In 60 Seconds
- •The Hope: Small business owners believe 'We are small, so our customers love us more than the big corporate guys.'
- •The Data: The 'Double Jeopardy Law' proves this is false. Small brands have fewer customers AND slightly lower loyalty.
- •Why: Big brands (McDonalds, Roto-Rooter) have higher Mental Availability. They are easier to buy, so people buy them more often (Repeat Purchase).
- •The Lesson: You cannot grow by focusing *only* on retention. You are mathematically capped.
- •The Goal: You must aggressively acquire *new* customers to become big. Once you are big, loyalty naturally increases.
It flatters our ego to think we are a "Cult Brand." "We don't advertise. We grow by word of mouth. Our customers never leave."
This is usually a comforting lie we tell ourselves to excuse a lack of marketing.
The Law of Double Jeopardy
Discovered by Andrew Ehrenberg, this law holds true across soap, cars, banks, and contractors. Brands with less market share suffer twice:
- They have fewer buyers.
- Those buyers buy less often (lower loyalty).
Why? Because small brands are harder to find, harder to remember, and harder to buy. If your favorite "Niche Coffee Shop" is closed, you go to Starbucks. Starbucks wins on Availability, not necessarily taste.
Size Drives Loyalty (Not the Inverse)
We prefer to buy what we know. Everyone knows the Market Leader. Therefore, the Market Leader gets the "Default Business" from lazy brains.
- "Just call Roto-Rooter."
- "Just Google it."
Implications for Strategy
- Stop obsessing over 'Churn': Yes, fix bad service. But don't think 0% churn creates growth. It just creates stability.
- Obsess over 'Acquisition': The only way to get "Big Brand Loyalty" is to become a "Big Brand."
- Mental Availability: You must be famous in your zip code.
[!TIP] The 'Niche' Trap "We only serve high-end vegan homeowners." That's fine for a lifestyle business. It is death for a Growth business. Growth comes from Light Buyers (the masses), not the Niche.
Read Next in This Hub:
- Light Buyers - The target.
- Customer Acquisition - The strategy.
Related System:
- Local Visibility Systems - Get famous.