Connecting the Dots: Why Geocoding is Critical for Businesses

September 30, 2008

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Many companies have found geo-location or geo-targeting 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 website visitor's IP address.

For marketers, geocoding is critical in targeting specific demographics. Appending demographic census track data to latitude and longitude coordinates helps marketers target the right demographics - those who would be most likely to respond to their offer or marketing message.

Insurance companies are relying increasingly on geocoding techniques to help set premiums and make underwriting decisions based on the physical location of the insured property. Take Hurricane Katrina and storm-surge damage, for example. 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 insuring properties that may not be situated in a flood zone, but are actually in a storm-surge zone - where the flood exclusions in their policies would not apply.

"With mapping applications in such widespread use, companies have a need to translate existing address data to their respective lat/long coordinates," says Bud Walker, product manager for Melissa Data, a data quality and geocoding service provider.

"The benefits of high-accuracy address geocoding are manifold and serve a diverse set of applications such as market segmentation, demographics, spatial, dispatched services, nearest location queries, sales districting and zoning, tax jurisdictions, elections, etc.," says Walker.

A Web Shoe-In: Geocoding as a Store Locator

One of the most widespread uses of geocoding technology is in store/dealer locators. Businesses use 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 the Sprint Nextel store nearest your home or business.

However, to adequately serve its 52 million customers, Sprint Nextel often has multiple stores located within the same ZIP Code. So which neighborhood store is closest to a particular customer's home? Using a geocoding solution to power the Store Locator on its website allows Sprint to turn the street addresses of its stores into usable locational information - so customers can actually determine which store is closest in relation to their home address.

But what if the address is wrong? Without accurate addresses, it would be difficult to obtain accurate geocoding. For instance, a geocoding application might not recognize the difference between 123 Elm St. and 123 S. Elm St., which could be two totally different addresses located miles apart. A bad address diminishes the accuracy of a store locator - it's the biggest reason why some store locators get it wrong.

That's why businesses are more proactive about integrating routines for address verification with their geocoding initiatives.

Dansko - the footwear manufacturer and distributor known for its popular "stapled clogs" - successfully integrates address verification technology as part of its geocoding solution.

Dansko distributes its footwear to more than 3,500 retail locations. The company sells its products through specialty retailers and online shoe venues. Dansko uses an address verification API to validate and standardize its retailers' contact data, which include each store's address, city, state, phone number and ZIP Code. The footwear manufacturer wants to ensure that its retailers' information is uniform and correct before it geocodes the data. Once the addresses are verified and corrected, Dansko uses a geocoding solution to append latitude and longitude coordinates - allowing the company to zero in on the exact location of each retailer's store.

The company's website - - features a "Find a Store" lookup function, which enables shoppers to locate Dansko retailers by entering a ZIP Code or city. After typing in the 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 would mean that the retailer carries the shoe in its inventory.

By integrating address verification and geocoding technology into its website, Dansko creates a more enhanced and personalized experience for online visitors and drives foot traffic to its retailers' stores.

It's all in the Delivery: Geocoding as a Routing Tool

The use of geocoding applications as a delivery/routing tool has proven to be a necessary component for businesses that rely on having their products delivered on time and to the right location. Geocoding also 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.

Frito-Lay uses geocoding technology with its routing application to zero in on the precise location of its 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. Just ask CXT Software. The Phoenix, Arizona-based courier software and mobile resource management technology firm wanted to increase dispatch efficiencies by determining the exact location of its delivery personnel.

CXT Software 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 job.

"Geocoding allows the quick plotting of the address on a map," said Lyndon Edmonson, chief financial officer for CXT Software. "Distance, whether it is from a map or some other algorithm, is more quickly ascertained with latitude and longitude than other methods. Precisely knowing where a pickup or delivery is, and where the driver is, increases his proficiency and aids in his ability to make good dispatching decisions."

Based on a recent analysis report, the company's use of geocoding technology improved a customer's overall operations; revenues jumped 7 percent, online orders increased 25 percent - while costs dipped by 4 percent.

Wherever You Are, There You'll Be: Geocoding as a Local Search Tool

Other businesses use geocoding technology to deliver more relevant content to online visitors, to create better relationships with Web visitors and to improve customer satisfaction and retention rates. By offering more relevant content to the site visitor, retailers can prevent - or at least decrease - website and transaction abandonment.

HelloMetro - a global network of city search guides - provides website 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.

The "hyperlocal" search functionality gives users more relevant information about a specific neighborhood or ZIP Code - right down to a map, local reviews and contact information.

Businesses require the highest level of accurate locational information available. Using geocoding technology can help a business 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? By geocoding client data you can see patterns emerge and create new opportunities for businesses. Utilizing a geocoding solution can help businesses strengthen customer relationships, improve profitability and increase effectiveness - all of which are critical in expanding business in a down economy.


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