According to www.allbusiness.com
On a basic level, domain names are important because the Internet’s addressing scheme is not very effective without them.
Each computer on the Internet has an Internet protocol (IP) address: a unique string of four numbers separated by periods, such as 126.96.36.199. Since remembering the IP addresses of all of your favorite Web sites would be nearly impossible, a group of computer scientists created the domain name system to assign a unique name to each numeric IP address.
But domain names are much more than just a technical shortcut. A short, memorable domain name can make the difference between creating a successful Web presence and getting lost in cyberspace.
A domain name adds credibility to your small business. Having your own domain name makes your company look professional. If you publish your site through an ISP or a free Web hosting site, you’ll end up with a URL such as www.yourisp.com/-yourbusiness. This generic address does not inspire confidence in a customer like a www.yourcompany.com domain name does. And since many people don’t yet trust the Internet and e-commerce, you’ll want to do what you can to prove that your small business deserves their money. If you’re not willing to pay the money to register an appropriate domain name, why would consumers think you’d put any effort into creating valuable products or services?
A domain name says you’re forward-thinking. Having your own domain name indicates you’re part of the Digital Revolution, and it implies that you’re up-to-date on emerging technologies. Whether this is true or not, having your own domain name might just put you ahead of your competitors.
A domain name adds mobility to your Internet presence. Owning your own domain name lets you take that name with you if you transfer Web hosts or switch to your own in-house server. If you don’t own your domain name, you’ll have to take a new URL, which will destroy the branding that you built up with your first address.
The right domain name can attract walk-in business. If you decide to register a domain name that matches the concept of your business (instead of your exact business name), you might draw Web surfers in search of that topic. For instance, a hardware store that registered Hammers.com might get visitors looking for hammers on the Internet. Also, although search engine results are hard to predict, Hammers.com could show up more frequently in search results when someone searches for information about hammers.
A domain name builds your brand. More than anything else, a domain name can increase awareness of your brand. If your domain name matches your company name, it reinforces your brand, making it easier for customers to remember and return. It will also be easier to win business via word of mouth because customers will remember your name and pass it along to friends.
The bottom line is that a good domain name can go a long way toward generating traffic to your Web site and building your reputation. That, in turn, will result in more customers and better sales