Suppose you started out with the catchy domain name Franks-garage-amsterdam.nl. It suited you fine at first, but your business has evolved. You've now got branches outside Amsterdam. And your main line of business is no longer servicing and repairs, but selling used cars. So, for a while now, you've also been using the name frankscarsales.nl. It goes better with what you do and where you do it. So internet users looking for cars are more likely to click on a link to your site. The arguments for going over completely to frankscarsales.nl are strong.
The ranking catch
Unfortunately, the internet doesn't cope with change as well as you might expect. Longstanding customers may not realise that frankscarsales.nl is you. And you could drop down the search results and find that your mail bounces more often. The story of British newspaper The Guardian illustrates the risks. The graph below shows what happened to the paper's Google profile when it switched from theguardian.co.uk to theguardian.com.
Domain name first!
Part of the problem for The Guardian was that it changed domain names at the same time as rolling out a new website. Visitors consequently landed on an unfamiliar page, leading many to hit the 'Back' button, damaging the page's ranking. Experts recommend that, if you change your domain name, you wait several months before launching a new site. That way, search engines are completely familiar with the new name before your site goes live. Unfortunately, a domain name change is often part of a comprehensive rebranding exercise that includes a redesigned website. Users are then more likely to be confused and many will desert.
Redirects: think your strategy through!
Of course, you'll set up a redirect from your old domain name to the new one. But that needs to be done carefully. If Frank the car dealer has a page devoted to Ford Focuses, for example, the redirect needs to take visitors to the corresponding page on the new site, not to a more general page. Visitors don't respond well to landing on a page that isn't what they're expecting. It's also important to inventory all inbound links from other sites before proceeding. Inbound links are important, so think your strategy through and make sure the links still work.
Read the guidelines
Google has published guidelines on changing your domain name. You're well advised follow them carefully!