What is a Postal Code and Why is it Important for Address Verification and Validation? - Data Ladder (2024)

You may have often heard of ZIP+4 address verification when implementing a data cleansing and matching activity. But do you know exactly what is a postal code and why the ZIP+4 is important for complete address verification and validation?

Let’s find out more.

In this quick blog post, we’ll discuss:

• What is a Postal Code
• The History of Postal Codes
• How Important ZIP Codes are for Businesses
• How Does DataMatch Enterprise Verifies Address Data

What is a Postal Code?

We all know what postal code is, but not many of us know the technical (or historical) details behind it. For starters, ZIP is the abbreviation for Zone Improvement Plan. This was a system initiated in by the Post Office Department to handle increasing mail volumes by categorizing the U.S. into well-defined areas – making it one of the most organized and mature addressing systems in the world. The code became a tool for organizing and displaying demographic information while also allowing for the efficient sorting and dispatching of mail.

Over the span of 50 years, the ZIP Code was expanded from 5 digits to 9 and then to 11, with each digit indicative of the address location. With just the ZIP Code, it was easy to sort mails right down to the postal zone of a specific area or locality.

A Quick Lesson in History

Back in the 1940s, mail sorting was done manually. The Post Office Department’s mail staff depended entirely on local addresses and hand sorting addresses with postal offices. Post-war, the economic boom created an increase in mail volumes by 160%. Banks and companies began sending advertising mail to customers across the country. It became overwhelming for mail staff to manually sort through mails, while also ensuring they were delivered to the right addresses. During all this time, mail sorting was a laborious work which caused extended delays and erroneous deliveries. It took 8 to 10 employees to handle one mailed letter!

With the industrial boom, forward-thinking Postmasters attempted to create a system that would increase efficiency and reduce the manual sorting effort. In 1943, The program started the creation of a standardized coding system that would allow for easy mail grouping for distribution, logistics and transportation routing.

The system divided large cities into multiple 2-digit figures which would later be called local zone numbers. This 2-digit code helped the mail system with easy distribution, but it was limited to just the big cities, making it difficult to handle mails from other regions.

In 1944, Postal Inspector Robert Moon proposed the use of a 3-digit code system to categorize areas of the country by sectional center codes – which are central post offices of that region.

The 3-digit code introduced by Moon was incorporated with the earlier 2-digit code to make a 5-digit code that provided information on the area, the code of the central office and the small post offices or postal zones that followed it. The use of ZIP Codes significantly reduced wrong deliveries and improved mail delivery services.

Zip Codes Today

In 1983, the Postal Service expanded on the ZIP Code again, adding an additional +4 digits to the code. This 4-digit expansion would identify city blocks, streets or an office building. Today, the ZIP Code has been expanded to 11 digits, with each expansion adding a newer layer of information and adding to the accuracy of the address. As machines become more sophisticated with location precision, the ZIP Code plays an even more important role in ensuring the delivery of mail without the need of any additional written information.

How are ZIP Codes Important for Businesses?

ZIP Codes are not just numbers that identify a location. They have become social identifiers – giving information on the demographics of the people of a certain region. Companies use Zip Codes as important data structures that give them a visual representation of their audience. With this information, companies are making major marketing decisions including the closing or opening of stores, launching new products or services and pivoting sales data into regions. ZIP Codes are POWERFUL and as such, it is necessary for any business to have VALID and ACCURATE ZIP codes.

Incomplete, Invalid ZIP Codes as the Biggest Challenge to Address Data Quality

In an age when businesses get data from multiple sources, the address data is usually flawed, incomplete or invalid. Human entry of data is often the cause of errors, typos, punctuation marks, wrong or mistyped ZIP Codes etc. Not to mention some people may also enter fake addresses making your data inaccurate and invalid. It is therefore important for organizations to verify their address data source to ensure that they have complete information for statistical analysis.

Other than fake or incomplete data, most address codes are also plagued with letters or punctuation marks that have no use in the code. These issues, though seemingly minor become major bottlenecks for businesses when they attempt to use their data for analysis. Flawed data also leads to flawed analysis – imagine the consequences of making a business decision based on flawed data!

While flawed data is one critical challenge, another major problem is that of addresses that do not comply with the USPS address code. This means that businesses are storing and making use of address data that may not even be valid and neither is it verified for authenticity, leaving the business at legal, financial and operational risks.

Address Verification and Validation with ZIP Codes

In order to make sense of raw address data, it must be verified and validated against a government address database, such as the USPS database. This verification and validation are done via data matching where the organization’s address data is first profiled to find errors, cleansed to fix errors and then matched against the USPS database to verify and validate the address.

Once your address data is validated with the USPS database, businesses can be confident of the accuracy and validity of their data which then, in turn, helps them get analysis they can rely on.

Postal and ZIP Code Address Verification Solution

There are dozens of address verification solutions out there, but most of those solutions simply match addresses against a reliable address database (usually a government database). Those solutions require businesses to already have clean and valid data which may be a difficult feat to achieve if you have millions of rows of data. It would be impossible to sort through typos, punctuation errors and multiple other issues through manual methods.

This is where a complete data quality solution is needed.

How Does DataMatch Enterprise Help with Postal Code Data?

DataMatch Enterprise is a complete data quality solution that has address verification as an important part of its data quality process.

A data source is first profiled to catch problems such as:

• Typos, abbreviations and upper/lower case errors (New York written as NewYark)
• Punctuation and non-printable character errors (90210 written as ZIP-902-10)
• Invalid and null field issues such as incomplete ZIP codes

The user can fix data and standardize it during the profiling phase. Once this data is cleansed, the user can then opt to data match which helps with:

• Matching your address data source fields to catch duplicated records within the data source or with another data source. Here addresses are verified right down to ZIP+4 or geocoded data.
• Matching your address data with a reliable database (such as the USPS database) to verify and validate the address ensuring it meets the Coding Accuracy Support System (CASS).
• Once this address is validated, the business can use the data with full confidence of its accuracy.

Because most addresses do not have a ZIP+4, DataMatch Enterprise can add the ZIP+4 to verified addresses. This helps the business with accurate data that they can use for multiple purposes – including delivery, analysis and much more.

Using a complete data quality solution software like DataMatch Enterprise can help your business ensure that your address data is clean, accurate, updated and is valid. This is extremely important to ensure improved customer service and reduce returned mail costs while enhancing operational efficiency.

Data Ladder helps organizations clean and standardize address data, deduplicate and obtain a single source of truth. Get in touch to see how we can help your business to be operationally efficient with data.

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