For over 60 years, the Standard Industrial Classification (SIC) system has served as a widely accepted structure for the analysis of businesses participating in the US economy. Marketers have long looked to the SIC system and its successor—the North American Industry Classification System (NAICS)—to simplify the processes behind identifying, segmenting, and targeting potential customers and prospects.

But what if you don't have a lot of marketing experience in an industry? Perhaps you are just starting out and need to quickly understand the makeup of your potential customers and prospects, and profile them.

Understanding SIC and NAICS can seem like a daunting task, but having a cursory comprehension of these systems can help you support various marketing activities.

SIC and NAICS Simplified

According to the SIC system, an industry consists of a group of establishments primarily engaged in producing or handling the same product or group of products, or rendering the same services.

The US Census Bureau assigns one code to each establishment based on its primary activity (generally the activity that generates the most revenue). Classification codes are typically derived from information that business establishments provide on surveys, census forms, and administrative records.

SIC is a four-digit, top-down code: The first two digits of the code sequence define the major industry sector, and the second two digits further refine the sub-classification of that sector.

NAICS is a newer, six-digit version of SIC, first put used in 1997. Though NAICS has largely replaced SIC, some areas of government and business still use SIC codes, so it is important to understand both classification systems.

Making Sense for Modern Marketing

Most marketers face the same questions in planning a new campaign: What customers or prospects are you marketing to? What are the customers' motivations? Why are the customers in the industry you are marketing to?

If you have experienced a large amount of customer interaction, you may already know the answers to those questions. If not, many of today's marketers turn to creating buyer personas to document customers' demographic information, buying motivation, and potential paths into purchasing product and services.

1. Identify specific buyers

SIC and NAICS code contain information about a company's general industry classification and specific vertical product/service applications. However, some classification categories—for example, "pumps"—are very broad and can include a huge variety of manufacturing businesses. Does your company target manufacturers of pumps or pumping equipment? If so, what specific type?

Pumps and pumping equipment are classified under SIC code 3561. The NAICS Code 333911—Pump and Pumping Equipment Manufacturing—further classifies the 800+ companies within the category into the following segments:

  • Cylinders, pump
  • Domestic water pumps
  • Hydro jet marine engine units
  • Pump jacks
  • Pumps, domestic: water or sump
  • Pumps, general industrial type
  • Pumps, oil well and oil field

Websites such as list companies in each of the standard classification categories. By searching each of your target industry codes, you can locate basic details for companies in those verticals.

After identifying which specific industry vertical your products serve, you can more easily locate basic contact information for your target customers.

2. Collect detailed profile data

The more detailed industry categories identified in step one allow you to perform longtail keyword searches to further define your target buyer organizations. Manufacturing directories offer detailed information about a company's product offerings, including customer reviews, contact information, videos, blog posts, and recent news. These resources allow you to gain a better understanding of your target customers' business needs, motivations, and level of interest in the products you sell. Moreover, marketers can build target customer and prospect lists and develop campaigns with content that is relevant to the audiences they are attempting to reach.

3. Target related industries

After you drill down to find specific companies within a specific SIC or NAICS code, you can then drill back up to find other verticals related to those companies because they might also be good targets for your content and campaign messages.

The manufacturing categories listed in online directories also allow marketers to research related vertical industries. For example, a search for "air handling equipment" returns results for...

  • Air compressors
  • Air filters
  • Air pollution control
  • Blowers
  • Dust collectors

After researching companies listed within the related verticals, you may find that your base of prospect customers may be larger than you expected.

4. Refine lead-qualification criteria

Once you identify the most appropriate targets for your marketing campaigns, you can use the information to determine which inbound leads are most qualified for follow-up. In addition, you can budget advertising, content development, and campaign dollars based on which prospects are most likely to become customers.

As your company website evolves, industry classification codes become a method to guide customers and prospects to relevant content. Potential buyers can select their applicable industry vertical on your homepage and instantly view product information that relates to their unique business challenges.

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Even though the SIC classification system, and to a lesser extent NAICS, was developed in an era of relatively little technology, they provide an accepted framework for categorizing the hundreds of industry verticals that manufacturing marketers address every day.

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Four Ways to Use SIC and NAICS Codes to Boost Marketing Effectiveness

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image of Mimi Miles

Mimi Miles is director of Marketing for AXIOS HR, provider of human resources services and HR outsourcing. She has 20+ years' experience in concepting, branding, and promoting products and services.

LinkedIn: Mimi Miles