Choosing a name for a business is a complicated task. Would Groupon be as successful if it had been called Litter Box (after the way it's deals lay waste to your email). We think not.
Names are hugely important, but sometimes overlooked.
Entrepreneurs might spend so much of their time and energy trying to come up with ideas for new businesses that they either forget to or simply downplay the importance of their moniker. Sure, you can always change the name later, but it's much better to burst out of the gates with a clearer understanding of how you want to communicate your company to your competitors and potential customers.
Chicago Branding Group's Manny Rivera -- a managing partner with the firm that specializes in small to medium businesses -- talked to us about common mistakes and overlooked approaches inherent to picking a name for your new or established company.
So what's in a name? How important is a company's name, truly?
Manny Rivera: I try to tell my clients that a name telegraphs exactly who you are, what you do, and at the same time it actually tells the audience what your positioning is. In other words, your service or product, and how it fits into the world of the category you're competing in.
What are common ways to generate names that you find useful? There are organizations that actually have databases that generate, based on the criteria you put in, a new word or a combination of a word. For someone who wants to be happy when they're playing in the sun, and they're doing sunscreen, they may call it SunSight Sunscreen. That'd be really telegraphic of what it is, what it's about. That's one way. And that can be pretty expensive.
Another method is to map out what the category is and what the names are we can come up with that would be applicable to the service, company, or product that'd fit with the category or positioning that you desire to have people recognize you have.
Both ways converge into one area where you actually want to test that out within and outside your category. So those are the key components.
Can you cite some examples of well-known companies that have had to change their names?
A lot of times we get young start-ups and entrepreneurs who come up with a name and think that's it. You may not necessarily be thinking of how well it applies on the rest of the world or the category.
I mean, a lot of big brand names have changed. For example, Federal Express, when they wanted to expand overseas, the word "federal" meant "federale," meaning "the government." In Spanish that doesn't fare well in the southern hemisphere, running around and calling yourself the federale and asking for people's important documents. Those are some of the faux pas that larger organizations can make when they're thinking very small and not looking at how it can play out.
Other companies like Kodak, their name actually means nothing. It's a made-up word. They created a meaning for it over 100-plus years. People now define it, they know what it is, it's a neutral word that doesn't conflict with anyone's mindset but the problem with that is it requires a significant amount of awareness to establish what it minds.
Should a company be prepared to change its name over the course of its life? It sounds like you're saying a change might have to be made when making a big transition.
If it's done right at the beginning and you're thinking out your entire strategy, that should take you through the life of the organization. Of course a lot of small companies just start out and they step into a great opportunity and go with it, not realizing they might have to change their name down the road. That can mean becoming so big and having to explain your name. If you have to explain what your company does because your name [doesn't], you know you have a problem. That's a good way of finding out you need some assistance beyond what you think the name should be.
Is there a lot of paperwork involved in changing a company's name?
No, there isn't. As a small entrepreneur in the state of Illinois, even if they're an LLC, you can file it under whatever name you want so long as it doesn't conflict with anything else. You can call it what you want. If you have a company or product or service that's unique and it's doing well, you're going to want you trademark it. You want to protect yourself going down the future. That can cost you a couple hundred or thousand dollars, but at the end of the day it's a good investment. Especially when your products or services is getting into a crowded area. Beyond that it doesn't cost that much in the scope of brand names and naming an organization.
What sort of trends or challenges specific to Chicago have you seen cropping up with company names?
One of the things that we find is a lot of people will hire an ad agency to do a lot of this work. I think there's a misnomer about what ad agencies do. They're experts in communications, but communications is what I would call an executional arm of your strategy. If you let your executional arm dictate what your strategy is, you're kinda walking into a room backwards.
There are a lot of great communications agencies from PR to advertising. There's a lot of good ones but they execute the strategy. But if you don't have a good strategy or a good brand or your positioning's not correct, they will by nature force you into a bucket for what they do. When we come in, we find that a lot of people are paying a lot of money on creative when they could have cut that in half.
Another common mistake is apparently being too specific or too vague in a name. What's your opinion on that?
There's a happy medium. There's some psychology in it -- if you go beyond two words, people have less retention in what you're trying to communicate and also the associations of what it does. That's just how we are. We think in sound bites. It's very important to have singular words, no more than two syllables per word. The longest you want to do is four syllables with two words.
How about when it comes to naming products or services?
I was working with another client just last month regarding some of their products and how to reposition them in a global scale. The challenge was that they kept on repeating the [name of the company.] Every product they had carried the first two names of the company. "Do you really need that? Out of the 12 products you have, it's pretty redundant and you're getting people confused."
Another trend that some people in your field think should go away is the approach to merging nouns with adjectives to create a company name. Names like IniTech, QualiTron. What's your take on those?
A lot of the tech companies do that just to telegraph exactly what they do to their audience. Microsoft. It's totally fine [as a strategy] so long as you choose the right words that mean something. You have a pretty good idea what it is, so you don't have to sit there and think, "What is that?"