Understanding Industry Codes

SIC vs. NAICS

The government helps us categorize and identify businesses by industry through SIC and NAICS codes. Let's learn about what each of these means:

SIC

SIC stands for Standard Industrial Classification and is denoted by a four-digit code to identify the primary economy targeted by a business in the US. The first two digits represent the industry super sector, and the next two digits represent the industry sectors, allowing further subclassification. SIC codes represent 11 divisions and 10,000 industries in total, where unique SIC code represents companies belonging to the same industry.

NAICS

NAICS stands for North American Industry Classification System, a classification system encompassing a broader range of industries across the US, Canada, and Mexico. NAICS is a six-digit system, the first two digits indicating the industry's super sector, the third digit indicating the sector, the fourth digit indicating the industry group, and the fifth digit indicating particular industries. The last digit indicates industries by country.

Some areas of business and government entities still use SIC codes, so it's essential to understand both.

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What's the difference?

The NAICS system was developed to update the SIC system to eliminate overlap and poor logic. It utilizes a purely production-oriented structure identifying businesses only by their primary economic activity, whereas the SIC system moves from production-oriented logic to market-oriented logic throughout its structure. (NAICS Association ©2013)

How do NAICS & SIC codes relate to my sales initiatives?

There are multiple use cases where using Industry Taxonomy comes in handy:

  • Targeting the Right Industries: NAICS & SIC codes allow you to focus your marketing and sales efforts on specific industries.
  • Market Segmentation: Creating territories by industry using NAICS or SIC codes will enable you to determine which industries represent your ideal customer profile (ICP).
  • Discover Potential New Markets: The first two digits of a NAICS or SIC code is an industry title super sector. Using this number, you can find more businesses under the same super sector to which you can sell your product!