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Costco: Continuing to Invest in Customer Satisfaction

Costco: Continuing to invest in Customer SatisfactionIn my last entry, I compared the customer service strategies and standards of two wholesale retail giants – Sam’s Club and Costco. When all was said and done, thanks to Costco’s remarkable attention to detail, extensive market research, and clearly-defined target market, the Washington-based retail chain came out on top.

Still not convinced? The cold, hard proof lies in their customer retention. 91% of Costco’s current members renew their memberships every year. Bear in mind that they achieve this outstanding metric for success without advertising, and without compromising the culture of the company.

So what’s responsible for their customer loyalty? The answer lies, at least in part, in an unconventional return policy. With a few exceptions (computers, cameras, and mobile phones), any items bought at Costco can be returned by members at any time, with or without a receipt. Even if you’re not able to access one of their stores, Costco coordinates with UPS to allow their customers to return items via mail.

I once saw a man return unhealthy pea plants, no questions asked, to a Costco in my area. On the same visit, I was able to return a broken DVD player without a receipt over a year after the original purchase date.

Sometimes, I hear people ask why anyone would want to pay just to walk in the door of a Costco. The short answer is that unconventional customer service policies such as these incentivize membership to such a degree that people choose to renew year after year.

Stay tuned for more updates from John Tschohl, founder and president of the Service Quality Institute.

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