Your brand name is a priceless business asset. Numerous pitfalls await those business leaders that change brand names for the wrong reasons, in a disorganized manner or without a well-conceived strategy.
Changes to a long-established brand name should never be made without careful consideration. For companies with a long-established history and a respected reputation, name value is one of the most important business assets. That’s why a name change is never a casual undertaking. Here are a few common reasons for changing a company’s name:
Current name is no longer suited to future strategic business imperativesScandalous actions associated with the company have irreparably degraded the current nameCultural or political backlashAcquisition by a company with a better reputation and greater name recognition
When a well-established name is changed, something is lost. The challenge is to limit losses and ensure that they are outweighed by upside gains.
Doing this requires sound strategic planning and clear communication. Changing a company or brand name is not a single abrupt act. It is a process that has impact on everyone associated with the company—employees, customers, vendors, creditors, investors and even competitors. It is crucial that each of these parties understands the need for the change and perceives it as a positive development.
The impact on employees:
For valued long-term employees, there is a personal attachment to their company. They may not be owners but they are nonetheless emotionally invested in the company. Often their company is like a second family to those employees.
Changing the company name has strong personal significance for employees. Before any change is made, employees must understand why the change is necessary and they must perceive it as a personal benefit. Failing to take employees into account risks a loss in esprit de corps. Employee understanding and support is crucial to the success of any company name change.
The impact on customers:
Customer trust and loyalty has immeasurable value. It should never be taken for granted. Once lost or diminished, regaining customer loyalty can be as difficult as earning it in the first place.
When a trusted name is replaced by an unknown name, much of the associated trust that accompanied the original name is at risk. Customers are naturally suspicious when such a change is thrust in front of them. In the best business relationships, customers and suppliers work together with shared interests.
Before any significant change is made in the company name, a concerted effort must be made well in advance to inform customers of the reasons for the pending change and the effect that change may have on the business relationship. Companies that have undergone a successful name change have done so in incremental stages with customers well informed and consulted far in advance of any change.
The impact on vendors and creditors:
Maintaining good relationships with key vendors and creditors requires the same consideration as should be given to the very best customers. For many of the same reasons as previously stated, vendors and creditors have a vested interest in the future of the business. Communication with this audience is critical in the early planning stages of a pending name change.
The impact on equity partners and investors:
The investment community wants to know not only how healthy a business has been but, more importantly, how it will do in the future. Therefore, a well-developed and clearly articulated business strategy is crucial in securing investor confidence.
Savvy investors will probe deeper into business operations than would customers, vendors or even employees. They will want to know not only what vision drives the future of the company, but also how that vision will be acted upon.
A brand strategy is a key component in the implementation of any business strategy. Deficiencies in either the business or the marketing plan will raise a red flag of caution to any investor. Changing the names of successful business /brand names is a major initiative. If done in an unprofessional manner, as a capricious undertaking, or without a well considered strategic rationale, investor concern will be well founded.
The impact on competitors:
If there is any negative connotation to be taken in the changing of a company name, competitors are sure to exaggerate the negative perception and use it to their advantage. The truth may be that the change is a positive development. However, in marketing, perception often trumps truth. Therefore, getting out in front of the media and preempting any negative perception associated with a name change is a must. A simple measure of the success of a company’s name change is silence. Conversely, failure can be measured by feedback noise like “What’s going on?” or “What happened to…?”
Before you pull the trigger on a name change, a word of caution.
There is no greater sign of disrespect than the failure to communicate and gain the understanding of those audiences most affected by a name change. When a name change is necessary, well before any corporate/brand identity is put in place, there must be a concerted effort to consult with and inform all interested parties of the pending change, the reasons for the change and what it means to all parties.
That information should be conveyed in a manner that respects the interests of all audiences. It should not be conveyed casually in a memo or an email blitz. It should be conveyed professionally, tailored to the special interests of each audience group, far enough in advance so that when the change is finally made, it surprises no one.
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