A M e l i s s a D a t a W h i t e Pa p e r Geocoding: Acquiring Location Intelligence to Make Be er Business Decisions
2 Introduction Geocoding: Acquiring Location Intelligence to Make Better Business Decisions In a tight economy, the need for making sound business decisions while finding efficiencies is crucial. That s why more companies are looking to add location intelligence to their data to gain better insight into critical decisions. Just about any industry sector can benefit from location intelligence. Financial, insurance, retail, communications, even governmental agencies can plot the exact longitude and latitude of a particular location of interest to determine tax jurisdiction, fire, school, police districts, optimize routing, like deliveries or emergency response; and even append Census demographics for customer profiling and effective target marketing. Location intelligence solutions can help businesses answer fundamental questions, such as: What is the geographic area we serve? Are our sales territories and client clusters properly aligned? What are missed or overlooked areas where potential clients might exist? Are homes located in a specific ZIP Code situated within a tornado hazard zone? How can I deliver the most relevant content to a mobile phone user? How can I segment geographic areas by customer cluster-types? Because location intelligence is based on first translating a physical address into latitude and longitude coordinates a valid address and precise geocoding algorithms are necessary to build location intelligence that is accurate and meaningful. This white paper examines what geocoding is, the levels of accuracy you can choose from and several examples of how businesses use geocoding technology and location intelligence to gain a competitive advantage. WHAT IS ACCURATE ENOUGH? Geocoding Levels of Accuracy While geocoding accurately identifies the spatial positioning of an address, there is no database that exists with an exact geocode for every postal address. So every business must decide how accurate is accurate enough to meet specific business needs. Generally, there are three levels of accuracy: Example: 2001 Pan American Plz San Diego, CA 92101-1636 Doorstop Pan American Plz Pan American ZIP Plzto Centroid ZIP+4
3 1. ZIP Code Geocoding Geocoding to the ZIP Code level (5-digit ZIP) returns the centroid of the passed ZIP Code. Since this is a mid-point location, geocoding to the ZIP Code level has limited business value because it s inherently vague. Most businesses require a higher degree of accuracy, which can be achieved by geocoding to the ZIP+4 level. 2. ZIP+4 Geocoding In order to geocode to the ZIP+4 (9-digit) level, you must first validate your address data to append the ZIP+4 postal code. Validating your address data to the delivery point level using a CASS Certified address verification solution will ensure that every address meets USPS specifications for accurate delivery. The accuracy of geocoding to the ZIP+4 level of an address falls within a radius of 10 to 20 households on the same side of the street. Geocoding at this level is ideal for: Demographics and customer segmentation Target marketing Store locator/site selection Input 2001 Pan American Plz San Diego, CA 92101-1636 Output County Name San Diego County Fips 06073 Latitude 32.726441 Longitude -117.153789 Census Block 2036 Census Tract 005600 PlaceName San Diego PlaceCode 0666000 Lat/Long Level ZIP+4 What is Cascade Geocoding? Cascade geocoding finds the best coordinate for an address by geocoding addresses in the following sequence: ZIP+6 (or the 11-digit ZIP, ZIP+4 with Delivery Point) ZIP+4 (or ZIP+4) ZIP+2 (5-Digit ZIP+2) ZIP (5-digit ZIP centroid) How does it work? If an 11-digit code is not available, the process will cascade down to the next level of geocoding, which is to the 9-digit level of an address or parcel. If there is no 9-digit data provided to calculate the address-level coordinates, the process will geocode to the 7-digit or 5-digit ZIP Code centroid. The benefit of cascade geocoding is that it takes geocoding to a higher level of accuracy by returning lat/long coordinates of buildings and parcels where the addresses are physically located. Did You Know? More than 20 percent of all 5-digit ZIP codes cross county lines.
4 3. Doorstop Geocoding Doorstop geocoding appends lat/long coordinates to the 11-digit level of the address or parcel. This high level of geocoding provides a distinct set of coordinates for every valid address giving you the actual, physical location of the address right to the doorstop, building or property parcel. It is considered the most accurate method for pinpointing addresses. Address 2001 Pan American Plaza San Diego, CA 92101 Geocoding at this level is ideal for: Insurance territory assignment/tax jurisdiction Risk exposure analysis Vehicle/delivery routing Did You Know? There are many different ways to access geocoding data: 1) Web service/api 2) Service bureau 3) Raw database POINT A TO POINT B: DIFFERENT GEOCODING APPROACHES Now that you ve identified a need for geocoding, how do you plan on using your location intelligence data? Geocoding as a Marketing Tool Many businesses use geomarketing to perform specific market/region data analysis for the purpose of making sound business decisions. Geomarketing allows businesses to analyze customers on digital maps, acquire valuable market data, and plan sales territories and delivery routes. This enables organizations to better coordinate all of their domestic and international sales and marketing operations for improved efficiency. For marketers, geocoding is critical in targeting specific demographics and in customizing push marketing messages to a specific audience based on the geographic location of potential customers. A good geocoding solution will append exact Census Tract and Block numbers to each address. With this information a marketer can easily append detailed demographic data with thousands of variables, such as population counts, age, race, house values, annual earnings, income, etc., which can be taken from the Census Long Form, or data from historic Census Bureau data such as 1980 and 1990, or present day estimates and projections.
