Your name is one of the most valuable assets your business owns. Exactly how valuable depends on the name itself. Great names are worth a lot more than mediocre or bad ones.
Before I explain, I want to clarify what makes a name truly great. In very simple terms, a great name is one that people can easily remember. There are many things that contribute to the memorability of a name. Memorable names tend to be short (two syllables), easy to say, easy to spell and are unique. Memorable names also invoke positive feelings to the relevant public. In the wise words of Maya Angelou, “people will never forget how you made them feel.”
Memorable names are generally not descriptive or generic. Examples of descriptive or generic names include Premium Window Cleaners, Gold Star Construction, Canada Bread, Sophisticate Clothing, etc. These names all have descriptive or generic components that reduce the name’s ability to identify only a single source of products and services, and as a result, makes them darn hard to remember.
Finding a memorable name isn’t easy. It can take months of reflection and false starts before you come up with a name that resonates with your target audience and is unique in your industry. But investing the time and effort into finding a great name will save you thousands of dollars and increase your business’ overall value. Let me explain how.
Lower advertising costs
One of the biggest financial benefits to having a great name is in the impact that it will have on your advertising costs.
It is a simple fact that unique and distinctive names stand out more on store shelves, in directories, and most importantly, online where searches are based on keywords. If your name is descriptive or generic it won’t be easily found online through organic searches. There’s a ton of competition online for descriptive and generic words, and this competition leads to more users and higher per click costs in paid advertising. For example, the CPC for the term “Canada trademark” is $4.55, whereas the CPC for “Markably” (the name for our online trademarking platform) is $0.
If you choose a unique and memorable name over a descriptive or generic one, you’ll face less competition online. This translates to less effort to be found organically, and lower per click costs for paid keyword advertising.
Lower Legal Costs
Have you ever tried to hang onto a tasty snack while surrounded by a pack of hungry dogs? Well, it’s a lot like trying to keep your competitors from using your descriptive or generic mark in their marketing. You’ll have to keep continuous watch and have a team of trademark lawyers on call to enforce your tenuous legal rights.
And tenuous they are. So much so that you likely won’t even be able to register your name as a trademark. Registering descriptive and generic trademarks is near impossible in Canada, unless you have been continuously, extensively and exclusively using and advertising your name throughout Canada for many years.
Choosing a unique and memorable name will save you thousands in the legal fees you would otherwise incur trying to register and enforce your ownership of a descriptive or generic name.
Facilitates Premium Pricing
To reiterate, great names invoke positive feelings to the relevant public. In order to create a name that will do this for your business, you really have to understand your purchasers and the value and results that you provide to them. If your name speaks to all of this, your people are more likely to want to purchase from and remember you.
Generally speaking, generic and descriptive names are neutral when it comes to creating feelings. These names are simply utilitarian. They don’t generate happiness, joy, and, even more importantly, loyalty. A product or service branded with a descriptive or generic name can be easily swapped with any other, and this forces you to compete on other factors, such as convenience and price.
My favourite brand name that illustrates this very point is YETI®. Many years ago, while in a Dick’s Sporting Goods store, I came across a display of YETI® insulated beverage containers. They were so pretty with their pastel colours! I had never before heard the name YETI®, but its use on beautiful cups immediately invoked thoughts of looking incredibly stylish while hiking in the rugged outdoors.
Of course, I bought the mug and quickly learned of its impracticality for outdoor use. The lid design causes the contents to leak out whenever the cup is tipped. Nevertheless, I still use the mug (at my desk) and would readily spend hundreds of dollars on a YETI® cooler, which I suspect would work about as well as an $80 COLEMAN®.
The YETI® name just appeals to me, and it’s firmly entrenched in my brain. The products don’t function any better than the competition, but people like me are willing to pay more for them because of the positive attachment we have to the name. The YETI® brand name invokes such loyalty that they don’t have to compete on price (or, arguably, quality).
This is exactly what you want your name to accomplish, and it won’t if your name is descriptive, generic or too similar to someone else’s.
Increases the goodwill valuation of your business
The question of what your name is really worth will almost certainly come up when you go to sell your business. Your brand name is often labelled as “goodwill” and lumped in with other intangible assets like intellectual property, customer lists and even non-compete agreements. Collectively, these assets are why customers buy from you, and this makes them major drivers of your company’s value.
The recent sale of Spanx® is a great example of how strong goodwill can really bump up the sale price of a business. In June 2021, Forbes estimated the value of Spanx at $540 million, when it actually sold a few months later for $1.2 billion. It took founder, Sara Blakely, only 20 years to build the Spanx® brand to this valuation, and I highly doubt it would have happened that fast or that much if the company had of been named something like “Shapewear” or “Slimming Pants”.
A great name is usually well recognized in its industry, and this leads investors and buyers to assume the company has greater potential for future growth. This, in turn, results in a higher overall valuation and better payout for the owners.
Realistically speaking, most of us will never sell our business for a billion dollars. But your business is an asset that you’re investing a significant amount of time and money in building. Having a great name acts like a booster for your investment, and it will result in a faster, easier and greater value.
If you are struggling to find a great name for your product, program, service or an entire business, we can help.
We’ve developed a unique approach to naming that results in a memorable name that your business can truly own. Book a free consult to find out more.