In 60 Seconds
- •The Law: Small brands are punished twice. 1) They have fewer buyers. 2) Those buyers are less loyal.
- •The Cause: It is a statistical availability issue. Big brands are easier to buy and find, so their customers come back more often.
- •The Myth: 'I am a niche brand, so I have a small but fiercely loyal following.' Data shows this is almost never true. Niche brands usually have small *and* disloyal followings.
- •The Escape: You cannot fix the loyalty issue directly. You fix it by getting bigger. As Market Share grows, Loyalty naturally ticks up.
- •Action: Stop trying to be a 'Cult Brand'. Try to be a 'Big Brand'. Focus on acquisition.
Double Jeopardy is an empirical law in marketing science. It holds true across toothpaste, cars, software, and local plumbing.
It states: Brands with less market share have fewer buyers, and these buyers are also less loyal.
Why It Happens
It comes down to Availability (Mental and Physical).
Big Brand (e.g., McDonald's):
- Everyone knows it.
- It is on every corner.
- Result: People eat there often because it's easy. (High Loyalty).
Small Brand (e.g., Local Burger Spot):
- Few people know it.
- It's hard to find.
- Result: Even people who like it go there less often, because they are often near a McDonald's and not near the local spot. (Low Loyalty).
The Strategic Implication
If you are a small business owner, you likely stress about "Customer Churn." You think: "If I just gave better service, they would never leave."
Double Jeopardy tells us: Some churn is a function of your size. You are small, therefore you are easily forgotten or unavailable.
The solution isn't just "better service" (though you need that). The solution is Growth. As you acquire more customers and become more "famous" in your town, your retention rates will naturally inch up because you become the "Default Choice."
B2B Application
"But I'm B2B!" It still applies. The biggest IT vendor gets the renewal because they are the "safe choice." The small boutique IT firm gets swapped out because nobody knows who they are.
To win: Get loud. Get big. Become the default.
Read Next in This Hub:
- Customer Acquisition vs Loyalty - The strategy.
- Mental Availability - The B2B angle.
Related System:
- Local Visibility Systems - Solve the First Jeopardy (Size).