A Retail Tech Glossary: The Letters! What Do They Mean?

A RETAIL TECH GLOSSARY: THE LETTERS! WHAT DO THEY MEAN?
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When a group of fish moves together in the same direction it's called a school. In the same way, with a shared understanding of the meaning of words we can all move together in the same direction.

“Hey! Can we get the API schema to connect your CDP to our CMS? We’re looking to maximize CLV by increasing AOV and reducing CAC but are struggling to determine ROAS. If the CTR is there, we can do some CRO and feed it into our ESP and start pulling the right content from the DAM!”

If I lost you at CDPread on! This glossary of common acronyms and terms should help navigate the world of retail technology, and because we know that the technology landscape changes daily we’ll update often. Are we missing one you’d like to know more about? Shoot us a line so we can help CYA!
 

 

AAR – Active Affiliate Rate

AAR, or active affiliate rate, is the percentage of affiliates that you consider "active" (defined by traffic, sales conversions, etc.), which lets you know how engaged your affiliates are and how effective your program is for getting them moving. Ideally, this number is above 10%.

API – Application Programming Interface

An API is a way to allow your application to communicate and interface with other applications and data. The API provides a standard set of instructions and responses called “contracts” that typically don’t change, enabling many different sources with different coding languages and designs to achieve the same function. For example, a website that allows you to login with Facebook is using Facebook’s Login API, which allows you to authenticate a user. A blog displaying weather data from weather.com uses a third-party API to display that information.

AOV – Average Order Value

AOV, or average order value, is the average dollar amount each time a customer completes a transaction. Tracking AOV helps you know if both your pricing and marketing strategies are working. Knowing this data allows your team to interpret it and make changes to increase AOV.

BOM – Bill of Materials

BOM, or bill of materials, is a list or database that contains information and quantities about materials, assemblies, and parts that are needed to manufacture a product.

CAC – Customer Acquisition Cost

CAC is relevant to CLTV (Customer Lifetime Value) because it's the amount of money you will have to spend in order to win the business of a new customer. If your CAC is higher than the potential CLTV, that can let you know that it’s not worth pursuing their business. Calculating the cost of marketing, employee salaries, and time spent on the sales cycle are just a few aspects that contribute to the CAC.

CDN – Content Delivery Network

A CDN efficiently and quickly delivers content from your website to visitors. Essentially, it puts a copy of your site on many different servers, enabling the quickest responding one to serve up your website to a customer when they enter in your domain. Cloudflare, Netlify, and Akamai are a few common ones you’ll encounter, though Microsoft, Amazon, and Google also provide CDN services.

CDP – Customer Data Platform

A CDP is a tool that collects data from multiple systems and condenses that data into a single customer profile. This allows you to build more effective and efficient marketing campaigns, provide better customer support, and increase visibility into your customer’s behavior. Learn why you need a CDP in this post. 

CLTV – Customer Lifetime Value

The CLTV is a prediction model that estimates how much money a particular customer will make you over the course of the entire business relationship. Having this data is important for planning future cash flow and profitability.

CMS – Content Management System

A CMS, or content management systems, is a tool that enables marketers, merchandisers, and creatives to create and update content for a website with little to no help from an engineer. A CMS is typically cloud-hosted. Examples include Prismic, Contentful, WordPress, and Squarespace.

CPC / CPL / CPS – Cost Per Click / Lead / Sale

CPC, or cost per click, is the average price you pay for each click, lead, or sale. These metrics help you identify how much you’re paying for new traffic or for acquiring each new customer. It can also be useful for deciding where to focus your marketing spend.

CRM – Customer Relationship Management

A CRM, or customer relationship management, is a system that stores data about current and potential customers, and assists in managing the different stages of that relationship. Unlike a CDP, they’re focused on relationship management rather than information gathering and serving, but they should consume data from your CDP if you have one. A CRM is a valuable tool for sales cycle management. Popular CRMs include Salesforce and Hubspot.

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CRO – Conversion Rate Optimization

A CRO, or conversion rate optimization, is a process put in place to increase your rate of conversions. The conversion you are seeking could be a purchase or simply obtaining contact information, but either way, optimization just means having a higher percentage of people take the action you want them to take.

CVR – Conversion Rate

CVR, or conversion rate, is the percentage of traffic resulting in sales (ideally above 10%), which provides a snapshot of the overall effectiveness of your efforts.

CTR – Click-Through Rate

CTR, or click-through rate, is the number of clicks on links or ads that come through to your website. This shows you which of your links and creatives are getting the most action and helps you refine the ones that aren’t working.

