This week U.S.-based loyalty provider 500friends officially announced that it was changing its name to Merkle Loyalty Solutions (Merkle, Inc. acquired the startup back in 2014).

This news got us thinking… what drives a name change or rebrand? And how does it affect the customer relationship?
 

A strategic shift

A change like this is no small feat – to make it stick requires consistency across channels and that means a lot of coordination. Merkle has done this quite well; even their mention in a recent Forrester report (alongside HTK), shows the updated name.

With so much work involved, a name change or rebrand of any kind must come from a strategic objective. In Merkle’s case, this might have been to increase the credibility of the solution, suggest greater integration with the company’s other products, or distance the platform from a social-only approach implied by the former name.

Another rebrand that’s been in the news lately is that of American coffee chain Dunkin’ Donuts, who are considering shortening their name to something a bit less pastry-focused.

Dunkin’ (as the company may soon be called) has been pushing to become a coffee, rather than confectionary, brand for several years. From a strategic point of view, this shift is clearly meant to reinforce the wider range of their product offering and position them alongside other brands like Starbucks.

We’re no strangers to a rebrand here at HTK, either. Although our company has had the same moniker since 1996, our Horizon platform has “reinvented” itself a couple of times – from simple marketing automation platform, to “marketing hub”, to the current “loyalty hub”.

These changes, although on a much smaller scale to Dunkin’ or Merkle, represent the growth of our product and capabilities over the last several years. The purpose, on each occasion, was to help our customers and prospects understand more immediately what our platform can do for them.

For Dunkin’ and Merkle Loyalty Solutions, the reasoning is almost certainly the same. That’s because the most important “why” behind a name change or rebrand of any kind must be the customer. And with that in mind, let’s consider what effects – good and bad – a rebrand can have on the customer relationship…
 

Consider the customer

Your brand – from your logo, to your company name, to your tone of voice – is how your customer recognises you, relates to you and understands “who” your organization is and what you stand for. That’s why any changes to these elements must be done with careful consideration.

Being able to effectively communicate the purpose of the change – and its benefits to the customer – is essential. Take the example of music-streaming provider Spotify. The company changed its logo in 2015 and faced enormous online backlash.

The interesting thing was, the change was incredibly minor – a slightly different shade of green for their “brand” colour. But customers were not impressed. Although the aesthetics of the new logo colour dominated most of the discussion, the underlying issue was the lack of communication. Customers had no idea that change was coming, or what the reasoning was behind it – and as a result, they rejected it.

A logo colour is small piece of your brand identity; your name is much bigger. Any change you make should align with your brand values, and should help your customers better understand your company and what you offer. If your company’s approach, service offering, positioning or “personality” has changed, then a rebrand is certainly appropriate – and even helpful.

For Spotify, the logo change was part of a wider rebrand intended to reposition the company as a music provider rather than a tech provider. Ultimately, the purpose of the change made sense; it was the failure to communicate this purpose effectively that ruffled customers’ feathers.

Done well, a rebrand can improve customers’ perception of your company, help them align themselves with your brand values, clarify for prospects what you can do for them or simply help modernize an organization.

But changing an aspect of your organization’s identity without proper communication has the potential to damage customers’ sense of trust and their emotional connection with your brand – factors that significantly impact customer loyalty. It’s an important thing to keep in mind when planning any sort of rebrand.

And in Merkle’s case, they’ve done this fairly well – with blog posts and FAQs to inform and reassure customers that the brand’s values will stay the same. The only suggestion we’d offer is that the “why”, for customers, could be more clearly defined. A blog post on the company’s website says the change represents the “strength of partnership” between the loyalty solution provider and its parent company. But what that actually means for the day-to-day user remains to be seen.