Loyalty Differences Stem from Size, Not Quality

By German Tirado, August 12, 2025

Introduction: The Loyalty-Quality Myth That Misleads Marketers

In marketing circles, it’s almost a sacred belief: if customers are more loyal to a brand, it must be because that brand offers superior quality. The idea sounds logical and comforting—loyalty as the ultimate proof of brand greatness. After all, why else would customers come back again and again if not for exceptional product performance or outstanding service?

But this popular assumption doesn’t survive contact with decades of rigorous research from the Ehrenberg-Bass Institute for Marketing Science. Across hundreds of industries—from consumer packaged goods to B2B markets like internet marketing services and telephone answering services—the data tells a different story: loyalty differences between brands are largely a predictable outcome of brand size, not a reflection of quality superiority [1].

The underlying pattern is known as the Double Jeopardy Law. In every measured category, large brands enjoy two advantages:

They have more buyers (higher penetration).

Those buyers are slightly more loyal (higher repeat purchase rates, lower defection rates, and larger share of wallet).

Small brands, by contrast, face a double handicap: fewer customers and lower loyalty levels. This is not because their offerings are worse—it’s because they are less mentally and physically available in the market [1][2].

This matters because many marketing teams waste resources chasing loyalty metrics as if they were a direct measure of quality. They double down on retention programs, VIP clubs, and elaborate loyalty schemes, expecting these to drive growth—when the evidence shows that the real driver of loyalty is acquiring more customers through broad-reach marketing, building memory structures via Category Entry Points, and maximizing ease of purchase.

In the following sections, we’ll unpack the evidence, explain why size—not quality—explains loyalty gaps, and show how marketers can apply these findings to grow penetration in their categories. Whether you sell software, coffee, or professional services, the lesson is the same: grow your customer base and loyalty will follow automatically.

Introduction: The Loyalty-Quality Myth That Misleads Marketers
The Evidence: The Double Jeopardy Law in Action
Why Bigger Brands Have Slightly More Loyal Customers
Why “Loyalty Equals Quality” Is a Dangerous Assumption
How to Grow: Focus on Penetration, Not Loyalty
The Role of Category Entry Points in Loyalty & Growth
Metrics to Track for Growth
Action Plan for Marketers
Conclusion: Loyalty Will Follow Penetration – Not the Other Way Around
Frequently Asked Questions (FAQs)
Works Cited

The Evidence: The Double Jeopardy Law in Action

The Double Jeopardy Law states that:

Bigger brands have more buyers (higher penetration).

Those buyers are slightly more loyal (higher purchase frequency, retention, or share of wallet).

Smaller brands have fewer buyers and those buyers are less loyal [1].

This pattern has been observed in B2C and B2B markets alike. Examples include:

B2B Banking – Smaller banks have fewer clients and those clients use fewer services on average [1].

Business Insurance – Defection rates are higher for smaller brands across nearly every insurance product [2].

Telecom & Industrial Markets – Larger brands enjoy more repeat purchasing simply because they’re bought more often in the first place [1].

The important point: loyalty metrics are predictable outcomes of brand size, not proof that one brand’s offering is inherently better than another.

Why Bigger Brands Have Slightly More Loyal Customers

1. Mental Availability

Large brands are remembered in more buying situations. They have wider and fresher memory networks because they are linked to more Category Entry Points—the cues that trigger brand recall when a buyer needs to make a purchase [2].

2. Physical Availability

Large brands are easier to find, buy, and use. They’re available across more channels, geographies, and formats, and they maintain consistent shelf or platform presence. This ubiquity means they get bought more often, which naturally boosts repeat purchase rates [2].

3. Network Effects

More buyers means more visibility, more word-of-mouth, and greater chance encounters with the brand. That creates reinforcing loops of buying and remembering.

Why “Loyalty Equals Quality” Is a Dangerous Assumption

Quality Thresholds Are Usually Met

In most competitive markets, all players meet acceptable quality standards. Differences in perceived quality are often small and subjective—yet the loyalty gaps between big and small brands are large and consistent [1].

Light Buyers Dominate Sales

Even the biggest brands rely heavily on light buyers—customers who buy infrequently. These customers may like the brand but will still buy competitors occasionally [1].

Switching Is Often Unrelated to Quality

Contract cycles, price changes, location shifts, or operational needs frequently drive switching. Even happy customers defect when circumstances change.

Conclusion: High loyalty is a symptom of size and availability—not necessarily proof of quality superiority.

How to Grow: Focus on Penetration, Not Loyalty

If loyalty is size-driven, the main growth lever is customer acquisition—increasing the number of category buyers who purchase from you in a given period. This requires building both Mental Availability and Physical Availability.

Reach More Category Buyers

Use broad-reach advertising to cover both in-market and out-of-market buyers (remember the 95-5 Rule: most buyers are not in the market right now) [1].
Avoid wasting budget on narrow retargeting of your current customers—they already buy you.

2. Build Mental Availability Through CEPs

Identify key Category Entry Points in your market (e.g., “when upgrading equipment,” “when needing urgent delivery,” “when compliance deadlines approach”) [2].
Link your brand to these cues through consistent, distinctive messaging.
Refresh those memory links regularly to prevent decay.