5 Appending demographic census tract data, population characteristics, customer age ranges, and consumer purchasing behavior and patterns to an address helps marketers easily profile typical customers and target the right demographics those who would be most likely to respond to their offer or marketing message. You want to find more customers like your best customers. Many organizations have found geocoding technology to be of value in Internet advertising. Pay-per-click search engines like Google and Yahoo offer the ability for advertisers to deliver targeted advertising banners based on the location of the Web site visitor s IP address. Delivering geographically targeted content or ads can help businesses enhance performance, improve returns, and increase click-throughs significantly. Geocoding in Spatial Analysis Store Locator One of the most widespread uses of geocoding technology is in store/dealer locators. Businesses utilize geocoded data to ascertain proximity to potential customers, distance to suppliers and competitors, service areas, and delivery routes. You ve probably experienced a locator lookup yourself maybe to find a restaurant, pet shop, or your mobile service provider s closest store to your home or work or even a certain shoe style. Take Dansko, for instance. Dansko distributes its footwear to more than 3,500 retail locations, and sells its products through specialty retailers and online shoe venues. The footwear manufacturer and distributor integrates address verification technology to validate and standardize its retailers contact data as part of its geocoding solution. After the address is corrected, Dansko uses a geocoding solution to append lat/long coordinates, which allows the company to pinpoint the exact location of each of its retailer s stores. But the footwear giant also uses geocoding technology in other critical ways like for instance on its Web site. Dansko.com features a Find a Store lookup function, which enables shoppers to locate Dansko retailers by entering a ZIP Code or city. After typing in your ZIP Code or city, the Find a Store function will do a radial search from 10 to 50 miles and display a listing of local retailers that sell the Dansko brand right down to the shoe style and color level. To do this, Dansko checks its shipping history to see if a set minimum quantity of a particular shoe/color was shipped. This provides a good indication that the retailer has the shoe in stock.
6 Tax Jurisdiction and Insurance For businesses in the insurance, electric and gas utilities, telecommunications, retail operations and services determining tax jurisdiction can be a difficult and cumbersome task. It s a challenge for businesses because most companies rely on determining tax jurisdiction at the ZIP Code level. This can be a problem because some ZIP codes cross multiple boundary and county lines, some municipal boundaries change, and not all ZIP codes fall into a specific tax district. In addition, some businesses have contact data that contains incomplete addresses, misspelled street names and missing ZIP codes. Geocoding Territory or Tax Jurisdiction 2001 Pan American Plz San Diego, CA 92101-1636 County Name San Diego County Fips 06073 Latitude 32.726441 Longitude -117.153789 Census Block 2036 Census Tract 005600 PlaceName San Diego PlaceCode 0666000 Lat/Long Level ZIP+4 The most effective way to accurately determine tax jurisdiction is to integrate geocoding technology along with an address quality solution into your operations. Geocoding addresses to at least the ZIP+4 level will provide businesses with the location intelligence needed to accurately determine tax jurisdiction. By geocoding addresses, businesses can avoid penalties, fines and other costs that could be assessed if tax jurisdiction was improperly determined. Some businesses also rely on locale specific sales tax areas which is determined using the Census Place Code and Place Name from a good geocoding solution. More and more insurance companies rely on geocoding to help set premiums and make underwriting decisions based on the physical location of the insured property. Most insurance carriers have their own set of rules and criteria when it comes to underwriting, such as property elevation, and determining the distance of the property from/to the coast. Such an imprecise standard may leave carriers with unknown risks exposing them to potential payouts to insured properties. And the same could be said in a reverse situation carriers might even turn down properties that are located within a short distance from the shoreline yet are not in a storm-surge zone. This is why accurately determining the insured s precise location and attaching the appropriate risk is imperative. A carrier could stand to lose millions. Geocoding as a Routing Tool Utilizing geocoding applications as a delivery/routing tool is a necessary component for organizations who rely on having their products delivered on time and to the right location. Geocoding enables companies to perform route sequencing technology which calculates the most time efficient, optimal way to deliver or visit multiple locations. For snack foods giant Frito-Lay, the use of geocoding technology is vital. Frito-Lay utilizes geocoding techniques to ensure efficient delivery of its consumables and manage and control the flow of goods.
