If you’ve spent any time working with B2B data, you’ve likely come across NAICS codes. These numerical identifiers help companies classify industries, determine market size, and conduct targeted outreach. But what exactly are NAICS codes, and how did they come about? Below, we dive into the history behind the North American Industry Classification System (NAICS), how it differs from its predecessors, and why it remains a cornerstone of effective B2B marketing and sales in 2025.
NAICS (pronounced “nakes”) stands for the North American Industry Classification System. It’s a six-digit code used by businesses and governments in the United States, Canada, and Mexico to classify organizations by their main economic activity. Each digit in the code narrows down the industry more specifically, from a broad sector (like manufacturing) to a particular industry (like commercial printing or software publishing).
Why Do NAICS Codes Matter?
• Regulatory Requirements: They’re used by government agencies for taxation, compliance, and statistical analysis.
• Market Analysis: Marketers, sales teams, and data analysts use them to identify potential markets and size up target audiences.
• B2B Prospecting: NAICS codes help your team zero in on the types of businesses you want to reach, making your outreach more targeted and efficient.
Before NAICS, there was SIC (the Standard Industrial Classification system), which was introduced in the United States in the 1930s. SIC codes were originally intended to classify business establishments by their primary activity and were widely used for decades. But as North American economies evolved—especially with the rise of technology and the service sector—it became clear that SIC was outdated and did not fully capture new and emerging industries.
In the early 1990s, efforts began to modernize this classification approach. Recognizing the growing economic integration among the U.S., Canada, and Mexico—spurred further by the North American Free Trade Agreement (NAFTA)—governments sought a system that could provide consistency across borders. This led to the birth of NAICS.
1. 1997: NAICS was officially introduced, replacing SIC in many government data programs in the U.S., Canada, and Mexico.
2. 2002: The first major revision of NAICS refined categories to better reflect evolving industries.
3. 2007, 2012, 2017, 2022: Subsequent revisions have continued to update the classification, ensuring new sectors like e-commerce, cloud computing, and emerging tech receive accurate representation.
• Broad Categories: SIC codes often lumped fast-growing niche industries into broad categories, making it harder to analyze or compare them.
• Inconsistency Across Borders: Globalization demanded a standardized approach that could track industries across North American markets.
• Rapid Technological Change: The digital and service-driven economy outpaced SIC’s ability to keep up with new industry structures.
NAICS uses a six-digit hierarchical system:
1. First two digits: Represents the major economic sector (e.g., 11 = Agriculture, Forestry, Fishing, and Hunting).
2. Third digit: Drills down into the subsector (e.g., 111 = Crop Production).
3. Fourth digit: Identifies the industry group (e.g., 1111 = Oilseed and Grain Farming).
4. Fifth digit: Specifies a particular industry (e.g., 11111 = Soybean Farming).
5. Sixth digit: Indicates the national industry (unique to each NAICS-participating country).
Example: A software publisher might fall under NAICS code 511210 in the U.S.
• 51 (Information)
• 511 (Publishing Industries, except Internet)
• 5112 (Software Publishers)
• 511210 (U.S. industry-level classification for Software Publishers)
1. Government Reporting & Compliance
Agencies like the U.S. Census Bureau, the Internal Revenue Service (IRS), and the Small Business Administration (SBA) rely heavily on NAICS codes. When businesses register, file taxes, or apply for loans, these codes determine eligibility, compliance requirements, and more.
2. Market Research & Competitive Analysis
If you’re analyzing an industry, identifying growth opportunities, or benchmarking competitors, NAICS codes serve as a consistent framework to categorize data. They also help in identifying and measuring market segments for everything from new product launches to geographic expansion.
3. Targeted Marketing & Sales Prospecting
• Segmentation: NAICS codes let you segment potential customers by industry, ensuring that your SDR teams and marketing campaigns focus on the right audience.
• Personalized Outreach: Sending targeted messages to businesses that share similar NAICS codes can boost conversion rates, as these businesses often have similar pain points.
• Account-Based Marketing (ABM): For B2B organizations practicing ABM, NAICS codes help confirm that you’re going after the correct industry vertical and not wasting resources.
1. Relying on Outdated or Incorrect Codes: Businesses evolve and change industries; if you’re using old data, you risk targeting the wrong audience.
2. Ignoring Sub-Level Codes: Using only the first two digits lumps too many sectors together. Drilling down to the fourth or fifth digit can help you pinpoint your ideal buyer.
3. Not Updating Your CRM: Team members might enter NAICS codes inconsistently. Over time, this leads to dirty data and missed opportunities.
1. Regular Data Hygiene: Make sure you periodically validate and refresh the NAICS codes in your CRM or marketing automation platform.
2. Use Reputable Sources: Whether you purchase data or gather it in-house, confirm that NAICS assignments come from official and updated databases.
3. Combine with Other Data Points: NAICS codes alone might not be enough. Layering in firmographics (e.g., company size, revenue, tech stack) can give a fuller picture.
4. Leverage AI for Classification: Advanced AI-driven data providers can automatically detect and assign the best-fit NAICS code based on a company’s online presence, descriptions, and other data signals.
NAICS is continually updated to keep pace with the economy, especially as entire new industries emerge. Sectors like Fintech, AI-driven services, and SaaS evolve rapidly, challenging the classification system to stay current. Here’s what we can expect:
• More Frequent Updates: With the rate of technological change, we may see updates happen more frequently than every five years.
• Increased Granularity: To differentiate traditional from “digital-first” businesses, NAICS could move to more detailed sub-classifications.
• Global Alignment: While NAICS is designed for North America, there’s a broader push to align global classification standards, potentially merging or syncing with systems like the United Nations’ International Standard Industrial Classification (ISIC).
At RevenueBase, we understand that data quality isn’t just about having names, emails, and phone numbers—it’s about understanding the businesses behind those contacts. NAICS codes offer essential insight into a company’s true market sector, enabling:
• Better Segmentation for demand generation
• Higher-Performance SDR Campaigns
• Stronger Account-Based Marketing Programs
• More Accurate AI/ML Models for targeting and forecasting
When it comes to B2B, leveraging NAICS codes effectively can be a game-changer for pipeline growth and operational efficiency.
NAICS codes have come a long way from their SIC predecessors, serving as the backbone of industry classification across North America. For modern B2B teams, they’re more than a bureaucratic label—they’re a strategic tool for market research, compliance, and highly targeted outreach. As the economy continues to evolve, NAICS will adapt to reflect the realities of new and emerging sectors, and those who keep their data accurate and up-to-date stand to gain the most.
Looking to optimize your B2B data strategy? At RevenueBase, we specialize in delivering fresh, 95%+ accurate data—complete with NAICS codes and more. Get in touch with us to learn how our continuous updates and AI-powered insights can help you gain a competitive edge in your industry.
