Another new year has arrived and with it will come the inevitable changes in how we do business. Some of those changes may not be welcome ones, but the phasing out of the old Standard Industrial Classification code (the SIC) is definitely one that will be.
Back in the 1930’s the US government implemented the original SIC as a means of classifying industries in order to collect and make use of data on businesses nationwide. Since then it’s been used for a variety of purposes, not the least of which has been for building prospect bases for our marketing efforts.
Creative marketing professionals early on recognized the value of having a national record of businesses and what they did. The problems with actually using the SIC for practical marketing, however, were numerous. Many, particularly in small business enterprises, found it to be less than comprehensive and so never bothered to put it into their box of marketing tools. Businesses were simply too broadly described, and the database gave them so many possible prospects that it was not an efficient use of marketing dollars.
But that is changing to a great extent. Beginning in 1997 the new North American Industry Classification System (the NAICS) slowly began to replace the old SIC system. Most of the new version was put into implementation in 2002. Though there are still some details to be completed, the NAICS is now up and running.
There are a number of advantages to the new system. It is the first common system that includes all industries not only in the US, but in Canada and Mexico as well. With the advent of NAFTA a lot of firms are open to expanding their promotions and sales into those countries. NAICS will help make those territories more accessible.
The NAICS identifies almost 100% more business sectors than did the SIC and the industries recognized have been increased by over 30%. New service industries have been added and the breakdown system that describes business has been expanded from four digits to six.
How does this aid marketing professionals? It enables them to pinpoint actual potential customers from broad industry sectors such as Transportation and Warehousing. In the old system you might have found literally hundreds of thousands of firms under the SIC code for that industry. Under the new system you can identify more specific types of warehousing; such as general warehousing, refrigerated storage, food products, electronics, paper products, auto parts, and other classifications that will help narrow down the search for potential customers.
Say you manufacture or sell industrial shelving. Under the old SIC system you could identify grocery retailers…a group you wouldn’t likely consider as prospects for your product line. With the new NAICS system you could go a step further. Instead of simply looking for grocery retailers, you can now find warehouse club grocery retailers and those are folks who might just need your product.
By more closely defining and breaking out the types of business firms, and by including firms in Canada and Mexico, the new NAICS becomes a far more valuable marketing tool than the old classification system.
To make the NAICS even more valuable, there a number of organizations ready to help marketers convert to the new system. The Georgetown University business school puts a number of information links and articles on their web site at http://gulib.lausun.georgetown.edu/swr/business/naicslin.htm.
At http://www.loglink.com/sic.asp you will find a page sponsored by LogLink, a transporation and logistics outfit. This gives viewers a free search engine for identifying not only their own NAICS code, but codes for all industries.
One of the more comprehensive sites you can find is that of the NAICS Association at http://www.naics.com/index.html. Good explanations for the NAICS along with downloadable documentation and classification lists can be found free of charge on the census bureaus site at http://www.census.gov/epcd/www/naics.html.
There are also a number of commercial firms that can set you up with company lists and information to build a ready-to-go prospect database for your company. You can not only have your prospect list reflect the type of business and products you want to sell to, but any number of other filters such as company size, revenue, years in business, square footage, and location can be used.
A lot of internet web space is dedicated to the NAICS. A short search can lead you to a number of ways of exploring government collections of business information and how you can use such information to your advantage.
As the competition becomes more intense, and we all need to find ways to increase our base of prospective customers, it becomes apparent that no stone should go unturned. If you abandoned mining the statistical database that was the old SIC, it’s time to rethink your position. If you’re new to such things altogether you may find the NAICS to be an exciting and relatively inexpensive way to dig up a whole new group of people to educate about your company and services.
So as you take this opportunity to check out the North American Industry Classification System; I will take this moment to wish all of you a prosperous new year, the discovery of great new markets, and the finding of a lot of new business.
(next article in series)
