How to Pick the Perfect Name For Your Business?

In early 1995, two Stanford grad students started working on a new way to index web pages. This “search engine” used a proprietary algorithm to map out all links come into and going out of a web page. Internally, they called this search engine “BackRub”.

By 1996, BackRub had grown too big for Stanford University servers. The two students had a choice — they could either sell off the algorithm, or they could turn it into a business.

Fortunately for the internet, they took the latter option. And the first thing they did was to change the name. “BackRub” turned into “Google” — a play on the mathematical term “googol”.

You know how the rest of the story unfolds.

perfect name

What’s in a Name?

Can you imagine saying “why don’t you BackRub it?”

Probably not.

Google’s name had a not insignificant hand in the search engine’s success. It’s short, quirky, pronounceable, memorable, and easy to write. Unlike its competitors at that time — Lycos, AltaVista, etc. — it can also be turned into a verb. For a company that sells an activity(searching), that’s a big plus.

(Imagine saying “just Lycos it” — doesn’t quite roll off the tongue, right?)

As a number of studies have shown, brand names have a marked effect on how customers perceive your business:

  • A joint studyby the University of Miami and California Polytechnic Institute found thatstore name and quality of merchandise are the two biggest contributors to a store’s perceived image.
  • Another study foundthat consumers are more likely to pay more for a store’s own brands if they have a positive perception of the store brand itself.
  • One study concludedthat brand names of products sold in a store had no impact on consumers’ risk-perception while shopping. However, consumers perceived greater risk if the store’s own brand image was weak.

This is why Sean Parker advised Mark Zuckerberg to “drop the ‘The’” from Facebook; your name is far more important than you realize.

How Brands Work

Finding a brand name that works is more than just a matter of brainstorming over a weekend. It’s about testing creatives, surveying potential customers, analyzing competitors, and most importantly, understanding what gives brands their value.

Major brand consulting agencies such as Igor or A Hundred Monkeys will charge you upwards of $1M for it.

You can get the same benefits by truly understanding how brand values work.

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The Two Pillars of Branding

Brand names don’t exist in isolation. What works for a clothing retailer might not work for a car accessories manufacturer. This is why it’s important to understand where brands get their value from.

Extrinsic and Intrinsic Quality Cues

Every brand name gets its values from intrinsic and extrinsic quality cues.

As you might have guessed, intrinsic cues are inherent to a product. Extrinsic cues are a result of external factors.

perfect name

Both intrinsic and extrinsic quality cues are related. For example, a designer shoemaker who uses top-tier raw materials appeals to a very different market segment than one who mass manufactures shoes with low quality materials.

These intrinsic factors, in turn, affect its extrinsic cues — its brand name, where it’s sold, label information, etc.

At the same time, changing extrinsic cues alters how customers perceive intrinsic factors. In one study of 1,564 shoppers, it was found that changing the brand name for generic products made customers believe that the products were more valuable.

This is an important lesson — we can’t readily change intrinsic cues, but we can change extrinsic factors. And this can have a drastic effect on customer perceptions:

  • A study at the Iowa State University concluded that there is a direct link between store name and perceived quality of a product, i.e. a product being sold at a high-end retailer is perceived as more valuable.
  • A study of beef sold at retailers showed that consumers can be made to pay more by controlling extrinsic quality cues, i.e. changing the beef’s brand name, the store it’s sold in and its price.

You’ve probably experienced this yourself — you’re willing to pay more for a product at Whole Foods than WalMart simply because of Whole Foods’ better brand image.

So ask yourself:

  • What are my product’s defining intrinsic quality cues?
  • What is the product’s target market?
  • How can I change extrinsic cues — brand name, price, etc. — that will change how customers perceive my product?

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Low Knowledge, High Knowledge Consumers

Not all your customers possess the same amount of knowledge about your products.

For example, if you were running a laptop store, a 50-year old mom buying her first computer would likely have limited knowledge about laptops. She would represent a low-knowledge customer.

A 22 year old computer science student, on the other hand, would likely know a lot about laptops. He would represent a high-knowledge customer.

How knowledgeable a consumer is about a product affects the way he/she shops.

  • High knowledge consumers focus on intrinsic quality cues.
  • Low knowledge consumers focus on extrinsic quality cues.

In one study of female blazer shoppers at the Carlson School of Business, it was found that shoppers who self-identified as fashion experts (i.e. high knowledge) focused on intrinsic quality cues such as stitching quality, material, etc. to make a purchase decision.

Low-knowledge shoppers, on the other hand, relied on external cues such as the brand name, price and presentation to make a purchase decision.

Why is this important?

If your customer base is primarily composed of high-knowledge shoppers, controlling extrinsic cues such as brand name or price will have little impact.

If your customer base is largely low-knowledge shoppers, you can change customer perception by changing extrinsic cues.