The Value of the Standard Industrial Classification (SIC) System

The value of the Standard Industrial Classification (SIC) System in relation to your Prospects Analysis Report

BACKGROUND

The SIC system is a federal government coding system, developed in 1940’s, to categorize businesses. The system has 13 major groups, and 64 subgroups with 1000 4-digit classifications. Most B2B businesses have organized their market plans by SIC since the 1950’s and continue to do so.  The attached two page summary of two and three digit SIC’s will help you better understand the SIC system.

VALUE

Inside Prospects will provide a Prospect Analysis Report (PAR) to any firm targeting Orange and San Diego county businesses FREE of charge. The PAR uses the SIC codes as well as employment ranges. The report will select from the 162,000 Orange and/or San Diego county business and professional firms, and provide the market that best defines your prospects. For example, when Inside Prospects targets its own market, we find that we have 3000 prospect companies (2% of all firms), falling within six general SIC groups.

We view the PAR as the starting point in our prospecting effort. The report allows us to focus our marketing investment on our best opportunities.

Many marketing questions can be answered once we understand the number of prospects we have. For instance, if our marketing budget is $30,000, we will then be able to determine a maximum $10 investment per prospect. We can then decide how to best to use that $10 to get our value proposition in front of the 3000 firms.  If we had incorrectly concluded that our market was 6000 prospects, we would have had to limit our investment to only $5 per prospect.

The budget is usually based, in part, on “new business”.  New business is hopefully based on capturing a percentage of the prospect base, and if the base is incorrectly determined, the budget can end up being over or underestimated to meet current marketing needs.

The SIC system provides a foundation for our Prospect Analysis Report. The information contained in the Prospects Analysis Report is crucial when designing sales territories, and setting sales quotas. It is also important in determining the type and number of salespeople needed, the best medium to reach your prospects, current market penetration, and market risk factors.