DAM – Digital Asset Management

A DAM, or digital asset management, is a system that stores digital assets—photos, documents, logos, artwork, videos, etc.—and controls access to the appropriate people, time, and place. It often integrates with a PIM to associate images with product records, has some concept of state (e.g. Needs Review, Ready for Publication, etc.), and has a robust set of search, indexing, and optimization capabilities. When evaluating a DAM, it’s important to consider your organization’s specific needs as some will specialize in certain areas. Amplifi and Widen are two examples of the big players in the DAM space.

DMP - Data Management Platform 

Think of a Data Management Platform (DMP) as a matchmaker. It knows what your company does, considers your unique attributes, and helps you find and reach your perfect target customer match! As your business operates, a DMP continually weeds through customers until they find your ideal matches. A DMP allows you to communicate with each of these customers across various channels, platforms, and applications all through one centralized system. A DMP helps you improve the way you serve customers, using data to help you make actionable decisions to improve your business, ultimately improving customer experience which can result in satisfied customers who spend and refer more.

ERP – Enterprise Resource Planning

An ERP manages systems and data for every aspect of a business. It can track and update with real-time information regarding cash flow, order processing, sales, accounting, payroll, etc., by integrating data from multiple applications and creating a repository for all of the information to live and communicate with each other. Odoo, Domo, NetSuite, and SAP make some of the most popular ERPs on the market today.

ESP – Email Service Provider

An ESP is the service that hosts your email. Applications like Gmail can be integrated into your own domain to give you a unique email address and take advantage of all the benefits of an ESP without having to use the service provider url as the domain component of your email addresses.

IDE – Integrated Development Environment

IDE, or integrated development environment, is a software application for developers that contains the basic tools they need to be able to develop a website or an application. An example of an IDE would be Visual Studio Code (Microsoft), which has a source code editor, debugging tools, and more. Developers are able to then download and install extensions that can be used with their own IDE.

IMS – Inventory Management System

An IMS is an inventory management system that tracks your inventory of a product from purchasing and storing all the way to the end transaction of completing a sale. Unlike an OMS or PIM, an IMS focuses on the quantity of things you have in stock. Since you may have different e-commerce storefronts (e.g. Etsy, Shopify, or eBay), this provides a real-time-updating source of truth for how many you have and prevents you from over-selling.

MRP – Manufacturing Resource Planning

MRP, or manufacturing resource planning, is the system manufacturers use to manage and plan their operations, resources, finances, and accounts for future unknown events utilizing predictive simulators.

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NPS – Net Promoter Score

NPS measures how likely it is that a customer will recommend a product. The score is used to measure customer satisfaction and loyalty. Research on NPS has shown that it can directly correlate with your growth and revenue.

OMS – Order Management System

An OMS is a system that receives and processes orders and payments, and stores information about pricing, vendors, marketing, and customers. In addition to big players like Salesforce, IBM, and SAP, companies like Webgility and Multiorders have sprung up with the rise of e-commerce.

PIM – Product Information Management

A PIM is the source of truth for your product data. Having a central source of truth allows you to manage the data in one place and have it propagate everywhere else. Many companies use spreadsheets as their PIM, but that lacks the capability of connecting to external systems. Widen, Salsify, and Amplifi are some of the popular systems on the marketplace today. Learn why every retailer needs a PIM in this article. 

POS – Point of Sale

POS is the specific point where the transaction of a customer buying a product takes place. POS systems such as Square manage this process by generating receipts and accepting payments on the spot.

ROAS – Return on Ad Spend

ROAS, or return on ad spend, is the total revenue after the cost of running your marketing campaign. This shows how much you’re really earning after the costs of ads and other investments.

RR – Reversal Rate

RR, or reversal rate, is the percentage of transactions that are cancelled after the order is put through (ideally below 10%). This metric can show whether your affiliates are generating quality traffic to your site, incorrectly advertising your products, or pushing ads to the wrong audience.

SDK - Software Development Kit

SDK, or software development kit, is a package the developer installs that uses multiple tools to develop an application. They are specific to operating systems, so if you were developing an app for iPhone, you would need an SDK specifically for iOS applications.

TAYRT - Test Are You Reading This

You're right, there's no such thing as a "TAYRT." But good for you for reading all the way through this glossary. We're so excited you made it this far! We hope you found it helpful. 

WMS – Warehouse Management System

WMS, or warehouse management system, is a software that can be used to manage and track everything that goes on in a warehouse operation. It’s one place to manage data on inventory, personnel, planning, and tracking movement within the warehouse in order to create a more efficient operation.

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