Thanks Tom.

While it seems that search engines generally handle these characters well I still had to ask because I did two Google searches: One for "lole" and another for "lolë", and I got very different results. On the first search my website came up on SERP page one but on the second one we were nowhere to be found on any of the first 15 pages.

Whats more, every one of the first 10 SERP pages or so contained at least one instance of the character with an accent in the title, description, or within the on-page copy. So it seems that special characters and regular ascii characters are not one in the same, or at least they are not weighted the same.

I do have to agree with you on the fact that most users will not go through the trouble entering Alt codes on their search bars. On the other hand, the fact that we barely register on SERPs for the company's DBA name might be cause for some concern.

We carry a few brands that have special foreign characters, e.g., Kühl, Lolë, but do search engines recognize special unicode characters? Obviously we would want to spend more energy optimizing keywords that potential customers can type with a keyboard, but is it worthwhile to throw in some encoded keywords and anchor text for people that copy-paste these words into a search?

Do search engines typically equate special characters to their closest English equivalent, or are "Kuhl", "Kühl" and "Kühl" three entirely different terms?