Resonata Consulting's Blog

Recently I read an interesting blog by one of our “friendly competitors” which was fittingly about SIC codes. I say fittingly because we all have competitors but the common controversy with SIC codes is that current day services companies might struggle to find themselves in the right company.
When reading the blog, I found a surprising statement which instantly raised an eyebrow with me: “While SIC codes are extremely valuable, they’re a level of granularity that is far too deep for my purposes. There are almost 1,000 SIC codes which is way too many”.
As analysts, researchers and ultimately consultants who research companies and use business data for a lot of our work I find this surprising, and perhaps outdated thinking.
I realise that for many organisations SIC codes are very useful but when it really comes to defining basic company and target types. However, SIC codes are only part of the research we undertake when doing larger scale bespoke work – research that enables us to build a database that is relevant, targeted with knowledge and insight that is genuinely useful from a business development perspective. We go much further than accruing a lot of names in financial services for example.
SIC codes can be a good starting tool for us and some of our clients certainly. But modern businesses are after a certain type of client and SIC codes go very little way to looking at what really makes these businesses stand out from each other.
Rather than hammering my point home here let’s look at some examples we have come across recently:
A client of ours wanted us to explore luxury brands, and looking at SIC codes would have been fruitless here. We needed to find them by researching very specific sectors, countries and work out what a luxury brand was to the client and if we could come to a common goal.
Universities – easy you think? Nope, we had to look for and research particular types of Universities across the world, add in Research institutes in specialist subjects and you are looking at a whole can of worms.
What about Financial institutions? Easy right, nope not them either since we were asked to look specifically for hedge funds, and they fall into the larger group of financial institutions such as insurance companies, banks, and similar organisations.
My point is that approaching the problem with SIC codes has little to do with the fact there are over 1,000 of them. Any company profiling, including SIC coding needs to be looked at from what makes these businesses different from others, where do they fit in the market, who are their clients, what products do they do, where they have come from and where they are going.
So the next time you think that you can say let’s target these types of firms, consider your strategy that bit further so you have an advantage over those who do not understand the problems with SIC codes.
Think about the pains that you solve, the challenges you solve and look at your existing clients work out what made them buy or what made you realise they had these issues.