To Re-Brand or Not to Re-Brand

A CLEC's brand is one of its most important assets, or it certainly should be. But sometimes even a strong brand isn't good enough - especially when a company is trying to transform itself, as many in this industry seem to be doing these days.

The company formerly known as NextLink Communications of McLean VA is an interesting case in point. NextLink, one of the fiefdoms in cellular pioneer Craig McCaw's telecom empire, made a big splash last month when it "re-branded" itself as XO Communications and introduced an integrated suite of flat-rate voice and data services.

How and why it took this radical step makes an interesting story. NextLink, headed since July by McCaw henchman Dan Akerson, had built a reasonable level of brand awareness in the 50 or so markets in which it was offering traditional CLEC services to business customers. But the company had aspirations to be much more: not just a regional CLEC, but a national and then a global provider of integrated communications services.

Besides city-core fiber and wireless networks, NextLink was also building a national fiber network to connect them and had begun to make some moves internationally. With the $2.54-billion acquisition in June of ISP and DSL provider Concentric Network (www.concentric.com), NextLink finally had all the pieces in place to become the kind of company it wanted it to be. But there were questions about the strength and aptness of the NextLink brand.

"Dan Akerson came in the door asking the question, 'Should we keep the name NextLink?'" says XO vice president of brand and marketing communications Kerry Morgan.

For one thing, there was confusion with the Nextel Communications brand. Nextel, Akerson's old company, is a McCaw-owned mobile wireless telephony service provider.
Morgan says NextLink sales people were spending too much time explaining that NextLink was not the same as Nextel.

But it went way beyond that. There were also concerns about whether the name was viable as an international brand and whether it expressed the identity the company wanted for itself. So the decision was taken to re-brand, whether that meant keeping the NextLink name and simply redesigning the logo and relaunching the company with a new marketing thrust, or actually changing the name.

NextLink hired a relatively small Seattle-based design firm, The Leonhardt Group (www.tlg.com), headed by branding ace Ted Leonhardt. It chose a small company because it needed to work as quickly as possible and some of the larger and better known branding agencies tend to be somewhat "bureaucratic," says Morgan.

It also deliberately chose a company with no experience in the telecom industry.

"When you look around the industry, everything looks the same," Morgan says. "You see lots of swishes, lots of blue, lots of red. We decided early on that if we do change the name or even keep the name and change the logo, we need something that will cut through the clutter."

The first step was deciding on the name issue. Leonhardt helped a team of NextLink marketing executives generate almost 5,000 possible names, many of them quickly rejected.

International viability was one of the first selection criteria. Was the name legally unencumbered? Could it be pronounced? Did it communicate the right image and message in key languages, including, of course, English - or could it be made to? Was the URL available?

XO, for example, was initially suggested as a name that would be pronounced 'so', but in some languages that pronunciation didn't compute. The NextLink team narrowed it down to six names, including NextLink, and using what Morgan calls "placeholder creative" - rough sketches of what a logo might look like - presented the names to a meeting of senior NextLink and Concentric executives.

After hearing explanations of the pros and cons of each, the assembled honchos voted for their choice. NextLink actually won by a narrow margin over runner-up XO. This was despite there being legal problems in some countries with the NextLink name - in one it was the name of a company that would be a competitor, in another it was a registered product name. And it was despite questions about whether it sent the right message.

"NextLink," says Morgan, "sounds like an evolutionary thing. We wanted to be more than evolutionary, we wanted it to be revolutionary." But NextLink did have strong brand recognition, which of course would be lost if the name changed.

Flying home with Akerson the day after the meeting, Morgan and others on the branding team kept hashing over the name issue. And the tide started turning towards XO.

"The fact is, the XO name gets under your skin," she says. "It really is a breakthrough name. And while it certainly feels a little bit more risky than a NextLink, if your goal is to make a big impact and break through the clutter, you can do that more so with an XO than with a NextLink."

In the midst of this discussion - in mid-air - the phone on the back of Akerson's seat rang. It was the chairman, Craig McCaw. Akerson told him the XO name. McCaw loved it. The rest, as they say, is history.

While to some the name may first suggest associations with the simple-minded and time-wasting game, it's meant to be symbolic in a couple of ways.

"The brand XO signifies the underpinnings of simplicity that make this company and its services unique," Akerson said at the re-branding launch on September 25. "We are making a statement with our brand by showing an 'X' indicating that we are right on target and an 'O' representing our ability to offer a complete set of services." The two letters also recall the new company's dual heritage - the X for NextLink, the O suggesting the Concentric name.

Logo design was completed by Leonhardt in a matter of days. The branding team voted on two possibilities and chose one with the two letters floating free. A key part of the process was getting the company's workforce on side. If you fail at that, Morgan explains, and employees resist the new brand, they may delay doing dozens of trivial tasks such as changing graphics on bill forms. "And that hurts the brand position with customers," Morgan says.

XO took a daring step in letting the cat out of the bag to employees two weeks before the launch. "In effect, we asked 6,000 or so people to keep a secret for two weeks," Morgan says. The lead time gave the marketing team a chance to win employees over before the launch. Each day it sent out XO branded goodies - cookies, a mouse pad.
It also previewed the $20-million ad campaign that would help launch the brand.

The first salvo, a three-page ad in the Wall Street Journal on September 25, had in bold letters filling the whole of the first page, "Tired of using 4-letters to refer to your telecom providers?" The spread on the next two pages bore the headline, "Try these two instead," followed by the new XO logo.

"As people started to see how strong the brand could be and how it could be used," Morgan says, "excitement grew." At launch day, feedback from employees was universally positive, she says.

The re-branding - the name, logo, associated graphics, color schemes and so on - was not enough on its own to make the kind of impact the company wanted. XO considered a one-two punch, announcing the re-branding first and then following with announcements on its "breakthrough" marketing strategy. The strategy includes flat-rate, bundled pricing for all services - local, long distance, broadband Internet access, Web site - a single bill, 7/24 customer service and a three-month guarantee. The company decided in the end that it needed to tell it all at once to make a big enough splash.

Did It succeed?
"I think we're being noticed," Morgan says. "Friends in other telecom companies have told me, 'Well, we know you're here.'"

So, should every CLEC looking to transform itself into a full-service communications provider try and fight free of the competitive scrum by re-branding itself?

"Every brand has positives and negatives," she says. "I would very carefully consider keeping that name and just building on it," says Morgan. "If you change it, the entire company has to get behind it or it's just not going to be effective. It really is a big undertaking."

And an expensive one. Morgan won't reveal exactly how much XO spent on the re-branding exercise. She estimates the range would be from $200,000 to $4 million, depending on the design firm selected and the number of names considered. XO's bill was towards the lower end of the range, she says.