The case against zip codes for analytics

There was one year our fortune 100 company did bonuses based off of online sales assigned to the nearest store by zip centroid (goals were based off year over year comps of sales to those zips). I remember having a detailed conversation with them about all the reasons why this was a terrible idea and citing examples, really dumb assignments for zip codes (say a store getting credit for sales across the bay because the centroid was closer) and all the edge cases that it created. I remember outlining an alternative based off of trade areas established by travel time that could get consistent comparisons year over year.

Was a total dumpster fire with tons of complaints by stores being screwed by zip changes.

I left the company but to this day a ton of their delivery assignments are based off a ridiculously stupid zip lookup table that completely ignores geography and has a ton of hard coded changes. I can still see the dumpster fire from my new workplace.

/r/gis Thread Link - carto.com