Don’t Rename Your Company! (Reasons Not to Rebrand…)
Entrepreneurs love to take action, and sometimes that includes renaming their companies when their business situation changes. While there are plenty of professionals out there willing to help you rename your company, there are too few telling you that it’s usually a bad idea.
That’s right, rebranding your company is usually a bad idea. We rarely rename our pets or ourselves (married last names aside), and our celebrities rarely name themselves after they get famous (The time Prince changed his name to an unpronounceable glyph now stands as a cautionary tale).
The Prince Glyph
I’ve been in situations up close to see businesses rename and then suffer one or two quarters of missed sales expectations as a result. I’ve seen other situations where the value of multi-million-dollar company acquisitions was squandered because of poorly conceived and executed rebrands. For those readers in the Northeast US, I’d be happy to share these stories sometime over a beverage. The rub: too often companies that rename have underestimated essential truths about brands.
Before you consider renaming your company, here are 5 business truths that you should seriously consider.
Truth 1: Your brand lives in the minds of your customers...
...not on the sign at the front of your HQ. Another way of putting it: You can’t change people’s minds just by changing your sign. Once initially established, your brand occupies real estate in people’s brains that you don’t own, and it is costly to re-landscape and rename that real estate. Your rebrand isn’t successful until essentially all of your customers, prospects and stakeholders know your new name or have a reliable way to find you, and refer to you. That can be expensive and hard to achieve.
Truth 2: Referrals rely on unaided brand awareness.
For most companies, referrals are an essential and low-cost source of new business. Yet for someone to refer business to your company, they need to remember your company name, give it to another person, and have that person find you. A rename can break that chain. When you change your name, you run the risk of negatively impacting your referral business for a significant period of time after a rebrand: years and not months.
Truth 3: Changing your name implies a change in quality.
Consumers are smart in this age of mergers, acquisitions and company transformations. They know from personal experience that when business change their names, the quality, price or level of service provided by those businesses often changes.
If your favorite restaurant changes the name on its door, naturally you’ll want to know if this means new ownership and if there will be a decreased quality of food or service. Similarly, your rename can give people a reason – even if it’s a squishy or barely conscious one – not to buy from you. If your brand has a high-quality reputation, rename-induced doubts (from current customers, prospects or stakeholders) are a problem your business will need to overcome.
Truth 4: Renaming devalues every branding investment you’ve made.
Remember that time you paid for a national ad campaign? Or an expensive sponsorship? These were an investment in your old brand name, and they lost value as soon as you rebrand. While it’s easy to make new pens and t-shirts, it’s impossible to directly replace the ones already in circulation, e.g. you can't visit the desks of all your prospective customers and switch out branded coffee mugs you made two years ago.
Truth 5: Your website’s domain authority takes a hit when you rebrand.
Domain authority is the term that the web analytics company MOZ gives for the tendency of search engines to highly rank your site’s pages in search results on the basis of your domain name. Here is MOZ’s summary on domain authority, which is earned by your website over time. After you change your domain name to reflect a new company name, it may take quarters to rebuild the domain authority of your site if you do everything right (including having a good re-direct strategy). If you do it wrong, you may never recover the level of domain authority you have today. So if, like many of my clients, you generate a significant percentage of your new business from people finding you on the web, rebranding can affect your sales in the short, medium or long term.
"But I still need to rename!"
Yes, there are some circumstances where it makes sense to rebrand. Perhaps you will weigh your company’s need to rename vs. the value of the brand equity currently locked in people’s heads, and decide it is truly worth changing “the keys.”
If you absolutely need to rebrand, consider the above truths, have a good strategy, find a superior name, and execute well! Here’s a tactical summary.