The Standard Industrial Classification (“SIC Codes”) and North American Industry Classification System (“NAICS Codes”) are universal numbering methods that help identify the primary business of a company.
Standard Industrial Classification codes were developed in the 1930’s by the Federal Government along with the U.S. business community. They arevaluable tool for marketers looking to segment domestic markets, analyze customer relationships, and conduct general business research.
SIC Codes classify all economic activity into ten main divisions. The first two digits describe the nature of this activity in very general terms (i.e. Mining, Construction, Manufacturing). Remaining digits break down these categories into more specific sub-industries.
If more than one SIC Code is assigned to a company, the first one listed is the primary line of economic activity. If the business has othereconomic activities that makes up at least 10% of the business’s annual revenue, secondary SIC codes will be listed.
The North American Industry Classification System, (“NAICS”, pronounced ‘nakes’) was introduced in 1997 as a replacement for SIC Codes. NAICS Codes serves as the standard for the three NAFTA countries of Mexico, Canada and the U.S.
NAICS Codes were developed at the urging of leading business economists, who felt that the current SIC Codes under-represented many service industries. The new NAICS Codesoffers classifications that more closely reflect the many new industries that have re-shaped the U.S. and global economy.
NAICS Codes differs from SIC Codes in that they focus on business processes rather than on end products. Like the SIC Codes, NAICS Codes are organized into hierarchical classification groups.
How Do SIC Codes & NAICS Codes Relate to Business Lists?
Business List Targeting – The first and most obvious use of SIC Codes & NAICS Codes is that they allow you to target your business lists to specific industries.
Market Segmentation –By appending SIC Codes & NAICS Codes to your existing customer database, you can determine who your ideal customer is. By evaluating your most frequent and high paying customers, you can develop strategies to retain your best customers and find more like them.
Identify Potential New Markets –Similar types of businesses will have similar types of SIC Codes & NAICS Codes.If you are looking for a specific industry, look at theSIC Codes or NAICS Codes listed above or below your intended industry and you may find new opportunities that you never thought of.
Learning to navigate the SIC Codes & NAICS Codes can open new doors to great prospects and sales leads. Ask your List Broker for help.