Research Outline

Customer Experience - Costco


To acquire evidence to show that Costco shoppers are loyal to the brand because of its customer experience, for use in writing a video script for Costco's YouTube channel.
  • Provide data on why Costco's clients are loyal to the Costco brand because of Costco's customer experience.
  • Determine if clients are loyal to Costco because of its friendly and helpful employees, access to less expensive products, or the convenience of bulk items.

Early Findings

Data Availability

The initial round of research indicates that data availability is adequate on this topic.

Costco Brand

  • According to Forbes, Costco has a 90% customer retention rate.
  • Unlike other brands, Costco does not have a traditional loyalty program but drives active customer participation. The key Costco customer loyalty drivers include reliability, trust, empathy, investment, and customer appreciation across the brand experience.
  • According to an ICF article, Costco has three core customer loyalty categories; habitual loyalty, emotional loyalty, and transactional loyalty. The habitual and transactional loyalty customers choose the Costco brand based on the services offered, prices, and the value of rewards.

Factors that Promote Costco's Customer Loyalty

Costco Product Prices

  • Costco provides great purchase deals for its customers through high-quality private label products, loss-leader status, and bulk quantity offers. According to consumers, the Costco credit card product is lucrative and straightforward, considering that "membership is built into the annual fee" and has high cash rewards.
  • The Costco brand has managed to retain loyal customers by offering few consistent and reliable values for their shopping experience. By doing this, the brand has portrayed reliability, trust, and investments in its value proposition.

Exclusive Membership

  • Costco requires all shoppers to buy the annual membership, which goes for either $60 for household or business and $120 for the executive. The exclusivity experience makes shopping more appealing and unique to customers because you have to be part of the Costco membership to shop.
  • Since customers are given a 2% cashback reward every time they shop, it makes them shop at Costco even more to recover their annual membership fee. Costco has a 90% membership renewal rate, while Canada has 51.6 million paying memberships with multiple cardholders.

Research Summary

  • In the initial hour of research, we have provided some quantitative insights into the Costco brand customer loyalty and some factors that boost the brand's customer retention rate. Due to time constraints, we could not provide information to determine if clients are loyal to Costco due to its friendly and helpful employees.