When Should a Company Change Its Name?

Alvenda is the latest local company to change its name-but the decision to do so isn't an uncommon one, and experts say there's lots to consider before making the move.

Minneapolis-based start-up Alvenda, Inc., is the latest local company to make the bold decision to change its name-but at least a handful of others will consider the same move in the coming months.

Bloomington-based Strategic Name Development, Inc., has extensively researched company name changes-of which there are at least 2,000 each year in the United States. What its experts have learned: There's lots to consider before taking action.

Alvenda said on its Web site that its name change to 8th Bridge, Inc., “signifies our company's pioneering of social commerce, the increasing capabilities of the social graph, and a new stage for our organization, which has experienced tremendous growth and remarkable accomplishments since its founding in 2008.”

8th Bridge creates social commerce channels by integrating social networking, advertising, and e-commerce. The company-which won the Minnesota Cup competition in 2009-opens in-stream shopping experiences that include a quick checkout feature inside Facebook's news feeds and fan pages, and inside banner ads on various Web sites.

The name 8th Bridge dates back to 18th century KÅ¡nigsberg, Prussia. The city was situated on both sides of a river and included two large islands that were connected to each other by seven bridges. A mathematician determined that it was impossible to walk through the city, crossing each bridge only once, without the addition of an eighth bridge-and the solution eventually led to the development of graph theory.

Diane Prange, chief linguistics officer at Strategic Name Development, said that a name change is definitely a good idea in cases when:

  • a company's target market is asking for it (example: the YMCA successfully underwent a “namectomy” and became the Y-a shorter, friendlier version of its initial name and one that most people were already using)
  • a company outgrows its initial vision (example: National Public Radio successfully changed its name to NPR because it has expanded its capabilities to online and other avenues beyond just radio)
  • a company name isn't as strong as the name of one of its products (example: Binney and Smith successfully changed its name to Crayola because that product was so well known and it was not)
  • a company name is tarnished beyond the company's control (example: After a 1996 crash that killed 110 passengers and crew members, ValuJet successfully rebranded as AirTran Airways.)

A name change can also make sense if a company is still relatively unknown or just before it plans to “go big,” Prange said. A company called Cadabra.com, for example, changed its name to the now well-known Amazon.com right before it made its large-scale debut-and 8th Bridge, which has numerous high-profile clients, seems to be doing the same thing.

Before a company changes its name, it should make sure that the new domain name and trademark are available (they both were for 8th Bridge)-and that there's buy-in from employees since they are the company ambassadors.

Prange said that a name change doesn't make sense in cases when there's a lot of equity in the current brand-which is perhaps best illustrated by Yellow Pages. It went from a household name to a virtual unknown when it started going by YP.

But perhaps the worst type of name change is one that makes the company's underlying motives transparent. Comcast rebranding to Xfinity, for example, was met with a negative reaction from consumers because they believed that the company was trying to use the new name to mask a bad reputation, Prange said.

The bottom line: A name change can be a good move that helps drive the company's growth and goodwill, but “if it isn't broke, don't fix it,” Prange said.