Direct Marketing Definitions

There are many terms that are unique to the direct marketing industry.  Sort out the confusion with our Direct Marketing Definitions listed below.

A
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.

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.

B
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.

C
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.

D
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).

E
eMail Append
The process of adding email addresses to customers on your housefile that do not already have an email address listed.  Usually done by a 3rd party.
This can also be used to update email addresses which bounce or are undeliverable.

Exchange Balance

The balance of names you owe a given list owner or the number of names that list owner owes you.

F
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.

G
Gross Input Names

Total number of records received prior to conversion and file hygiene.

H
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.

I
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.

L
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.

M
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.

N
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.

O
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.

P
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.

R
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.

Reverse eMail Append

The process by which a mailable street address is appended to email addresses you have on file.

S
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.

T
Tails

Orders/sales generated form older catalogs that were mailed last year or even earlier.

U
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).

V
Variable Order Processing Costs

The costs to take and process an order through an internal or external contact center.

Z
ZIP Code Model

Identifies the best areas geographically for your offer based on your own housefile results.