Why is rebranding risky?

Rebranding is a high-stakes move that can redefine how a company is seen, both inside and out. Done well, it can signal growth, sharpen positioning, and breathe new life into a brand. But when it’s done incorrectly, it can confuse customers, weaken trust, and undo years of brand equity.

Think about brands that have faced backlash after a redesign, a name change, or a complete repositioning. The intent was progress, but the execution missed the mark. Customers didn’t recognize them. Employees felt disconnected. The story that once made the brand unique got mixed up in translation.

A brand is a promise. And when that promise changes, even for the right reasons, it has to be done with care, clarity, and strategy.

What makes rebranding a company such a risk?

While rebranding signals transformation, it also comes with risk. Doing it properly can strengthen your brand’s position, open new doors, and keep a company relevant in a shifting market.

Some of the world’s most recognizable brands have faced backlash after miscalculating how their audience would react to a major shift. Customers form emotional connections with brands, and when those connections feel disrupted, trust erodes. It’s why rebranding requires precision, strategy, and a deep understanding of what makes the brand valuable in the first place.

Financial costs

The rebranding comes with a price tag that extends far beyond design updates, often encompassing significant changes in brand identity. Companies need to account for everything from new packaging and website overhauls to marketing campaigns, employee training, and supply chain changes. When a rebrand does not land well, reversing it—or repairing the damage—can cost even more.

Take PricewaterhouseCoopers’ (PwC) attempt to rebrand its consulting arm as “Monday”. The company spent an estimated $110 million on the rebrand, only for it to be scrapped within a year when IBM acquired the division. The name never resonated with clients, and the entire effort was seen as an expensive misstep.

Similarly, when Syfy rebranded from the Sci-Fi Channel, the goal was to broaden its appeal. Instead, it alienated core fans who felt the new name stripped away the brand’s identity. The network eventually had to work its way back, reconnecting with its original audience while justifying the change.

Keeping brand equity

A brand is a recognition, trust, and shared understanding between a company and its audience. When that foundation is disrupted, customers do not always follow.

Loyalty is built over time, and familiarity breeds trust. People associate brands with memories, values, and personal experiences. When a rebrand disregards that emotional connection, it risks alienating the very customers who helped build its success.

Even established brands can miscalculate the impact of a name change during the rebranding process, leading to confusion among their target audience. RadioShack’s attempt to rebrand as “The Shack” was meant to modernize its image, but instead, it created brand dilution. The name compromised its connection to the company’s legacy in consumer electronics, leaving longtime customers unsure of what the brand stood for. The business was already struggling, but the failed rebrand accelerated that.

Rebranding is a significant investment. Motto’s Flagship® process ensures companies do not just change their identity but strategically reposition themselves to grow, adapt to changing markets, and strengthen their position in the industry.

Why do companies choose to rebrand?

Brands are not meant to stay the same forever. As markets shift, customer expectations change, and businesses evolve, what once felt modern and relevant can start to feel outdated. Rebranding strategies helps you stay relevant, sharpen your positioning, and adapt to new realities.

Here are the most common reasons companies take the leap:

• Outdated identity: Design trends, language, and customer expectations shift over time. A brand that once felt fresh can start to feel dated, making a refresh necessary to stay relevant in a changing landscape.
• Market expansion: As businesses grow into new markets, their original brand may not translate well globally. A business rebrand helps align messaging and visuals to appeal to a broader audience.
• Mergers and acquisitions: When companies merge or acquire new businesses, a rebrand helps unify the entities under a single, cohesive identity that reflects their new vision and structure.
• Shifting customer perception: Sometimes, a brand becomes associated with something it no longer wants to represent. Whether it’s due to past controversies or changing industry norms, companies rebrand to reposition themselves in a more positive light.
• Competitive differentiation: In crowded industries, brands must stand out. A strategic rebrand can help clarify what makes a company unique and why customers should choose them over competitors.
• Business evolution: A company’s products, services, or mission may change over time. If the brand no longer reflects what the company offers, a rebrand ensures alignment between perception and reality.

The strongest brands know when to evolve, ensuring they remain relevant, recognizable, and ready for what’s next.

Lessons from successful and failed rebrands

Rebranding is a balancing act. Change too much, and you risk alienating loyal customers. Change too little, and the effort falls flat.

When Dunkin’ made a name change it was subtle but meaningful—it reflected what the brand had already become rather than forcing a drastic shift. Dunkin’ also kept its signature colors and casual, friendly tone, ensuring customers still felt connected.

By reinforcing its position as a coffee-first brand, Dunkin’ stayed competitive with giants like Starbucks while maintaining its existing customer base. The lesson – A strong rebrand builds on what customers already love. Instead of erasing brand equity, it refines and enhances it.

But not every rebrand lands as smoothly. In 2023, Twitter rebranded to “X” under Elon Musk’s leadership. The move aimed to transform the platform into an “everything app,” but it created a ton of confusion. Twitter’s iconic blue bird and the verb “tweet” had become part of global culture, and the shift left users struggling to connect with the new identity.

The rebrand failed because it abandoned too much of what made Twitter recognizable. The blue bird and the word “tweet” were instantly associated with the platform, and removing them stripped away decades of brand familiarity. On top of that, the change wasn’t backed by a clear messaging strategy—users were left wondering what “X” stood for and why the rebrand was necessary.

The transition felt abrupt, with little effort to gradually introduce users to the new identity, leading to a disconnect between the brand’s past and its uncertain future. The lesson is that brand loyalty is built over time. A successful rebrand should feel like a natural evolution.

The brands that get it right do not just change their visuals—they build on what works and redefine what doesn’t. Motto’s strategic workshops help leadership teams uncover their brand’s core essence, ensuring that every change strengthens, rather than weakens, their identity.

How to rebrand smarter?

For a successful rebrand, you need to make sure that the transition feels purposeful, seamless, and aligned with what customers already trust. Studies show that brand clarity increases customer loyalty in the long term, reinforcing the importance of a well-structured rebrand.

So, what separates a smart, strategic rebrand from a risky one?

• A clear purpose: The best rebrands aren’t about chasing trends or making change for the sake of change. Companies that succeed start with a strong “why”—whether it’s entering a new market, modernizing an outdated image, or aligning with a new business vision. Without a clear purpose, a rebrand risks becoming an expensive misstep.
• Respect for brand equity: Rebranding is not about erasing the past—it is about evolving without losing what makes a brand valuable. The strongest rebrands identify which elements to keep and which to refine, ensuring that loyal customers still recognize and trust the brand.
• Customer-centric approach: A brand exists in the minds of its audience. Companies that listen to customer feedback, conduct market research, and test their new identity before launch are more likely to create a rebrand that resonates rather than alienates.
• A thoughtful rollout: An unexplained shift can create confusion. Smart rebrands introduce changes in phases—starting with internal teams, then gradually rolling out to customers through messaging, teaser campaigns, and storytelling that explains the evolution.
• Testing and iteration: Even the strongest brand strategies benefit from feedback. Companies that use focus groups, soft launches, and A/B testing can fine-tune their messaging and visuals before committing fully—reducing a costly rebrand reversal.

The bottom line

Rebranding is a strategic decision that shapes the future of a company. Leadership teams that invest in a thoughtful, research-driven rebrand are positioning their brand for long-term success, ensuring they stay relevant in a changing market.

A successful rebrand isn’t just about a new logo or a catchy slogan. It’s about understanding what makes your brand unique and using that insight to evolve in a way that resonates with both existing and new customers.

Motto’s proven process helps businesses not only redefine their visual identity but also clarify their mission, values, and positioning. Growth is the ultimate goal, and the right rebrand can help you unlock it.