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Costco Business Model – Steal Their Marketing Strategy

What can you learn from one of the world’s largest companies? In this article, I’ll share with you three marketing lessons that you can learn from Costco, and analyze the Costco business model so you can learn to emulate them.

Costco business model lesson number one – collect data

Whenever you check out at Costco, you scan your membership card. Why does Costco do that? They build a database on you. They study what it is that you buy and when you buy it.

As a result, they’re able to offer you – and people just like you – better products and services. Without having to ask you, they simply look at your behavior and they’re able to offer you more of what you want, and do away with less of the things that you don’t want.

In other words, it’s a really great system.

What if you don’t have a membership program, though? What can you do?

Here’s two thoughts for you – number one – ask your customers why they chose you. The best time to do this is when your customers are actually buying something from you, whether it’s in person or

Another way to do this is via surveys via mail, or email, or social media. Ask your customers why they chose you and ask your customers what they want from you in the future.

Another way to do this is by simply listening to your customers on social media. A really great way to retain your customers’ business is by following them on social media. Go a step further and listen to what it is that they’re sharing, and make your decisions based on
those things.

Costco marketing strategy – offer less choices

Wait… what?

“Spencer, have you been in a Costco before? You’re telling me that my business should offer LESS choices? Look at this place!”

Hold on a second, though. Let’s zoom in:

This is the toothpaste selection at Costco. You notice that there are two options. There’s Crest, and then their Kirkland brand that they created themselves.

Why would they do this?

Costco knows their customers. Costco knows that their affluent customers have more money than they do time, so their customers don’t want to make decisions.

The implication of this, then, is that by only offering you a couple choices, Costco has already done all of the hard work. They say, “Look, regardless of what it is that you choose, you’ll be making a great decision.”

Costco Business Model – guarantees that MEAN something

Here’s Costco’s return policy – “On your membership – they’ll refund your membership fee in full at any time if you’re dissatisfied. On merchandise – they guarantee your satisfaction on every product they sell and we’ll refund your purchase price with the following exceptions,” which include electronics, diamonds, alcohol, that kind of stuff.

So, what I’d ask you’d to consider with your guarantees is there are these two kinds – there’s the guarantee that everybody has, and then the guarantee that I actually believe. There’s a huge, huge chasm between these two things.

When you offer guarantees or you offer assurances, make sure that you honor them, and that you follow up on them.

What do you think about these three lessons? Would you agree? Is there anything that I missed? I’d love to hear in the comments.

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About the Author

Spencer helps you save time through teaching digital marketing and social media strategies in plain English, after proving they actually work for himself and his company AmpliPhi first. He also is an instructor at the University of Wisconsin and Rutgers University.

Spencer X Smith

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