The question is in the title. I'm rather curious, because the use of colored names seems to only provide disadvantages. The reason I'm asking this is because in a recent game:

A player with a colored name was put on trial on D1 (Yes, there is a trial on D1) and claimed bus driver and even detailed his plan of action for the first night. The town agreed to inno him. Being an arsonist, having a bus driver alive would prove to be disadvantageous to me as I may douse incorrect targets. So, I decided to use his colored name/points against him by openly lying with the statement: "I know this guy personally, he blacklists town roles. He's lying." "He even told me specifically a few games ago that he blacklisted Doctor, Sheriff, Investigator, Detective, and Bus Driver." Since he uses a colored name and likely has the points to use -prefer and -blacklist, the town believed me and changed their votes to Guilty which resulted in him being lynched. They did not think of me as being suspicious and instead was angry with him saying things along the lines of "Don't blacklist town next time scrub". Unfortunately this manipulation seems to only work once as I've tested it several times on players before, but you get the point.

In addition to being subjected to random lynch, being a preferred target for killing roles, being disliked by players who can't use colored names themselves (jealousy), and probably a few more that haven't come to my mind yet, what exactly are the advantages of using a colored name? Players who use them only seem to make it easier for opponents (me in the example above) to eliminate them and win the game.