Today Costco is one of the only places many people go to, if they leave their homes at all. According to a recent Forrester “Consumer Energy Index” that looks at COVID-19 a.k.a. coronavirus’ impact on consumers, customer trust is at an all-time low. The report shows customers feel fragmented and disconnected. Customers find it hard to believe that organizations will do the right thing. Customers are still in the mood for something new but also slowly feel like they are losing control. Despite these odds Costco continues to keep its doors open for customers and make products accessible. Costco has consistently been open to accommodate concerned (and frankly absolutely panicked) customers who are loading up on key household items during this time of widespread fear and scarcity worries. The store design isn’t flashy, the shopping carts are massive and most customers come out with copious amounts of toilet paper and paper towels, but there’s something magical about Costco’s customer experience. The warehouse store earned top marks in customer satisfaction from the ACSI, knocking Amazon from the top spot it held for nearly a decade, and is regularly recognized for its customer service. Costco has a 90% member retention rate which is incredible.
So, what is it about Costco that keeps customers running back for more? A culture dedicated to customers and a shopping experience unlike any other.
Here are five lessons from Costco’s amazing customer experience that companies in any industry can exemplify.
During the Pandemic Costco Finds Better Ways To Protect Customers From Germs.
As people mob this beloved grocer amid the coronavirus panic, Costco has taken various steps to protect shoppers in stores. It is no longer offering its much-loved samples, it is limiting the number of shoppers allowed in stores at any one time, and it has ramped up the sanitization of its stores. Costco is trying to protect its vulnerable customers, and now customers 60 and older can shop between 8 a.m. and 9 a.m. Tuesdays and Thursdays.
During Normal Times:
During normal times, the differentiating factors are the most recent deals and finds. Costco shoppers are hooked on the store because of its unique, no-frills approach to shopping. Of course, the try-before-you-buy free samples are famous (which are postponed now as we established), as well as the food court with inexpensive food and drinks (which are now temporarily limited to members). Every Costco warehouse is purposely designed with the necessities at the back of the store, meaning customers have to walk through the rotating items and sales to get their most-needed items. But customers don’t seem to mind because shopping at Costco often feels like a treasure hunt of good deals. Instead of a run-of-the-mill grocery trip, Costco becomes an adventure that loyal customers are obsessed with.
2.Building Branded Products People Love
During The Pandemic People Are Stocking Up On Costco-Brand Wine
Costco has created a high-quality store brand across all of their departments, but particularly relevant now is its wine. Many people are now loading up on the signature Kirkland brand items, including Costco’s famous high quality wines. There’s nothing like alcohol supply during a global disaster. By cutting out the middle man Costco continues to accommodate better prices for customers without skimping on value.
During Normal Times
One of the reasons customers are so loyal to Costco is because of its store brand, Kirkland Signature. The products are cheaper than name brands but often incredibly high quality. In 2018, Kirkland Signature products brought in an astounding $40 billion in sales. Creating a strong store brand shows that Costco cares about its customers and wants them to have great products at a great price. It also creates a consistent experience for customers, who know that the store brand products will still be great quality, no matter the item. Kirkland Signature items are also available online, making them available to customers in all locations.
3.Be Both Exclusive and Accessible
During The Pandemic You Can Still Shop At Costco With A Gift Card, at Costco.com or via Instacart
Costco creates a lot of jobs for other companies, like Instacart who will hire 300K new staff to accommodate the surge in shopping delivery.
During Normal Times
Costco shoppers are required to spend at least $60 on an annual membership, which becomes their buy-in to shop at the store. The membership makes the experience seem exclusive, but the price is reasonable enough to be accessible to most Americans. The membership is also valuable because it provides access to other programs, like discounts on travel such as cruises (although no one is buying cruise tickets right now), home repairs and cars. Not every store needs to have a membership requirement, but the principle is sound: something about the experience should feel exclusive and make the customer feel like a VIP, even if everyone else could also get the same exclusive experience.
4.Focus On Quality Over Quantity
During The Pandemic Customers Are Saving Money By Buying Bulk Items
For better or worse, customers are stock piling items like toilet paper, paper towels, water, rice, lysol and disinfectant wipes, though Costco has put a limit on how many of these items customers can buy.
During Normal Times
Costco stores are massive, but the actual number of products they sell is much smaller than other big-box stores. Most warehouses only sell around 3,800 items, compared to142,000 items for sale at an average Walmart. Because there are limited options available for each type of product, customers feel confident that what they are buying is good quality. Costco buyers do the hard work to discover the best items in each category, and customers trust their decisions. Instead of having to sort through 15 types of lunch meat or toilet paper, customers have the choice between just a few options. Simplifying choices and focusing on quality products makes life easier for customers and builds their trust in the brand.
During The Pandemic Costco Is Making The Tough Call To Keep Customers Accountable
The customer is not always right — particularly when fueled by mass anxiety. That’s why amid coronavirus shopper panic, Costco is no longer allowing its customers to return toilet paper, which is highly coveted and hard to come by during this pandemic. Costco CEO Craig Jelinek recently said, “While the circumstances continue to change and we modify our operations as necessary, we thank you for your patience and cooperation…As new developments occur, be assured we are committed to taking care of our members and employees and to our mission of providing low prices, quality merchandise and exceptional service.”
During Normal Times
Costco is known for its generous return policy. Most items can be returned years after the fact, even if they are used and you don’t have a receipt. Instead of nickel and diming customers and making them jump through hoops, Costco shows it trusts its customers. Many aspects of the experience, including offering customers additional discounts throughout the year and cash-back for their purchases, adds to the trust. Costco is asking members to invest with their membership, but it pays back the cost with numerous benefits.
Every aspect of Costco’s customer-centric approach is intentional and focused on creating a unique shopping experience for customers — even during the coronavirus pandemic. By putting customers first in every choice and innovation, Costco continues to build its loyal customer base and show brands in other industries just what it takes to be totally customer-centric.
This article was first published on Forbes.com.
Blake Morgan is a customer experience futurist, keynote speaker and the author of the bestselling book The Customer Of The Future. Sign up for her weekly newsletter here.