What is a ZIP+4 Code & Why Does it Matter in Data Management

In the early 1940s, H. Bentley Hahn, a postal inspector in the United States, proposed the idea of using a five-digit code to identify specific areas within the country, based on a similar system that was being used in Germany at the time.

Hahn recognized that the existing postal system in the United States was slow and inefficient, with mail being sorted manually and often getting lost or misrouted along the way. He believed that a new system was needed to streamline the sorting and delivery process and so the ZIP code system was introduced in 1963. The system used a five-digit code to identify specific areas within the country, with the first three digits representing a regional sorting area and the last two digits representing a specific post office or delivery zone within that area.

The introduction of the ZIP code system revolutionized mail delivery in the United States, making it faster, more accurate, and more efficient. By enabling more precise sorting and routing of mail, the system reduced delivery times and improved the reliability of postal services throughout the country. 

According to historical data, the ZIP code system helped the postal service: 

• Save delivery costs up to $10,000 per year for some counties
• Speed up delivery by up to 48 hours at some locations
• Eased the process of sorting without a reduction in staff

Who would have thought a five-digital code would change the world!

Remember the infamous 90210 TV-Series that became the identity of Beverly Hills? It is an actual ZIP code that refers to one of the posher neighborhoods of Beverly Hills, and therefore to an exclusive neighborhood in an upscale part of Los Angeles. 

Here’s what each of the number means: 

So, as you can see, each number in a ZIP code represents a different part of the address, and together they make up a code that helps the post office quickly and accurately sort and deliver mail.

While five-digit ZIP codes did make mail sorting and delivery faster, better, and more efficient, it was unable to cope with the volume of mail and increasing delivery points across the US. And so in 1983, a new system was introduced, the ZIP Plus 4 Code! 

The United States Postal Service introduced the ZIP+4 system in 1983 to deal with the growing complexity and volume of mail. It is estimated the of mail delivered in the 1980s peaked at approximately 177 billion pieces. In terms of delivery points, the USPS reported approximately 89 million delivery points by the end of the decade.

The five-digit code which initially specified an area or a part of a town was no longer accurate or efficient enough. 

So, USPS created 9-digit ZIP Codes to ensure fast and accurate mailings. They indicate the actual path the mail should travel and usually they narrow down to somewhere between ten to twenty homes.

Let’s take the address of the Empire State Building in New York City as an example: 350 Fifth Ave, New York, NY 10118.

The first five digits of the ZIP+4 code, 10118, represent the regular five-digit ZIP code for the area. The last four digits, which can be found using USPS ZIP Code Lookup tools or on the USPS website, provide more specific information about the location.

In this case, the ZIP+4 code for the Empire State Building is 10118-9998. 

The last four digits, 9998, refer to a specific block, range of addresses, or building within the 10118 ZIP code area. This helps the USPS sort and deliver mail more accurately and efficiently.

So, if you were addressing a letter to the Empire State Building, you would include the full ZIP+4 code, like this:

Empire State Building

350 Fifth Ave

New York, NY 10118-9998

This ensures that your letter is delivered to the correct location with maximum efficiency.

Along with efficiency & accuracy, some of the key benefits of ZIP+4 postal codes include: 

Enhanced Postal Routing: With the use of ZIP+4 codes, the USPS can create more specific delivery routes for mail carriers. This allows carriers to spend less time sorting mail resulting in faster and more efficient mail delivery.

Improved Address Validation: ZIP+4 codes also help to improve address validation, with more detailed location information that can be cross-referenced with other databases, such as a geographic information systems (GIS). 

Reduced Shipping Costs: For businesses that ship large volumes of mail or packages, using ZIP+4 codes can help reduce shipping costs as carriers can more easily route packages and avoid unnecessary delivery delays or misdeliveries.

Better Data Analytics: With the use of ZIP+4 codes, businesses and organizations can gain more detailed insights into their customer base and marketing efforts. By analyzing ZIP+4 data, businesses can better understand where their customers are located, identify new areas for growth, and optimize their marketing strategies.

Increased Security: Finally, the use of ZIP+4 codes can help increase security and reduce the risk of fraud or identity theft. By providing more detailed location information, businesses can more easily verify the identity of their customers and reduce the likelihood of fraudulent transactions.

