What Made Them Successful is Now in the Way of Growth
One of the coolest names to make a big splash in the market in recent years is Dollar Shave Club. I was actually interviewed by NPR a few years ago about this recurring revenue powerhouse. The brand name is so good because you immediately know what they’re trying to do: sell you inexpensive shaving accessories in a subscription club model. But while that brand helped them explode onto the market and allowed them to take on the multi-billion-dollar giants of the shaving industry- Dollar Shave Club’s name might be the thing that dooms them in the end.
Have you noticed how, for example, the new advertisements the company has been running? They’re now offering just about every kind of bathroom and grooming product a man needs. You can see their strategy at work here: they are trying to sell more products to their existing club membership base. This makes sense at one level, especially since multiple copycat competitors have sprung up in addition to heavyweights like Amazon and Gillette offering similar services. It’s probably become more expensive for Dollar Shave Club to try and attract new members and it’s cheaper to sell more stuff to the same members.
But here’s the big problem they now face: their name doesn’t allow them to expand their product offering well. While they might be offering shampoo and body wash, their brand name doesn’t tell you that. While the name Dollar Shave Club was amazing at connecting customers to their core razor offering, it doesn’t tell you anything at all about the other products they want to try and sell you. In other words, their name has now become a liability.
It’s been my experience that lots of entrepreneurs create similar problems for themselves when they go about choosing a name for their venture. The goal should be to find a catchy name or brand that also doesn’t limit your ability to scale. There are a couple of tips to consider when you think about coming up with a name for your startup:
1. Don’t Use 3 Letters or Acronyms. In some of the recent ads they’ve run, Dollar Shave Club has been using the initials DSC- probably as a way to try and buy themselves some wiggle room with their name. But they may have created a bigger problem, as DSC doesn’t mean anything to anyone. People might point to companies like IBM and GE and think it’s powerful to have short company names. But those same people forget that IBM was International Business Machines for years before it could shorten its name. Similarly, GE was General Electric for decades. If you try to use an acronym, you’re only going to further confuse your customers about who you are and what you do. And whatever you do, don’t use the three initials of the founders!
2. Don’t Be Too Specific. While having a name that ties directly to what you do can be an advantage in the short run, or if your target market is large enough, you also need to pick something that gives you some ability to scale and expand in the future. Think about the International House of Pancakes- or IHOP. Not long ago, they tried a PR campaign based around a fake name change to IHOB to let people know that they now offer burgers in their restaurants. But do you think about burgers when you think about IHOP? It’s a great name if you want pancakes but it’s now limited them from expanding their offerings and probably damaged their brand with the fake name change. A good example might be Inspirato, a high-end vacation club. The name communicates inspiration, but not too specifically what they actually do. The lesson is to find something that carries both some specificity as well as being generic enough to grow along with the business.
3. Get the Dot Com URL. A fact of modern branding is that unless you can get the .com URL for your new company name and not the .org, .net, .co, .biz, or any other extension available these days- it’s not a good choice. The .com URL is the prime property of the internet and unless you can get it, you should probably move on to another option.
We’ll keep tabs on how Dollar Shave Club, or DSC, is able to evolve its business in the coming years. Hopefully, they’ll be able to make the shift. But my guess is that it will be extremely difficult, and expensive, for them to move the needle when it comes to building awareness of what they do.
So let that serve as a lesson to us all that, when it comes to picking a name for your business, don’t pigeonhole yourself right from the start.