It's more than the $1.65 hotdog and coke...

My friend Bill Ball makes fun of me all the time. He says that everything at the Martin household is from Costco. According to my rebate coupons from Costco, and my Costco branded American Express card, he might be right! If you don’t know, Costco gives their members a 2% annual reward coupon for every dollar spent there. Additionally AMEX rebates between 1-3%, depending on what you buy.

Two weeks ago I received both rebate coupons in the mail. When I did the math backward from my rebates, I was a little shook up….. We spent how much there this year?!?!?  I sat down and started to really analyze exactly what we buy there. Bill is right, we really do buy most of the things we consume at my house from Costco:

• Obviously, we buy food there. In fact, I think we get a good 80% of our groceries from Costco, including produce.
• I wear Kirkland brand (Costco’s house brand) underwear, dress socks, tee shirts, dress pants, jeans, dress shirts, and belts. I’d wear their suits if they made them!
• We drink Kirkland brand wine, beer, and liquor. They are excellent and cost significantly less than the name brand equivalent.
• I haven’t bought a single AA, AAA, 9V, C or D battery in 10 years that didn’t have Kirkland written on it.
• I have bought computers, stereos, cameras, televisions, and other assorted electronics there.
• For my business I buy coffee, bottled water, copy paper, pens, office chairs, folding chairs, tables, and countless other office supplies. I also buy gift cards to local restaurants and movie theaters to give as incentives to my sales team.
• Did I mention they have a tire center?
• We get our contacts and eyeglasses there.
• We print pictures at their photo center.
• Even our dog food and dog toys are purchased there.
• I’d guess that 70% of the gasoline we buy every year is purchased at Costco.
• I could continue for another 30 bullet points, but I think you are getting the picture!

Listen, I’m not a fan of shopping but I love going there. So much so, the lovely Dizzy D doesn’t even have to ask me. I volunteer. I don’t even mind going on a weekend afternoon. My closest Costco also happens to be the closest one to Sun City. For those of you unfamiliar with the greater Phoenix area, Sun City is a massive retirement community where the vehicle of choice is an EZGO golf cart. Saturdays and Sundays I have to wade through dozens of snowbirds that are avoiding paying for their evening meal by visiting EVERY sample station….twice. No big deal, I always love playing bumper cars with my shopping cart.

It got me thinking…..Why am I so loyal to Costco? It certainly isn’t the lavish furnishings. And honestly, their prices are typically better than other places, but not always. Besides, my wife will tell you that I’m not the kind of person to drive across the street, let alone across town, to save a dollar or two. For me, it boils down to 4 things. Things that I think you can apply to your business. And you won’t even have to help the octogenarian I ran over with my cart last Sunday.

Costco’s Four Simple Strategies That Lead To Loyalty:

1. Lack of choices – “WHAT?!?! Have you ever even been to a Costco Tim? I mean they have a trillion things for sale there! What do you mean lack of choices?” I can hear you screaming right now. I’m not talking about a lack of disparate items to purchase. I’m referring to the fact that they have basically one or two choices per category. Occasionally they will have 3 or more, but it is rare. Need an example? Earlier I mentioned batteries. Costco (at least mine) only carries two brands; Duracell and Kirkland. They don’t have Energizer, or Rayovac, or Eveready, or Sony, or Panasonic, or …….  I walk up, compare two brands, look at the price, choose, and then move on. Life is good! I don’t get bogged down by wasting time on a choice that basically doesn’t matter. A battery is a battery. I don’t need 15 choices. For more information on this topic, I would highly recommend you watch Barry Schwartz’s TED Talk titled “The Paradox of Choice”
2. Friendly customer service. – Costco employees treat their members like…..well… members. Remember, Costco is actually a club membership organization. They just happen to sell stuff. With the exception of them asking me every single time if I’d like a box, (No thanks, I was planning on carrying these 42 items from my car to the house one at a time.) they seem very sharp and engaged. The people at every Costco I’ve ever been to seem to really enjoy interacting with their members. They also seem to get that it is because I am there spending money, that they have a job. Many of the cashiers know me by name and seem genuinely interested in my day.
3. Fair prices – As I stated above, they don’t always have the lowest price on everything. And you know what? I’m O.K. with that. I don’t need to get the lowest price to think I got a good deal. If you are willing to stand behind what you sell and treat me like a human being, you have a very good chance of earning my business. You do it consistently, I won’t shop anywhere else. My wife recently got a free Sam’s Club membership (long story). I doubt that I will ever use it. Costco would have to screw up in a colossal way, maybe even more than once, for me to “cheat” on them.
4. Return Policy – I said in number 3, “If you are willing to stand behind what you sell” Costco has achieved legendary status, in this area, as far as I’m concerned. I could tell you dozens of stories but this one is the most recent. It also happens to be the second most impressive thing, that I have ever personally witnessed, in regards to delivering excellent customer service. (I’ll tell you the Panowitz Jewelry story some other time.) The other day I went to get a bottle of wine out of our little wine cooler in the laundry room. It holds about 24 bottles and usually keeps them at a very pleasant 55 degrees. It may not shock you to know that most of the wine happens to be from Costco (not all Kirkland brand, just some). Imagine my surprise when I realized that the cooler wasn’t working properly and all the wine was now room temperature. Worse yet, it wouldn’t reset. Bummer! This wine cooler wasn’t that old. So I unloaded the bottles from the cooler and loaded it in the Jeep to return it. Because we buy everything there with our Costco AMEX, we don’t need receipts to return items. They just look it up in their computer system for us. Due to the fact that we buy so many items from them, the CSR wanted to narrow down his computer search and asked me if I knew when I bought the wine cooler. I told him I wasn’t sure, but I knew it was a Christmas gift for my wife. I also knew it wasn’t this past year (2013), but probably the year before. Well……he kept scrolling, and scrolling, and scrolling. Finally, he found it in his system. I was right about it being a Christmas gift. I bought it on December 23rd……2008. Yeah…. It was nearly 5 1/2 years old. He explained that they still carried a similar product but the price had gone up some over the last 5 years. If I wanted, he could credit me the amount I had spent back in 2008 towards the new one. It would cost me a net total of about $60. Was I O.K. with that? Honestly, I felt a little weird about it. Was it fair for me to “take advantage” of them by returning a product that was 5 1/2 years old? When I even mentioned my dilemma to the CSR, his exact words were, “Seriously Mr. Martin, we want you to return anything that you’re not happy with, even 5 years later. That’s why you shop at Costco.” I couldn’t have said it better myself!

Conclusion: If you provide your customers a bullet-proof experience, they will never stray. Easier said than done, but you don’t have to be perfect. You just have to make sure they know you care, and that you are doing everything in your power to help them. If you make it easy for them to make choices, provide them great customer service, deliver great value for their money, and stand behind your word; I like your chances!!!

Question: How can you take your customers from good customers to customers for life? Let me know your ideas below. I answer every comment and email personally and promptly!