Does Double Jeopardy Apply Using Average Spend per Buyer as the Loyalty Metric?

Abstract

Double Jeopardy describes how smaller brands lose twice; they have fewer buyers who are slightly less loyal. A common loyalty measure is how often people buy the brand in a given time period. An alternative loyalty measure is how much people spend, which reflects purchase frequency and price paid. The brand equity literature suggests that high equity brands should reap high purchase rates and high prices. It is therefore possible that Double Jeopardy might become obscured when using a revenue-based measure such as spend per buyer. The reason is that price variation could create more, and more pronounced deviations from the Double Jeopardy pattern. We demonstrate that Double Jeopardy holds for spend in thirteen consumer goods categories: smaller brands have fewer buyers who spend somewhat less on the brand. We further find no relationship between brand share and average price and no relationship between excess/deficit loyalty and average price.