NAICS Accuracy Benchmarks

Updated: 2025
Category: NAICS Classification & Reference Center
Reviewed By: SICCODE.com Industry Classification Review Team (classification research, data governance, and standards alignment)

NAICS accuracy is not just about “having a code.” Accuracy means a defensible fit to the NAICS definition, correct hierarchy alignment, and consistent application over time. This page outlines practical accuracy benchmarks and common failure modes that reduce classification quality.

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Accuracy benchmarks for NAICS classification

Accuracy benchmarks help users assess whether a NAICS code assignment is likely to be reliable. The benchmarks below are designed to be practical for compliance, analytics, and data stewardship use cases.

Definition fit Hierarchy alignment Included/excluded logic Explainability Stability over time
Benchmark What it means Why it matters
Definition fit The business activity aligns to what the NAICS code actually covers. Reduces misclassification and improves defensibility for reporting and analytics.
Hierarchy alignment The selected code correctly fits its parent structure without “drifting” into adjacent categories. Prevents incorrect sector/subsector placement and improves consistency across datasets.
Included vs excluded logic Activity checks confirm inclusion and avoid known exclusions. Protects against common lookup errors where keywords match but the definition does not.
Explainability A rationale can be stated plainly using observable business activity signals. Supports audit readiness and reduces internal disagreement across teams.
Stability over time Changes happen only when evidence or framework updates justify change. Reduces churn and improves longitudinal comparability.

Common vendor failure modes

Keyword-only mapping

Assigning NAICS codes from keywords without verifying definition fit, exclusions, or hierarchy alignment.

  • High false-positive rates
  • Misclassification for multi-activity businesses
  • Inconsistent results across similar records

Over-broad defaulting

Defaulting to a broad category to avoid uncertainty rather than selecting the most specific defensible code.

  • Inflates broad sectors
  • Weakens segmentation and analytics
  • Creates “category drift” over time

Practical validation checks

If you are validating a NAICS code selection, these checks are often sufficient to catch the most common errors.

  1. Read the definition: confirm the business activity matches what the code covers.
  2. Check the parent structure: confirm the sector and subsector logic fits.
  3. Compare adjacent codes: ensure the chosen code is more accurate than nearby alternatives.
  4. Confirm included/excluded activities: validate the activity is included and not excluded.
  5. Confirm stability logic: avoid changing codes without evidence or revision-driven rationale.

What “good” looks like on a NAICS code page

A high-quality NAICS code page should provide reference-first clarity before tools: what the code covers, how it differs from parent codes, included vs excluded activity guidance, and practical examples that reduce ambiguity.

FAQ

  • What causes NAICS accuracy issues most often?
    The most common cause is keyword-only mapping that ignores definition fit, exclusions, and hierarchy alignment.
  • Are broader NAICS codes “safer”?
    Not necessarily. Over-broad defaulting can reduce accuracy and segmentation value. The most specific defensible code is usually best.
  • How should I handle multi-activity businesses?
    Use a primary-activity approach, then validate against included/excluded logic and parent hierarchy context to avoid drifting into adjacent industries.
  • Does SICCODE.com guarantee program eligibility?
    No. SICCODE.com provides reference guidance aligned to the NAICS framework to support consistent interpretation and classification decisions.