What the heck is a NAICS code?
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For us to be most effective in attacking our target markets we must first define them and, secondly, be able to identify individual companies within them. This sounds really simple but it is amazing how many companies haven’t taken the time to do this.
One of the primary ways that we have traditionally identified markets and individual companies within those markets is by assigning them SIC codes. You remember SIC (Standard Industrial Classification) codes; they’ve been around since the 1930’s. The problem with SIC codes today is twofold. They were created when the U.S. was predominantly a manufacturing oriented country and SIC codes only have four digits, which can 
be limiting.
SIC codes needed to be updated to better reflect a changing North American economy and provide more options for classification. To do that, NAICS (North American Industry Classification System) codes were created and are replacing the old SIC codes. This industry coding system was jointly developed by the U.S., Canada and Mexico and has six digits. The Federal Government has been using NAICS codes since 1997.
NAICS codes can help us in several ways:
1. SIC codes are falling out of favor and are being rapidly replaced by NAICS codes. What a golden opportunity for us to take a fresh look at how we segment our markets.
2. Many industry reports that are now available either from public or private sources use NAICS codes. If we are still using SIC codes we won’t be able to use this new information very effectively as a benchmark for our own businesses.
3. NAICS codes can open our eyes to many service industry opportunities that were missing in the old SIC codes, which could play a prominent role in how we re-segment our markets.
CRM (Customer Relationship Management) systems are giving us increasing abilities to segment our markets through automation and NAICS codes are playing a key role. NAICS codes can be a very helpful tool in helping us focus our sales efforts. For a complete list of NAICS codes please see 2007 NAICS Codes.
© 2008 Scott R. Sheaffer
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