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A lesson in rebranding gone wrong. Learn why United Airlines’ “Allegis” misadventure is a prime example of how important picking the right company name is to the rebranding process.

Rebranding Blunder: Rebranding Process Lessons from United Airlines' Allegis

The Vision Vs The Reality. Ferris’ vision crumbled at the unveiling of the new “Allegis” brand. Courtesy of the Name Droppings Blog at WordPress

What’s In a Name? Lessons from United Airlines Rebranding Blunder

It was 1987. Richard Ferris, CEO of United Airlines was at the top of his game, having amassed a full service travel empire. He had diversified United Airlines into the car rental business through his purchase of Hertz, and had bought up the Hilton and other hotel chains. He had a grand vision of passengers coming to United as a one-stop shop for all of their travel needs.

Flash-forward to today: Now that the internet has revolutionized the travel industry, Ferris’s “grand” vision seems almost matter of fact. Yet back in 1987 it was a novel concept.

Ferris had grown United aggressively both as an airline and a company. He wasn’t just pursuing growth, but a long term vision of how an airline should function and service its customers.

He had many skeptics on Wall Street, a community he had a very tenuous relationship with. They felt his strategy was misguided, especially in the short term. United, they felt, was best broken up into pieces to realize maximum value for the shareholders. However, no matter how focused on the short term, even the biggest skeptics saw the potential in Ferris’ strategy.

Rebranding to Market a New Era of Travel: The Allegis Corporation

Ferris countered with an aggressive campaign, but he wanted a single brand to convey his vision of travel. He decided on “Allegis” as it conveyed a sense of allegiance and loyalty to the customer.

It was a complete disaster. Donald Trump, who at the time was a United shareholder, called it a “world-class disease.” The choice of the Allegis name was unfortunate as foreign investors even had trouble pronouncing the name. To activist investors “Allegis” just rang empty, and added further fuel to the fire surrounding their doubts about Ferris’s leadership.

While they had significant misgivings over the new strategy, the new name made it far more “real.” As a result, they know had something tangible to rail against. The rebranding had set off a firestorm that galvanized the opposition. Within four months Ferris was gone. In the end,  Allegis’ board capitulated to their stockholders demands and agreed to sell off Hertz and the hotels.

For years Ferris defended his strategic moves, but admitted the “Allegis” name hadn’t helped his cause.

So, What’s in a Name? 4 Must-Have Qualities

For the less-motivated, there are certainly short-cuts, but with so much riding on a company’s name to effectively establish a successful brand, it pays to really think things over and make sure your moniker has the four following qualities:

  1. Clarity: It should convey a clear concept that doesn’t require a lengthy explanation like “Allegis” did. If you can’t explain it in a simple sentence then try again. The time honored aphorism “Don’t make me think!” applies here.
  2. Simplicity: It should be simple and easy to pronounce. “Allegis” was a tough word to pronounced for those who didn’t speak English as a first language. Contrast that with a “Microsoft” or “Lexus.”
  3. Timely: A brand name should be current with the times. General Motors eliminated all of its dated name plates from the Cadillac brand to compete with the “alphabet soup” models of their German counterparts. Model names like “Seville, Eldorado, etc” have given way to “CTS, XTS, and ATS.”
  4. Unbiased: Test it out with individuals who are outside of your business and don’t have any skin in the game. Ferris’ son later told him, “Dad it was a great idea, but it just had a bad name.” Within United,  Ferris hadn’t been able to get a real unbiased opinion.

These are just a few tactics to help develop a brand that works for your company and clearly conveys your mission statement to your prospects, investors, and your employees.

Do you have any favorite naming tactics to share?

Sudip works with portfolio companies to provide insights on the markets they operate in, their customers,
and drive development of business strategies.

  • http://www.facebook.com/alan.brew Alan Brew

    Sudip, nice blog about Allegis. It would have been a welcome courtesy for you to have referenced Namedroppings as your source (Allegis, the name that died of shame – http://tinyurl.com/23v8p62).
    Alan Brew

  • Sudip Verma

    Hi Alan,

    Thanks for your comment. We did reference the Namedroppings blog for the picture in the blog, but will be a bit more direct in the future. My interest in the Allegis debacle came from my undergraduate thesis at Brandeis which was about the deregulation of the airline industry. It’s just a very good example of a rebranding experiment gone bad.