Changing your brand name can be a risky move. Customers don’t always react well to the change, resulting in more harm than good. There are factors such as mergers, repositioning and bad publicity, that don’t give a company another viable choice. But that doesn’t mean the change will end on a positive note.
According to a study by U.K. research firm Millward Brown, “Many brands see an immediate 5% to 20% decline in sales, and can take years to restore levels, while others are negatively affected only in the short term.”
Brand communication awareness is what will make or break your company. The study showed that unaided brand awareness leads to the sharpest drop in sales, while an increase in activity to communicate the brand name change creates a steady increase back to original levels.
In the age of social media, everyone has an opinion. Changing your brand name can result in serious customer backlash and a Twitter storm of negative comments, so be prepared.
For example, when Kellogg’s attempted to change Coco Pops to Choco Krispies, the company not only saw declines in equity and market share, but also experienced strong public protest that resulted in changing the name back very quickly. The backlash did, however, give the company a chance to engage with their customers by asking them what they preferred the name of the cereal to be.
ABC Family also experienced some backlash after announcing its name change to Freeform, a move that the network deemed necessary for its millennial audience. Even though the network did all the right things in changing its name, including alerting the audience months in advance and promising minimal changes to content, it still received negative feedback. The social community went as far as creating a @StopFreeform Twitter account to share their outrage with the name of choice. It just goes to show that you can’t please everyone.
When A Name Change Can Work To Your Advantage
In some cases, a rechristening can stem from bad press associated with the company in its earlier incarnation. If there is a bigger problem, a company may use the name change to differentiate itself from its negative reputation.
Men’s Wearhouse recently announced that it is taking on a holding company structure and changing its name to Tailored Brands. The decision revolves around double-digit declines in sales after the retailer acquired Jos. A. Bank in 2014. With Tailored Brands as the new holding company, shareholders will swap their shares to the new company. The retailer hopes to avoid filing for bankruptcy after its failed investment. If the strategy is successful, this would be an example of a positive result from a name change.