Double Jeopardy

If loyalty dynamics are tied to size, how are you planning to grow?

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In the 1960s, Columbia University sociologist William McPhee discovered the popularity of Hollywood actors, comic strips and radio presenters were linked in one, specific way: Awareness.

The more well-known, say, comic strips were, McFee found, the more they were liked. The less well-known, the less they were liked.

In “Formal Theories of Mass Behavior,” McFee wrote: 

“Recall that renown was biased in favor of popular alternatives to the degree that these alternatives got the unique increments from people who did not know many other competitors as well.”

In other words, smaller comic strips suffered twice: They were less-well known and, even when known, less liked. He coined the discovery Double Jeopardy.

Since then, studies have found this extends to nearly every aspect of consumer behavior—our purchasing habits included.

From a 1990 article by Andrew Ehrenberg, Gerald Goodhardt and Patrick Barwise in the “Journal of Marketing:”

“For branded packaged goods, the less popular a brand, the less loyal its buyers tended to be. The reverse, a small brand having few but exceptionally loyal buyers, has seldom if ever been reported.”

Absurd as the following may sound, we think it can be further distilled in this way: “Big brands are big because they’re big. And because they’re big, people buy them more.”

Though dated, we’ve yet to see studies that disprove this discovery. And one could argue that DTC brands moving into brick-and-mortar for greater awareness and distribution is a clear indication that the “Law of Double Jeopardy” law is at play—whether we recognize it or not. 

We were reminded of this on Thursday, when a we saw a DTC brand marketer asking for advice on launching a loyalty program. When considering McFee’s discovery, though, you have to ask yourself: If loyalty comes from being more available, is it worth chasing by other means?

To gut check ourselves on this question, we sampled repeat purchase rate distribution from a handful of brands, each of which are roughly the same size and in the same category. In doing so, we observed the Double Jeopardy Law in play: For each band, the most frequent customers—the top quartile—purchased about twice as frequently as the median, and about four times as frequently as the third quartile.

In other words, no brand we looked at had stronger loyalty dynamics than the others. They were as similar in loyalty as they were in size.

In February, we suggested a better term for retention might be reacquisition. It strikes us now that shifting mindsets in this way would align a brand with the realities of the Double Jeopardy Law:

“A retention-focused mindset runs the risk of overestimating a brand’s position in market. It’s defensive in nature, maybe even passive.

A reacquisition-focused mindset, though, forces you to constantly think about how you can deliver a better product, at a more compelling value, in more places. It puts you on the offensive.”

The net of this is you probably end up worrying less about something you can’t directly control—loyalty—and you end up worrying more about all the things you can control—creating a great product, building a customer base and doing things that make it easier for customers to buy.

If this feels uncomfortable, maybe even heretical, McFee felt that way, too. “This seems absurd,” he wrote. And, yet, it’s a pattern that’s held up across use cases for nearly 60 years.