Let us start with the bare basics of domain names.

A domain is the name of your online business, which is used by net surfers to locate your web site. A business must have a name, and the name it has contributes towards building its image. 

But the name becomes extremely important if it also acts as the address (URL) of the business. Hence, the importance of choosing the right domain name cannot be stressed enough. 

The "right domain name" for an online business would be one that contributes towards enhancing your image and towards your marketing efforts. It helps in bringing more traffic to your web site. 

Whether you already have an established offline business or are trying to build an online business from scratch, here are a few simple rules of name selection to follow: 
 

1. Easy to Spell:
If people can't pronounce or spell your domain name properly, it is bound to cause problems for you. This is because they need to be able to type your domain name correctly to reach your web site. Otherwise, they would be surfing some other web site thinking it is yours. You are likely to be the loser if something like that happens. Hence, try to choose a domain name that is easy to spell. 

A number of words in English have different versions of spelling, for example: color and colour, jewellery and jewelry etc. Search all the possible spelling versions of your name and register all of them. It would save you from losing a lot of valuable traffic. 
 

2. Short and Simple:
The ideal domain name would tend to be short and simple. We need to avoid confusing our net surfer at all costs. Longer names are bound to lead to more confusion and would cause problems in pronunciation as well as spelling . Initially ICANN allowed only 23 characters for domain names but now this limit has been changed to 63 characters. While this has made a variety of new domain names possible, the danger of confusing net surfers with long names has also appeared. 
 

3. Memorable: 
Your domain name must be easy to remember, so that net surfers can instantly access your web site by typing in your domain name in the browser window. They might not bother to conduct a search for your web site if your domain name is difficult to remember and is easily forgotten by them. 
 

4. Unique:
Your domain name should not be a sub domain. These result when you choose to host your web site with a free or inexpensive host. 

To illustrate, a unique domain name would look like this: www.yourname.com, while a sub domain of XYZ company would look like this: www.xyz.com/yourname.html. 

As it is obvious, a sub domain results in a longer URL for your web site. This goes against all the three rules listed above. It won't be short or simple, easy to spell or memorable. But the problems don't end here. The biggest problem is that your URL would not be consistent. If you ever decide to terminate your hosting with XYZ Company you would have to change your URL. Your customers may not have any way of finding you, resulting in loss of business for you. 
 

5. Related to Category:
Your domain name should give some idea of the business you are in, and what your web site is about. The two famous web based brands Yahoo! and Amazon defy this rule. You can't tell that Yahoo! would be the name of a search engine and Amazon would be a book store. But don't let this change your mind. Amazon and Yahoo! have the advantage of being the pioneers in their chosen categories, along with consistent brand building efforts and a commitment for quality. 

If you intend to rely heavily on search engine traffic, like the majority of web sites on the net today, you may also want to consider the alphabetical order of the name. A name starting with "A" would be listed on the top of a directory, while "Z" would go right at the bottom. This may make a big difference on the amount of traffic you can draw from directories. 
 

6. Generic or Exclusive:
There seems to be a lot of debate on whether a domain name should be generic or exclusive. It is true that while generic domain names result in more traffic for a web site, they make poor brand names. The solution is simple: While you shouldn't be giving your online business an official generic name, you may want to buy generic domain names related to your category and use them to redirect your URL. 

In this way, you won't suffer the danger of having a poor brand name, and you would also gain more traffic through redirection. Supposing you were selling books, would a domain name like book.com help you in getting more traffic? You bet it would!! It appears that Barnes and Noble realize this as they already own this domain. 

Selection of the right domain name requires creativity along with a consideration for the above listed rules. And remember, Yahoo! is successful in spite of defying three of these rules. You just have to realize which of these rules are important for your particular situation.