3. Maximize Physical Availability

Expand distribution into more locations, formats, and platforms.
Ensure purchasing is frictionless—whether online or offline.

The Role of Category Entry Points in Loyalty & Growth

The Ehrenberg-Bass Institute’s research on CEPs shows that bigger brands are linked to more buying situations than smaller brands. In US Business Insurance, State Farm (25% penetration) was associated with more CEPs per buyer than smaller competitors like Hartford or Hanover [2].

For example, linking your brand to multiple scenarios such as:

“When I need coverage for new equipment”

“When my current provider raises rates”

“When my business expands into new states”

…increases the odds you’ll be recalled when that situation arises.

More CEPs = more occasions to be bought = higher penetration.

Metrics to Track for Growth

Market Penetration (%) – Percentage of category buyers purchasing your brand in a given time frame.

Mental Market Share – Share of all CEP mentions in your category attributed to your brand.

Distinctive Asset Salience – Recognition and correct attribution of your logos, colors, taglines, and other brand assets.

Share of Category Requirements (SCR) – Share of customers’ category spending that goes to you.

Action Plan for Marketers

Audit your brand’s CEP network – Identify the situations where you’re remembered and where you’re absent.

Prioritize high-value CEPs – Focus on cues with large buyer bases and high purchase frequency.

Create co-presentation opportunities – Pair your brand with CEPs in advertising, social content, events, and sponsorships.

Invest in distinctive assets – Ensure your brand cues are instantly recognizable across all media.

Maintain reach year-round – Avoid “bursty” campaigns that leave long memory gaps.

Conclusion: Loyalty Will Follow Penetration – Not the Other Way Around

The marketing evidence is overwhelming: brand loyalty is not proof of superior quality. Loyalty differences across brands are primarily a predictable outcome of market share, explained by the Double Jeopardy Law [1]. Larger brands have more customers, and those customers are slightly more loyal, not because the brand’s products or services are inherently better, but because the brand is more mentally available, more physically available, and easier to buy in a wider range of situations [2].

This means that chasing loyalty as a primary growth strategy is both inefficient and misguided. Efforts like elaborate retention programs or over-targeting your “best” customers may feel productive, but they deliver marginal returns compared to investing in broad-reach marketing that builds penetration. Real, sustainable growth comes from increasing the number of category buyers who purchase from you at least once in a given period.

For businesses in competitive categories—whether you run internet marketing services, telephone answering services, or any other B2B or B2C offering—the path to stronger loyalty metrics is clear:

Grow penetration first – Reach more category buyers, including the 95% who may be out-of-market right now, so your brand is remembered when they enter the market.

Build Mental Availability – Use Category Entry Points to link your brand to multiple buying situations, ensuring you are thought of in more purchase contexts.

Maximize Physical Availability – Expand your reach across more channels, formats, locations, and platforms to remove buying friction.

Refresh Distinctive Assets – Ensure your brand’s unique visual and verbal cues are consistently recognized and correctly attributed.

The takeaway is simple but powerful: loyalty will naturally rise as your brand’s footprint grows. Trying to “earn” loyalty without first expanding your base is like planting seeds without preparing the soil—it misses the fundamental growth mechanism.

When you apply the principles of marketing science, supported by decades of Ehrenberg-Bass research, you shift focus from vanity metrics to growth drivers that actually work. You stop obsessing over loyalty as a badge of quality and instead build the foundations—mental and physical availability—that make customers buy from you more often. In doing so, you set your brand up for long-term market share gains, better customer retention, and, yes, higher loyalty—because loyalty follows size.

Frequently Asked Questions (FAQs)

Q1: Does higher brand loyalty always mean better product quality?

No. Marketing science shows that brand loyalty differences stem primarily from brand size, not quality superiority [1]. Larger brands have more customers and slightly more loyal customers because they are more mentally and physically available—not because they are inherently better.

Q2: What is the Double Jeopardy Law in marketing?

The Double Jeopardy Law is a well-documented pattern where brands with higher market share have more buyers and slightly higher loyalty, while smaller brands suffer from fewer buyers and lower loyalty [1]. This applies in categories from consumer goods to internet marketing services and telephone answering services.

Q3: How can a small brand increase customer loyalty?

The best way to improve loyalty is to grow penetration, reach more category buyers and make the brand easier to buy. Expanding distribution, increasing advertising reach, and building mental availability through Category Entry Points will naturally increase loyalty over time [2].

Q4: What role does product quality play in loyalty?

Product quality must meet category standards to avoid negative word-of-mouth or delisting, but once a minimum threshold is met, quality differences rarely explain loyalty gaps. Loyalty is largely a side effect of being a bigger brand [1].

Q5: Should I invest more in loyalty programs or customer acquisition?

Evidence from the Ehrenberg-Bass Institute suggests that customer acquisition delivers far greater long-term growth than focusing solely on loyalty programs [1]. Loyalty programs can have tactical benefits but should not replace broad-reach marketing.

Q6: What are Category Entry Points (CEPs), and how do they impact loyalty?

Category Entry Points are the cues or situations that trigger a need for a product or service. Brands linked to more CEPs are remembered in more buying situations, which increases purchase occasions, market penetration, and, over time, loyalty [2].