Big Brands Have Higher Loyalty. Again.

This time it’s streaming video services in the U.S.

Looking at the data, the brands with the largest market share have higher household penetration AND higher retention rates. Netflix & Amazon are the big winners; Peacock and Apple are suffering the effects of being small.

This might be a shock to people who believe that there are some small brands which have small but highly-loyal customers. Like Warby Parker (nope). Or Harley Davidson (nope). Or Gnarly Barksdale (I just made that up).

One of the oldest laws in marketing is that small brands suffer twice: they have many fewer buyers, AND those buyers buy slightly less often (lower repeat, AKA loyalty, but don’t say loyalty, it’s a terribly messy word that should only be used for pets & sports teams). This is called Double Jeopardy. It’s older than me. 

So there are no companies that defy the laws of brand physics, so to speak, and somehow make water flow uphill.

This means we shouldn’t be shocked that Peacock or Paramount+ have lower retention than the industry average. That’s like being shocked that a flyweight can’t punch as hard as a heavyweight. Duh. You’ve got to control for weight class.

There is plenty of wiggle, though. The R-square for the trendline is .45, which means about half the variation in retention isn’t explained by penetration. (Or in other words, penetration and retention have about a 67% correlation.)

This means we should look at the DEVIATIONS from the expected pattern given the brand’s size. And here the interesting outlier is Apple+. Something’s clearly going on there — or more likely, 20 things are adding up to make retention for Apple+ waaay lower than expected.

So check your brand against the predicted Double Jeopardy pattern in your industry, not against the industry average. And then do the things — the 5 or 10 or 20 things — that help you punch above your weight.