What Is Geocoding & Why Is It Important?

Updated October 6, 2023

Melissa geocoding

When it comes to deliveries, having the right address is crucial. Sometimes though, this may not be enough. The chances of two streets having the same name can’t be ruled out. Also, when dictating or typing in an address, there can be typographic errors. Geocoding is the ideal solution to these issues. The definitive nature of expressing an address in this way has made it the preferred solution for many companies.

What is Geocoding?

Instead of describing a location’s address in terms of street names, Geocoding refers to these locations in terms of geographic latitude and longitude coordinates. The latitude refers to a location in terms of its North-South position on the Earth while the Longitude refers to the East-West position. Both coordinates are expressed in degrees ranging from 0° to 90°.

Geocoding and Customer Data Management

Geocoding plays a very important role in customer data management. From the time a customer is on-boarded, his or her address is captured as part of the customer profile. Geocoding this address makes it easy to find. Apart from ensuring that deliveries reach on time, this information can be used in a number of ways. For example, it can help create customer zones to assess buying behavior, design marketing strategies, etc.

How can Geocoding be used?

Geocoding makes location-based services operate faster, more efficiently and with lowered operational costs. It can also help with fraud detection. Here’s how.

Boost Delivery Accuracy Rates

For shipping companies, having a vague address is a common reason for late deliveries. For example, if the name of a road has been changed since the address was given the agent may find it very difficult to get to the delivery address. Geocoding resolves this issue by expressing an address in exact longitudes and latitudes. Thus, delivery agents do not have to stop en route and find the delivery address instead they can use Geocoding to find the best route there before starting for delivery. This reduces the chance of late deliveries and improves customer satisfaction rates. Higher satisfaction rates translate to repeat business for the company.

When it comes to taxi services that rely on addresses to pick up customers, the building and road name are often not enough to get to the customer. Many buildings have multiple gates and entrance/exit routes. In such cases, geocoding gives the taxi driver the exact location of the customer so that he can approach the building from the correct route and respond to a pick-up request faster.

Reduce Operational Costs

Taking wrong turns while trying to find an address doesn’t just delay delivery, it also increases fuel consumption. For companies that run a fleet of delivery vehicles, these costs can add up to a lot. Thus, Geocoding reduces fuel consumption in the long run and in turn, the cost of running these delivery vehicles. By helping drivers find the best route to the delivery address, it also reduces the chances of traveling by bad roads and thus reduces the maintenance costs.

Identify Customer Bases

Geocoding positions customers easily on the map. This information helps companies identify growing customer bases. They may use this information to design marketing strategies with relevant messaging to attract more customers from that area, change their product offering as well as develop infrastructure. For example, when a telecom company identifies a growing customer base in a new area, they may install a new phone tower in the area to improve reception. This type of proactive behavior boosts the company image.

Risk Assessment

For insurance agents, geocoding makes risk assessment easier and more accurate. By pinpointing asset location, insurance agents can make risk assessments for natural calamities such as earthquakes, floods, hurricanes, etc. with higher accuracy. This information helps them manage data efficiently and price insurance coverage appropriately for the offices in the locality as well as for consignments to the location.

In Conclusion

Precision and accuracy are vital to managing customer addresses. Geocoding makes this easy and helps companies map their customer bases and activities. This is a universal system that can be easily understood by all technological platforms. While the roads leading to an address may change over time, these long-lat positions remain constant thus ensuring straightforward and consistent data.

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