ZIP codes are assigned based on a variety of factors, including population density, mail volume, and other geographic considerations. Overtime, the boundaries of ZIP codes may shift or demographics and mail patterns change, and some ZIP codes may need to be updated or changed to cover new towns and cities. 

Ah! Never thought these could be two different things right? 

The fact is, they are often used interchangeably, but there are subtle differences that is important to know if you’re in data management. 

Here are some key differences: 

While the basic function of ZIP codes and postal codes is similar – to help sort and deliver mail – there are some differences in their structure and use. ZIP codes are specific to the United States, while postal codes are used in countries around the world. Additionally, ZIP codes are always five digits in length, while postal codes can vary in length and format.

Zip codes are important in data quality management because they provide a way to geographically identify and segment data, as well as help with improved marketing campaigns, customer profiling, and demographic research. 

Here’s an example scenario to illustrate why zip codes matter in data quality management:

Let’s say you work for a retail company that wants to target its marketing efforts to customers in specific regions. You are responsible for creating a database of customer information, which includes names, addresses, and purchase history.

To ensure the accuracy of your database, you need to validate and standardize the zip codes for each customer. This is important because zip codes can vary in format and spelling, which can cause errors and inconsistencies in your data.

For instance, a customer might provide an address with a misspelled or incorrect zip code, such as “12345” instead of “123456”. Without proper validation and standardization, this data would be useless for targeted marketing purposes.

By using zip codes to segment your data, you can gain insights into customer behavior and preferences in specific regions. For example, you might find that customers in one zip code tend to buy more high-end products, while customers in another zip code prefer budget-friendly options.

In the event that you have poor quality ZIP code data and you do not clean, match, or standardize it before business use, your company may risk: 

• Failure to validate and verify the data against government databases
• Marketing and other business operation failures 
• Misdeliveries, delayed shipments, unhappy customers
• Failure to meet compliance requirements 

ZIP codes and postal codes are extremely important identifiers of a database. In the UK for example, postal codes are used across government bodies to identify the location of an individual. If this data is not accurately matched with the individual’s identity, it may result in real-world challenges such as inaccurate credit reports, identity theft, and so on. 

It is therefore necessary for ZIP codes to meet data quality benchmarks before it is used for business purposes. 

Some organizations may underestimate the importance of ZIP codes in especially if they are not directly involved in the ecommerce, mail, or shipping industry. 

However, ZIP codes can be used for: 

Geo-located targeted marketing: ZIP codes allow businesses to segment their customers by location, which enables targeted marketing campaigns based on geographic demographics, local events, and purchasing behaviors.

Fraud prevention: In some cases, ZIP codes can be used as an additional security measure to prevent fraudulent transactions. For example, requiring a ZIP code for credit card transactions can help verify that the person making the purchase is the rightful cardholder.

Customer segmentation: ZIP codes and postal codes can also be used for customer segmentation. By analyzing the distribution of customers across different ZIP codes and postal codes, you can identify patterns and trends that can help you tailor your marketing efforts and product offerings to different segments.

Regulatory compliance: In some industries, the use of ZIP codes and postal codes is required for regulatory compliance. For example, in the insurance industry, ZIP codes are often used to determine premiums and coverage areas. Ensuring that your data is accurate and up-to-date with the latest ZIP codes and postal codes can help you stay compliant with these regulations.

Data quality management: ZIP codes and postal codes can be used as a part of data cleansing efforts to ensure that your data is accurate and up-to-date. By comparing your data to a reference database of ZIP codes and postal codes, you can identify and correct any errors or inconsistencies.

How you make use of ZIP codes depends on what you want from your data. But for ZIP codes to truly be effective, it’s necessary that they are validated and verified by matching against the USPS database before they can be used. 

ZIP + 4 code data is often raw data that needs to be profiled, cleansed, and matched against the USPS database to ensure its accuracy and validity. Performing these steps manually takes ages and is often inaccurate. Because it’s such a mundane, high-risk, and mind-boggling task, most organizations tend to simply ignore it and rely on unstructured or semi-structured address data. 

WinPure offers an easy step-by-step solution. You can profile millions of rows of ZIP code data to weed out incomplete or inaccurate codes. Once done, the clean record is then matched with the latest USPS database to ensure you’ve got the right data. 

Watch this video to see how ZIP code and address verification is done with WinPure. 

WinPure is a CASS Certified tool, which means we are able to convert your address data into CASS standards, ensuring you have the most accurate and valid data to work with.