Strategy: The Importance of Source Code Tracking and Matchbacks
Prior to e-commerce sales on the Internet, a catalog typically could trace 80 percent of its orders and revenue to a specific source or key code. Catalogers didn’t worry about the remaining 20 percent. They’d simply allocate it proportionally across all source codes. Life was simple in those days!
Today, tracing orders to a specific code is much more difficult and complex. That’s why the use of matchbacks has become a way a life for catalogers. This month, I’ll focus on the importance of tracing to a specific source code through a matchback.
Source Codes Demystified
A source code is simply an identifier that goes with a particular housefile segment, prospect list, etc. It really doesn’t matter what the code is, as long as it’s unique to the segment or list being coded. Some catalogs prefer to build intelligence into the code.
Others simply use a sequential numbering system. Alpha or numeric or a combination of alpha and numeric. It really doesn’t matter. Source codes are like bread crumbs in the snow — they can help you find your way. Without them, you’re lost!
Source codes help identify:
• which housefile segments to mail;
• which prospect lists to use;
• which lists to eliminate; and
• the “best” promo offer to make, among others.
A cataloger can’t remain in business very long without using them.
As catalogers, do everything possible to capture source codes. Some catalogers feel it’s not as important to capture source codes on the front-end because they’ll be identified when the matchback is done. While this hopefully is true, matchbacks aren’t perfect. What’s more, they cost money and are done infrequently. By not capturing source codes on the front-end, it becomes more difficult to know how prospect lists and/or segments of the housefile are performing on a daily or weekly basis.
The Co-mailing Quandary
A growing factor impacting the ability to track source codes has to do with co-mailing. There are two ways to co-mail: in-line and off-line.
When co-mailing in-line while the catalogs are being bound, both the back cover and order form in the center of the catalog can be ink-jet imaged with the customer’s name, address and source code. This was how co-mailing initially was done.
Off-line co-mailing, which occurs after the catalogs have been bound, is becoming more popular, especially for smaller mailers, because the catalogs don’t have to be the same trim size. With off-line co-mailing, however, the printer only can ink-jet in one place: the back cover. By not ink-jetting the order form at centerfold, catalogers reduce the number of orders they can trace to a specific source code, hoping once again a matchback will identify the proper code.
So, it’s important to weigh the cost savings resulting from off-line co-mailing vs. the need to ink-jet the source code on the order form. Considering the recent postal rate increase, you definitely want to maximize the savings. Off-line co-mailing negatively impacts source code tracking.
Here are a few ways to increase the amount of business traced to a specific source code:
1. Place the source code in a colored box on the back of your catalog.
2. Use as few digits (alpha, numeric) as possible — five or six max.
3. Avoid using codes that can be mistaken for letters or numbers like “o” vs. “0” or “1” vs. “I.”
4. Ink-jet image the source code on the back of the catalog (in the box) and on the order form at the centerfold as well (not possible if you off-line co-mail). It’s best for the code to appear both places.
5. Train telephone sales reps to ask customers for source codes. (It’s always a good idea to monitor calls to make sure reps are asking for source codes.)
6. Be sure every catalog is coded, including bulk copies used as bounce-back catalogs and to fulfill catalog requests.
7. Make sure there is a place on your Web site for customers to add catalog codes when placing their order. Having this option can increase the traceability of Internet orders by as much as 20 percent or more.
To some degree, I feel that catalogers have become more lackadaisical about capturing source codes on the front-end. They believe the code will be identified by the matchback. I’m still of the old school thought: Identify as many source codes on the front-end as possible. As mentioned earlier, matchbacks aren’t perfect. There are issues with regard to date ranges, matchback logic, timing of when the matchback is done, multiple catalog titles, etc.
The process of matching back is not all that complicated. It’s a matter of matching the mail files retained by your service bureau with your order file. For my clients, I’ve looked into doing matchbacks at the SKU level. It seems to be a logical solution for catalog companies that circulate more than one title to the same people with overlapping mail dates.
This results in an extra step in order to identify which book the customer purchased from. The problem with this is that there is SKU duplication in both books; therefore, this “extra step” to identify the matches at the SKU level doesn’t always help.
Another issue with matchbacks has to do with allocating the Internet portion fairly.
For example, if customers purchase products from the Internet, they become Internet buyers. However, they’ll receive a catalog in the mail. They may make a second purchase from the Internet.
When I do matchbacks, these people always will be considered catalog buyers after their initial purchase, because they were mailed catalogs with a housefile key code identifier. While the catalog remains the largest driver of traffic to the Web, this does make it difficult for the Internet marketing manager to verify that the business is growing and remaining on budget since, in this case, the credit is going to the catalog. This factor will impact the repurchase stats for the Internet.
Date ranges are important to accurate matchback reporting. For instance, how many months should you matchback? This varies by how often you mail and how much business is driven by the Web. The problem occurs in the last holiday catalog mailing. The matchback favors this mailing.
For example, let’s assume a cataloger makes five different holiday mailings. A large portion of the sales from these mailings will occur the last three or four weeks prior to the Christmas holiday.
In this example, the last mailing will receive a disproportional amount of the sales from the matchback. I don’t favor making assumptions for the allocation of this factor because it means introducing yet another unknown. Any allocation at this point really is not necessary, because what matters is the performance of the housefile buyers by segment for all five mailings combined. Any analysis from names mailed more than once should be evaluated in total across all mailings and not necessarily by individual drop.
Please note in the chart on pg. 41, how high the revenue per catalog mailed was during holiday 5. Again, this is due to the fact that the last mailing in the season is favored in the matchback logic. When we average the RPC for all five drops, the overall performance by segment can be evaluated.
Track Source Codes
Source code tracking is as important as ever. The fact that matchbacks are done on the back-end of a mailing doesn’t mean we should not stress the importance of capturing source codes on the front-end. Continue to capture those source codes on the front-end and use the matchback to help allocate orders through the Web and miscellaneous non-traceable results. Recognize that matchback methodology isn’t perfect. Certain assumptions must be made.
Tracing orders and sales to a specific source or key code is critical to arriving at proper conclusions and making the best decision on future circ plans. «
Stephen R. Lett is president of Lett Direct Inc., a catalog consulting firm specializing in circulation planning, forecasting and analysis. He is the author of “Strategic Catalog Marketing” a Catalog Success book published by Target Marketing Group Publications. You can reach him at (302) 537-0375 or via his Web site www.lettdirect.com.