If your geocode is wrong, your analytics are wrong, your insights are wrong—and your decisions are wrong—so it pays to be accurate. Accuracy has two elements, positional and match. Positional accuracy measures how close the geocode is to the reference point – such as a country, state, city, street or even parcel center. An address geocoded to a city centroid, for example, will be less positionally accurate than one centered on a parcel.
A more important factor, however, is match accuracy, which determines how well the input data reflect the actual reference point in which you are interested. In the United States, for example, the United States Postal Service estimates that more than 23% of customer records include an address error— errors that could lead a stand-alone geocoding system to return the wrong reference point candidate. That’s why only systems that standardize, validate and cleanse addresses as part of the geocoding process can achieve both match and positional accuracy. The result is a true confidence in geocoding that applies consistent rules in every market. Given the wide-spread impact that international geocoding can have on business, organizations would be well-served to consider the best practices employed by multi-national firms that leverage the power of geocoding in cost-efficient, effective and consistent ways across their organization. Following are nine recommendations that have been gathered from researching and working with such organizations over the past twenty years.
1. Validate source addresses
Consumer-oriented geocoding solutions can often be acquired at little or no cost, but organizations that use that information to make business decisions need to be more concerned with the validity of addresses. A business-strength application will offer the ability to cleanse data, standardize addresses and validate the accuracy of the source addresses before applying geocodes.
2. Validate geocode results
Analyzing geocode results based on positional accuracy doesn’t provide the full insight needed to make critical business decisions. Even when source addresses are fully validated, the geocoding process needs to ensure that the address is located at the right spot. Some solutions return geocodes without providing any details regarding the accuracy level—even when no close match is found. These “false positives” can create a false sense of confidence, which can increase the risk for poor decisions. A first-class geocoding solution will provide both the match accuracy and the positional accuracy—and enter a path of exception processing if there is the potential for an incorrect result.
3. Use precise, up-to-date reference data
How often you update your reference data is important, as reference points such as roads, addresses and developments are always being added and modified. In some cases, live data updates might be best, but many companies do quite well with quarterly data refreshes. In markets with fewer customer contacts, annual updates may be sufficient. The ability to generate precise geocodes is also important; some organizations may need to geocode at parcel-centroid level, for example, while others may need to identify points where two roads intersect.
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4. Geocode to multiple levels of accuracy
There will be times when it is not possible to deliver a geocode centered on a specific address or parcel. The tools you use should recognize this and apply consistent rules, automatically cascading to the next most specific point of reference, from address point, to street level, to postal code, city, state, etc.
5. Combine geocoding and spatial analysis
Ultimately, the goal of any solution is to provide answers, not latitudes and longitudes. Best-in-class solutions combine geocoding with the ability to perform analysis, calculations and predictive analytics, including:
- Point-in-Polygon Analysis (e.g. does a point fall in a sales territory or trading area?)
- Closest Site Analysis (e.g. determine the number of homes within a three-mile radius of a fire station)
- Calculate drive time and distance (e.g. find the nearest garage in the case of a car break down)
6. Integrate into existing workflows
One of the advantages of single-source, international geocoding is that it makes it easier to integrate geocoding and analytics into existing operations and business processes— which streamlines workflows, eliminates manual processes and improves decision making. API (Application Programming Interface)-based geocodes should directly feed into systems. Using the same API calls for each country enables systematic access to geocodes across multiple markets.
7. Design for maximum performance
Many organizations wonder whether reference data should be stored locally or accessed through a hosted solution. In most cases, on-premises or desktop data libraries will improve performance and allow you to geocode hundreds of thousands of records per hour—but there are costs involved. The best approach may be to use on-premise, local libraries for markets with high customer populations, and hosted solutions for secure access in all other markets.
8. Provide for data flexibility
Flexibility is particularly significant for multi-national organizations that operate across multiple languages, where there is a need for built-in logic that understands the nuances of local postal rules. You also want flexibility to handle different types of databases and input addresses, including structured/unstructured, residence/business, etc. Most importantly, organizations need the flexibility to use and switch among multiple data sources. For example, a company may own street data or point of interest data in one town or may have access to proprietary data from a local municipality—and the goal should always be to provide for the best decisions possible.
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9. Look for one-stop service
Solutions need to be simple to use and flexible enough to meet different business requirements. A single technology platform that matches up with your overall corporate objectives can help ensure that a consistent standard will be applied in every market. Likewise, maintaining one platform reduces cost of ownership and can speed up system integration. A single interface also simplifies training and education, and makes it easier for your company to gain the skills and capabilities in location intelligence needed to achieve a competitive advantage.
To recap, it cannot be over-emphasized how important spatial analysis is as a basis for business decisions in marketing, operations and a wide variety of industries such as insurance, telecommunications and the public sector. But before you can analyze, extrapolate or profit from location data, you need to geocode accurately and confidently. Geocoding can be complex, and mistakes in geocode assignment can lead to poor business decisions that impact risk, relationships and profits. Organizations need to consider several factors when choosing a geocoding solution, including accuracy, flexibility, functionality and experience. Today’s leading enterprise geocoding tools combine address quality, multi-level geocoding and spatial analysis in a single solution that can apply the same standardized rules in every market—so you can act with confidence.
Ed. note: PBBI is sponsoring a webinar on geocoding on Nov. 2, which will cover some of these topics in greater detail.