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Why are Zip Codes so important to companies?

 Why are Zip Codes so important to companies?

Zip Codes were originally created for the sole purpose of improving the efficiency of mail delivery throughout the United States. Since their creation and widespread acceptance, ZIP Codes have become another useful tool, they give significant insight into the people that reside within them. For example, a ZIP Code can reveal an accurate picture of a person’s income, health status/risks, education, culture, religion, and more. This is because ZIP Codes break down cities into neighborhoods, and in some cases even cross city lines. While a large city may have a wealthy and well-educated area, it may also have an area of residents with no college degree and low-income levels. Simply knowing that a person was from this city would make it difficult to determine what kind of neighborhood they live in, but knowing if they were from the wealthy area of this city, which has a separate ZIP Code than the low-income area, would provide a great deal more information.

ZIP Codes can even affect how much insurance companies charge on car insurance, as accident rates for the ZIP Code are tracked, and other factors such as weather conditions, population density, road conditions, and crime rates are taken into account. In terms of health care, a ZIP Code can predict the life expectancy of the average resident and show gaps in life expectancy between several or all the Zip Codes located in one city.

With so much powerful data being collected based on Zip Code, having an up-to-date and accurate Zip Code Database is essential for any company wanting to target optimal populations based on Zip Code Area, or to discover hidden trends (such as large percentages of customers coming from Zip Codes with low average age, or high education levels). With thousands of Zip Codes changes happening throughout every year, its important to make sure you regularly update your Zip Code Data with a database such as our 5-digit or Zip+4 database.