Why should I pay for ZIP Codes when I can get them free from the Census Bureau?

This question is another one of those, “if I got a stamp for every time I heard” stories. From the Census Bureau, you cannot get ZIP Codes, at any price, free or otherwise. Instead, the Bureau makes available a geographic product called ZIP Code Tabulation Areas,” or ZCTATM for short.

ZCTAs are approximations of mailing ZIP Codes and exist strictly for analytical purposes related to the 2010 Decennial Census. The data come with a slew of caveats, which you can read about on the Bureau’s FAQ page. Among the limitations: 1) The ZCTA of an address might differ from the mailing ZIP Code; 2) not all mailing ZIP Codes are represented; 3) the Bureau has no plans to maintain or update ZCTAs, at least not before the 2020 Decennial Census.Image of ZCTA vs ZIP Code 66101

If it is most definitely ZIP Codes you need for your application, then ZCTAs are not the way to go. All the same, ZIP Codes were designed, and exist solely, for facilitating the delivery of mail. All the other purposes we’ve invented for using them often stretch the boundaries. Therefore, we think there are some situations for which ZCTAs could be an acceptable alternative to ZIP Codes. Sales territories come to mind.

It’s routine for companies to construct sales territories from ZIP Codes. The main reason is convenience. Mailing ZIP Codes normally would be expected to exist on all prospect and customer addresses. Therefore, they become a convenient means of aggregating prospect and customer data into territories.

One downside to using ZIP Codes is that they are subject to change when mail delivery requirement changes. A ZIP Code might split, be consolidated with another ZIP Code, or be eliminated. Worse, from the perspective of sales territories, the boundary might simply be redrawn to cover a different part of the region.

Another downside is that businesses with a large volume of mail get their own ZIP Codes. Quite often, when sales territories are drawn using ZIP Codes, large business accidentally get left out because their “point” ZIP Codes (i.e., ZIP Codes specific to a PO Office box) are easily overlooked.

ZCTAs offer a nice alternative to ZIP Codes. While they are not ZIP Codes, by an large they look like ZIP Codes. Such familiarity makes it easier to sell sales on the idea. (We’ve tried to convince people to make sales territories based on Census Tracts because of all their nice properties, but have never succeeded. The concept just seems too abstract.)

The real advantage of ZCTAs, though, is that they are stable. You’ll not have to worry that overnight your sales territories might suddenly change, leaving your best sales rep with a much smaller and more remote sales territory. Of course, since ZCTAs are not ZIP Codes, some addresses in your databases will not have a ZIP Code that aligns or equals a ZCTA. ZIP Codes number around 41,350, versus 33,144 for ZCTAs. The difference largelyis due to PO Box ZIP Codes and US Territories. For example, the ZIP Code 30063 does not have a ZCTA since it corresponds to a single and very large business.

Therefore, a prerequisite for switching to ZCTAs for sale territories is to convert your database operation from assigning businesses to territories based on simple ZIP Code lookups to spatial references (i.e., point in polygon based lookups). If your address data already is spatialized – a good possibility – then this conversion is a snap. (ZCTAs are available for download from the Bureau’s ZCTA page.)

The payoff from converting to ZCTAs is that the boundaries of your sales territories will not change until after the year 2020, the next Decennial Census! Just think of all the time you’ll save because you will no longer have to explain why prospects suddenly seem to move to different territory.

ZIP Code Tabulation Areas from the Census Bureau should not be confused with ZIP Codes. However, in the right circumstances, they offer a viable alternative to ZIP Codes and can provide relief from certain headaches incurred by using ZIP Codes for purposes in which they were never intended.

 

Author: 
Daniel Brasuk
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