What’s in a Name: The Art of Naming a Business
Choosing a name may not seem like the biggest challenge your company faces, but the right name can influence buyers and become a staple of your company's entire image. The most notable brands of the world understand
that a name should never be chosen on a whim - it must be carefully planned and selected with purpose.
The three approaches
There are three common approaches that companies use to name their businesses. Each style offers benefits and drawbacks depending on the goals of the company.
- The blank slate: 1) Choosing a broad and abstract company name that doesn't indicate what the business actually does (Example: Apple Inc.); 2) The direct approach: Choosing a name that describes exactly what the
business does (Example: Burger King); 3) Coining a name: Making up a new word for the company name that doesn't currently exist in language (Example: Skype).
Regardless of the approach a business takes, science shows an easy name is usually the way to go.
- Cognitive fluency is a study in psychology that measures how easy it is to think about something. Psychologists have found that shares in companies with easy-to-pronounce names significantly outperform those with hard-
to- pronounce names.
- Change in share price. Duration from initial offering (keys: pronouncable; unpronouncable): 1) 1 day (pronouncable ~ 17%, unpronouncable ~ 4%); 2) 1 week (pronouncable ~ 12%, unpronouncable ~ 4%); 3) 6
months (pronouncable ~ 2%, unpronouncable ~ -3%); 4) 1 week (pronouncable ~ -0.5%, unpronouncable ~ -3%).
- Psychologists believe that the early brain likely evolved the preference for easy names and avoidance of unfamiliar ones as a survival mechanism. In other words, if it is familiar, it hasn't eaten you yet.
Make cognitive fluency work for you
Since cognitive fluency can influence the way people behave with their wallets, professional business namers warn companies against choosing non-fluent names. There are always exceptions, but most recommend avoiding:
- Strings of words from a language foreign to the main target market.
- Words that can be pronounced in several different ways.
- Words that are difficult to pronounce.
Coining a name
When a company decides to coin a new word for their name, they do so with intent. Most coined names were chosen because they say something about the company:
- Using prefixes & word segments: 1) Coined words can convey a message by using common prefixes or suffixes (Example: uses "acu" to express precision); 2) Combining relevant words: combining two words that
describe what your business does can produce an original name that explains what you do (Example: travelocity - combines the words "travel" and "velocity" to explain that they can book travel quickly); 3) Painting an
image: Companies who thrive on how customers see their products often use words that trigger images and shape perception (Example: Alienware - creates a futuristic, otherworldly image of its product with its name).
Deciding on a winner
Sometimes businesses come up with several possible names and gut instinct isn't enough to choose the winner. How do they choose the best name? Testing:
- Focus groups: Gather a group of volunteer consumers and ask them to record how they feel about the potential names, what each name makes them think of, etc.
- Opinion surveys: Distribute surveys about your product and the potential names that could be associated with it, and see which ones participants respond positively to.
- Graphic elements: Try combining different graphics, fonts, and logos with your names to see how the name appears when stylized for branding,
- Market testing: Run some ads using one name, and other ads using another. let the customers pick the winner with their wallets.
Sources: Entrepreneur.com; Members.com; Boston.com; Namelab.com; Sba.gov; Pnas.org.