7 Frito-Lay uses geocoding technology with its routing application to zero in on the precise location of their vendors addresses and doing so has helped increase the rate of accurate deliveries by 80 percent. Obtaining precise geographic information is also a must-have for the same-day delivery industry. CXT Software, a Phoenix, Ariz.-based courier software and mobile resource management technology firm, integrated a geocoding solution into X Dispatch, its flagship product. X Dispatch is an enterprise-level software application that allows a dispatcher to see the active orders and drivers on the same screen. The software applies advanced algorithms to the geocoded location of each order and driver which allows the dispatcher to select the best driver for each delivery. Geocoding Distance Between Two Locations Customer Businesses Geocoding as a Mapping Application Local Search Most mobile phones, especially smartphones, come equipped with integrated GPS functionality. A smartphone such as the iphone is a mobile phone offering advanced functions, including operating system software, email, and Internet capabilities. Marketers can apply geocoding technology to ascertain the smartphone user s location, and then deliver dynamic content to that specific user. This technique is known as mobile-search advertising. Other businesses use geocoding technology to deliver more relevant content to Internet visitors to create better relationships, and improve customer satisfaction and retention rates. HelloMetro a global network of city search guides provides Web site visitors with the ability to identify local restaurants, hotels, businesses and attractions in targeted ZIP codes and neighborhoods in all major cities in the U.S. This is the power that geocoding provides. HelloMetro s hyperlocal searches are powered by Maponics, a custom mapping and GIS data company. Example: You re driving to Los Angeles and you want to know what the movie times are for a theater located in the city you go to an online movie venue such as HelloMetro from your smartphone. You type in the city s ZIP Code, and the site automatically delivers targeted content based on your location. Geocoding also enables GPS navigation applications to deliver targeted messages to your cell phone based on your actual physical location (lat/long coordinates) without the user having to type in a ZIP Code. Example: Several smartphones feature applications that allow users to locate local parking structures on the way to their destination. This GPS-enabled application finds the user s current location and provides a listing of nearby parking structures.
8 Crime Mapping Using geocoding to perform crime mapping has become a hot ticket within law enforcement agencies these days mostly because of the increasing need to accurately determine the location of where a crime occurred. The Los Angeles Police Dept (LAPD) offers the public a way to track crimes near specific addresses via its online crime site at www.lapdcrimemaps.org. However, early on there was a problem which led the site to show a false crime spike indicating an increase in crimes just a block away from the LAPD office. Most of the crimes reported were accurately displayed on the site. But other crimes were not shown in the actual location of where they occurred. When the software could not accurately parse the intersection or street, it would display the default location instead, which was roughly 1st Street and Spring Streets right in front of the LAPD building. The error reinforces the need for accurate geocoding, and how vital the technology is to an organization. Accurate geocoding provides an organization with true location intelligence vital data that s needed to help detect patterns and risks to make more informed business decisions. CONCLUSION By geocoding your address data, you acquire the location intelligence needed to help you see patterns emerge and create new opportunities to grow your business. The beauty of geocoding lies not just in its universal use, but also in the flexibility of the technology. There are different levels of positional accuracy available, based on a company s budget and their business needs. There are also more enhanced levels of geographic accuracy, known as doorstop geocoding or geocoding to the 11-digit ZIP Code level which pinpoints the exact location of a house or commercial building, right to the actual doorstop. Cascade geocoding is another method of locating the address of a building or parcel as it finds the best coordinates by geocoding in different sequences starting from the highest level of accuracy and downgrading to the most broad level. After geocoding, businesses can use their location intelligence in many different applications, such as a marketing tool to perform market-specific data analysis, as a store/dealer locator; or as a delivery/routing tool; and as a local search tool to deliver more relevant content to Internet and smartphone users. Utilizing a geocoding solution can help businesses strengthen customer relationships, improve profitability, and increase effectiveness all of which are critical in expanding business in any economy. About Melissa Data Melissa Data is a leading developer of data quality, data management, and data enrichment solutions. Melissa Data helps companies acquire and retain customers, validate and enhance data, and improve marketing ROI. Since 1985, Melissa Data has helped companies like Mercury Insurance, Xerox, Disney, AAA, and Nestle improve customer communications. The following trademarks are owned by the United States Postal Service: ZIP Code, ZIP+4, CASS Certified, USPS