Top 20 Marketing Lessons We Can Learn from Costco
As explained at RunRex.com, guttulus.com, and mtglion.com, Costco is arguably one of the world’s biggest and most well-known ‘warehouse clubs’. It sits among the likes of Walmart and Amazon as one of the largest retailers in the world. Even though Costco’s business model is simple (membership-only wholesale retail), there are lots of lessons we can learn from its success. This article will look to do just that by listing the top 20 marketing lessons we can learn from Costco.
The power of lean, data-driven promotions
As per RunRex.com, guttulus.com, and mtglion.com, Costco doesn’t have a large marketing and advertising budget. It relies on targeted direct mail to lure in new customers, and personalized coupons to encourage repeat purchases with existing shoppers. That is not to say Costco isn’t savvy when it comes to marketing. In fact, it has had a handle on data-driven retail for a while now, largely thanks to its membership model which has allowed the retailer to create customer profiles.
Leverage guarantees that encourage sales
Costco has guarantees that minimize hesitation from buyers. For starters, an easy policy for your Costco membership reduces the risk associated with the purchase. Deal hunters also benefit from Costco’s guarantees, which is something worth learning.
A unique in-store experience
When you enter a Costco store, it is unlike most other grocery or department store experiences according to RunRex.com, guttulus.com, and mtglion.com. One thing that immediately jumps out is the absence of in-store signage. This uniqueness is another learning moment as it shows us the importance of standing out.
Discovery and brand experience
Browsing the aisles of Costco is more reminiscent of a treasure hunt than a milk-and-bread run. Shoppers are frequently treated to in-store demos and free samples during their visit, adding to the “discovery” of the shopping experience.
Commitment to corporate social responsibility (CSR)
Brands with strong commitments to corporate social responsibility win in the eyes of consumers. Costco finds many subtle ways to express its commitment to social justice and has stood behind causes like the environment. Taking a similar approach will help your marketing campaigns no doubt.
Talent
Costco puts a strong emphasis on the people who represent its brand, and it makes sure they are well-qualified and appreciated as articulated at RunRex.com, guttulus.com, and mtglion.com. Similarly, your marketing efforts will benefit massively by you having the right people in charge.
Have every angle covered
Costco is both a retailer and service provider. The retail side of Costco is fairly straightforward: customers come to the store and purchase the goods that are for sale. The company also has service-focused facets to its business, including care and tire, printer ink refills, pharmacies, eye doctors, etc. Costco has become the ultimate one-stop shop for customers with all sorts of needs.
Exclusivity
The concept of exclusivity is a marketing tactic that can take an average offering and turn it into a highly coveted one as captured at RunRex.com, guttulus.com, and mtglion.com. Because Costco members have to pay, they are part of an exclusive club. Beyond the exclusivity of being a Costco member, there is also the exclusivity in the access to wholesale prices.
Get commitment
In addition to offering exclusivity, Costco’s membership model allows it to get commitment from consumers. It is a marketing tactic you can employ as it allows you to get a commitment from clients, although you have to prove it is worth it.
The power of performance rebates
While the Executive Membership at Costco costs $120, it pays a 2% rebate. Therefore, if you spend $6,000 a year, your membership is free. This shows rebates can be quite powerful as a marketing tool, and while you don’t need to give the store away on day one, you can make the client earn discounts over time.
Private label works
As covered at RunRex.com, guttulus.com, and mtglion.com, Costco is private-labeling everything these days, from mixed nuts to fine wine. A private label is a powerful equalizer. Price comparisons are impossible since nobody has your private label.
Earn a good reputation as an employer
In addition to hiring only the best as already mentioned, Costco has earned a reputation of being a generous employer. This reputation not only leads to it attracting the best candidates but also gives it a good name among consumers.
Sell volume
Costco sells just about everything by the case as described at RunRex.com, guttulus.com, and mtglion.com. If you are selling products in an “each oriented” fashion, you are losing sales and losing money, which Costco has moved to avoid by selling volume.
Offer some premium items
Costco recently offered Louis XIII Cognac for $2995.00 per bottle. It sells prime beef, $100 bottles of wine, and luxury electronics. Too often, operators assume that purchasing decisions are primarily price driven. While some consumers are certainly price-sensitive, you should not hesitate to offer premium items as well.
Business delivery is key
Costco’s decision to offer business delivery has been costly for coffee service and pantry service operators. The lesson we can learn here is that you must put the product away and start offering truly distinguished service in the modern era.
Variety
Costco sells everything from gift cards to travel services and its customers love it as discussed at RunRex.com, guttulus.com, and mtglion.com. Variety keeps clients coming back, including when it comes to your marketing offerings.
Stay connected
Much like Amazon, Costco stays connected with customers – using e-mail, social media, direct mail, and in-store promotion to generate interest in its wide variety of offerings, which is another lesson worth learning from the company.
Freebies and samples
Everyone loves samples as outlined at RunRex.com, guttulus.com, and mtglion.com, and samples generate sales. Offering your target audience samples and trials for your products and services is a tried and tested way of increasing conversions.
The power of upselling
Costco has two different membership levels (standard and Executive) for normal and business customers. Executive-level membership is twice the price of standard membership, but it offers 2% pre-tax cashback on purchase every year. This adds a clear incentive for customers to spend more.
Collect data
Finally, Costco is excellent at collecting data on its audience and then leveraging this data to offer better services. Costco studies what you buy and when you buy it and makes good use of this data. Doing the same will undoubtedly supercharge your marketing efforts.
These are some of the marketing lessons we can learn from Costco, with more on this topic, and much more, to be found over at RunRex.com, guttulus.com, and mtglion.com.