Out of the Box

The Pros and Cons of a Name Change

By Menachem Lubinsky on April 04 2008

North Fork Bank is now called Capital One. The name change was the final step in the integration of the two financial companies that followed the acquisition of North Fork in 2006. Marketing experts refer to such a name change as “rebranding” since both Capital One and North Folk had achieved considerable success in their original branding.

A name change in the face of a merger or acquisition is, of course, not new. It is as routine for banks as it is for airlines and even department stores. Marketers approach name change with considerable trepidation since getting rid of a name of a well recognized brand can backfire or take a long time in making inroads with a customer base. In the case of North Fork, the bank had emerged as a leader in retail and middle market banking. It was to say the least a well recognized and successful brand.

In announcing the name change, Capital One Banking President Lynn Pike said: “A great deal of work has been done to ensure that the transition is seamless and positive change for our customers. Everything that made North Fork a great bank and a great business partner for our clients will remain the same, but leveraging Capital One’s national platform enables us to enhance and expand our product offerings and make changes for the better.” The name change did not happen overnight. Capital One prepared for this day for almost two years. It prepared a major advertising and public relations campaign to help ease customers and others it deals with into the new name. With the acquisition Capital One became the 14th largest bank in the US and it wanted to make sure that North Folk customers would know that in addition to receiving whatever services they were used to from North Folk that they will also benefit from being part of such a large bank. The ultimate goal for businesses like Capital One is that the new brand emerges stronger than the two separate brands it was succeeding.

While mergers and acquisitions are amongst the leading reasons for “rebranding,” there are many other factors that go into a name change. Another leading bank recently rebranded, changing its name from Washington Mutual to WaMu. There it was to give the bank a punchier and more marketable name, in an age of sound bites and acronyms. Marketers say that such changes have become more frequent as companies seek to gain an edge simply by having a name that has a better chance of standing out with customers.

One marketing magazine referred to these name changes as “for good reasons.” Like in the case of North Fork, the name change merely reflects the fact that two strong brands have merged and

the two have adopted one of the names. In the case of acquisitions, the stronger and more dominant brand usually ends up with the name. Frequently it is simply the acquiring entity that exercises its right to put its name on the merged company.

Even so, a great deal of money is invested into making sure that the customer stays with the rebranded name. Assurances are given that the quality of the service will be even better now that two such major brands have merged.

So when are names changed for other than good reasons? One of the most common reasons is for a failing or underachieving company that has over time managed to garner a negative image with customers. In the airline industry, name change came for one large airline after a series of mishaps. The airline lost a considerable amount of business until it changed its name. Bankruptcy is also a frequent reason for a name change as is scandal.

There are times when a name change is necessary simply to define the company. For example, a company that specialized in tires and eventually expanded into auto parts would have to change its name from ABC Tires to ABC Auto Parts or consider separating the two businesses if it wished to continue to focus a separate marketing strategy for its tire business,

Many marketers place a great deal of emphasis in the transition period. You may have probably noticed a name of a business with a line that says “formerly” They feel that the links with the previous brand is important for the sake of brand continuity, unless the former name had such a bad image that any reminder of its existence will only conjure bad memories.

The value of a brand name is so strong that it is part of a big business in this country where old brands that enjoyed considerable recognition are acquired and resuscitated. The reason is that it is faster to put an old brand with a certain percentage of recognition into play that starting up a new brand name from scratch. It can also be far cheaper.

There have been instances when a name change did not fare as well as its predecessor. I can recall counseling at least one business to revert to a name they had dropped when the new name simply failed to take off. It was easier to tweak the old name with new modern graphics and a fresh message than to try to pump life into a brand name that seemed for all practical purposes to be a dead end.

When contemplating a name change, think of what would happen if you decided to change your name without a marriage. You would have to make sure that your friends and relatives are told the story why, what was wrong with your given name, and how the new name will make you a better person. Good luck!

Out of the Box is a collection of strategic marketing articles that Lubicom has published on various topics, trends and ideas in the marketing world. The articles have been published in the Hamodia weekly newspaper circulated on three continents to a readership of well over 100,000.

The name, "Out of the Box" is a term used frequently in business nowadays to describe creative thinking that is not the norm. It is meant to help a business pull away from the pack or separate oneself from the competition. It is to some extent fraught with risk, simply because it is not the run of the mill thinking, but it is at the same time the key to reaching the next opportunity.