the process of matching vertical list names against a cooperative database and coring them with co-op targeting tools.
• OUTPUT QUANTITY – Total net number of records after all bad addresses and duplicate records have been eliminated.
• OVERS - Catalogs left over at the printer due to having paper leftover from the print run.
• PACKAGE INSERTS – Catalogs that are put in out-going shipments (orders).
• PERCENT COMPLETE REPORT (PCR) – Weekly detail of each of the mailings by keycode.
• PLAN - When and how many catalogs will be mailed and to whom.
• PRIORITY – Priority of each list category within the merge/purge process.
• PROSPECTING – Renting lists from other organizations, catalogs, magazines, compiled lists, etc.
• PURGE DROP – Number of records matched and dropped due to interaction with a purge (suppression) file.
• RECENCY, FREQUENCY & MONETARY VALUE (RFM) – A classification that “flags” each customer with a three place identifier based on the recency, frequency and total monetary value of that customer’s previous purchases.
• RELATIONAL DATABASE – A database that enables you to look across multiple catalog titles to determine who’s purchasing from your other catalogs or sales channels.
• RESIDUAL MAIL – Mail that doesn’t qualify for postal discounts.
• RETURNS & ALLOWANCES – Discounts and/or credits issued to customers when they return merchandise or request a refund.
• RPC (REVENUE PER CATALOG MAILED) – Gross sales divided by the number of catalogs mailed.
• SERVICE BUREAU – Company, who maintains a housefile and performs list hygiene, eliminates dups, processes the merge/purge, segments the housefile for mailing purposes and processes all list rentals.
• SIMULATED DOT WHACK – Area on the front of a catalog that is printed during the large catalog printing that instructs on promotions or other special messages.
• SINGLE BUYER – Net number of names by segment that did not match any other segment in the merge/purge.
• SINGLE DROP – Number of records dropped due to duplication within a segment.
• SOURCE CODE (AKA KEYCODE) – The code on the back of a catalog and generally on the order form that’s used to identify the origin of an order for the seller.
• SQUARE INCH ANALYSIS – The amount of selling space in square inches devoted to every item on every page in a catalog.
• STANDARD COUNTS – The number of customers on your housefile based on your file segmentation.
• STOCK KEEPING UNIT (SKU) – Any item ordered for resale has a SKU for inventory tracking and ordering purposes.
• SUPPRESSION FILE – List of people who are not to be mailed to or rented to.
• TAILS – Orders/sales generated form older catalogs that were mailed last year or even earlier.
• UPDATE – File sent that is an update of the database including do not rent, do not mail, address changes, new orders, and new inquirers.
• UP-SELLING – Getting customers to buy a higher quality of a product than what they initially ordered (e.g. a more expensive laptop with more memory than what they originally ordered); or buying a greater amount of a product than what they originally ordered (e.g. offering someone ordering a case of gourmet brownies a discount on two or more cases).
• VARIABLE ORDER PROCESSING COSTS – The costs to take and process an order through an internal or external contact center.
• ZIP CODE MODEL – Identifies the best areas geographically for your offer based on your own housefile results.