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Costco’s Entices Shoppers With Great Customer Experience

Costco Wholesale Corporation (better known as Costco) has been a fixture in retail shopping for nearly 40 years. Find out how shoppers are enticed with unique customer experiences including a new promotion with Volvo Cars. Did you know Costco sells vehicles?

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Introduction – Costco

Costco has been a shopping destination for many worldwide since its operation commerce in September 1983. As of May 2023, it operates over 845 locations in 14 countries. Headquartered in Issaquah, Washington, United States, the retail chain is known for its warehouse aesthetics, high-quality inexpensive food fares, supersized items at reasonable unit prices, and a customer experience strategy focusing on value, product demonstration, and unexpected product drops.

It is also well known for its generous return policy (which Retail Mashup covered in a piece on ChatGPT).

Transcript

Hello

Larry/DeAnn
Hi, this is Retail Mashup. I’m Larry. And I’m DeAnn. Retail Mashup the podcast is where we find the intersections between customer experience and the retail industry. Today, I want to talk about Costco, one of my favorite brands. I go to Costco regularly because it’s a fun activity and I need to buy things for my day-to-day life.

What Is the Costco Promotion With Volvo?

Larry
With Costco, I don’t need to go to the grocery shop every week. Instead, I can buy everything on a monthly basis or every couple of weeks. More importantly, I love the fact that you can have a sample. I miss that component a lot when it comes to my shopping experience, just having known some newer brands. I am able to see, “Ooh, that’s new dumplings or there may be a new bicycle” that they’re selling which may pique my curiosity at the same time.

I want to bring up Costco a little bit because I think most people didn’t realize that with their membership fees, they can actually buy a new car.

Most people would say to me, well, I have never seen any car-related promotions or items where would I get a car through Costco then? Well interestingly, for the month of May, up to July, they have a promotion with Volvo that members would be able to get up to $2,500 incentives on top of any manufacturer promotions on a new 2023 and 2024 vehicle model.

Costco’s Entices Shoppers With Great Customer Experience // New promotion with Volvo (Image: Costco)

And that is all over the US and in Canada, they also have their own separate program with separate incentives. I want to focus on the US. Their relationship with Volvo started in 2007. On top of that, Costco sells used cars and parts, And new parts as part of the auto program that they run.

Customer Engagement

I want to step back and ask myself that same question from before. “Wait a minute. I didn’t know Costco sells cars from a revenue generation perspective.” We talked about partnerships very often. Brands need to reach out to other brands and work together to bring that alignment to what they have to offer.

So why haven’t I seen a Volvo car in and out of Costco? Perhaps to build that excitement, to build that promotion, the first thing they should do maybe is actually show the product. Do people really think about Volvo when they drive a car? do Costco members Think about Volvo as a brand?

Costco’s Entices Shoppers With Great Customer Experience // Mobile Application (Image: Costco)

Having this particular partnership and promotional opportunity is amazing. But I also want to think number one, how are Volvo and Costco promoting and engaging their own customers on this particular partnership? Number two, how is the Costco shopping experience changed to accommodate this particular partnership?

And then number three, dive into after you get a Volvo, what’s next? Are there any specific Volvo after-sale care, gadgets, or parts that would fit well within a Volvo that is being sold by Costco? That would be something I would think. Customer experience is not just about me wanting to buy a Volvo, but really getting me to think about, Ooh, I need a new car.

Brand Association

Maybe I should think about a Volvo in the first place. Maybe get a test drive at Costco. And if I love it, knowing that I actually get an incentive for buying a Volvo at Costco, maybe that would just push me over the edge and allow me that opportunity to get a vehicle that I wanted, and then afterward maintain that relationship between me as a Costco member and Volvo.

That allows me a full circle moment to enjoy the vehicle and promote that relationship to other Costco members, other Volvo members, or just people in general. If I knew in advance that I can get up to $2,500 to get a Volvo, well, That could change the equation on what type of vehicle I want to get.

Discussion

Larry/DeAnn
What do you think? Are you a Costco member and did you know they sell cars?

I am a Costco member and I know they had this arrangement with Volvo, but I know they always make kind of a rotating arrangement with companies. They sell smart fridges from Samsung, for example, and I bought a very large Japanese maple for an extremely cheap price at Costco.

I’m not surprised when I see something out of the box. But I think to your point, I would love to see a car in the center of their store. Now, I’m sure they wouldn’t wanna give up so much real estate for one product, but even a car stop and make people think.

Loyalty Building

It’s also a great loyalty-building opportunity for Costco. As long As that discount really is impactful and makes members feel like they’re getting a special deal that other people can’t get. That is a solidifier for member loyalty. So yeah, that’s a great, great idea.

If I were Volvo, having a car or a picture of a car, or a piece of a car available in the store, would be so attention-grabbing. I’ll almost try to make it look like it’s on a shelf. That would really be an attention grabber and would really elevate what people think of as opportunities to get good deals on products in a Costco.

Costco’s Entices Shoppers With Great Customer Experience // Executive Membership Card (Image: Costco)

So I agree as well. I think it’s understanding the relationship and as a Costco member, I get emails from them, but I don’t typically see specific deals like this coming at me. Perhaps to some degree, Costco has not built the engagement points with me to ask me what I like, and what I’m looking now for. And so if it knows that I’m looking to buy a car, then it would send me more personalized information about this Volvo promotion, then maybe I would be more interested.

Training And Extending Brand Relationships

I also wonder if Volvo people are trained. They understood that, oh, I have a Costco member coming and that, they get up to $2,500, how can I make this person feel special, and that this relationship is important.

What I don’t like seeing sometimes is having brands working together and I think, oh, what a wonderful and interesting partnership. But then once I get to the other brand, they have never heard of the promotion before. It’s as if I made it up, and I just don’t like that feeling of being told I’m wrong, even if I have the information on the screen and they don’t believe that it’s true.

When brands are considering partnerships, the engagement is not just at your own loyalty program or membership level, but also ensuring that at the other end, the partners that you’re working with fully understand. What the deal is about and have the appropriate training or information sessions to guide potential new customers because you’re now building relationships on top of relationships.

Don’t Ruin The Brand Trust You Built

A referral, if you may, where I trust you and I believe in you. That’s why I’m giving you an opportunity to sell something to me. And you don’t want to burn a bridge just because you didn’t know.

Yeah, I think that. A source of annoyance with a lot of people is when they have a coupon or they have a discount in some fashion and it sends them to another store, another brand, and the employees look at you blankly and have no idea that this existed and are not even sure it’s real.

They haven’t been given the information and that is a dropped ball that’s easily correct. Make sure every employee knows what the affiliations or partnerships are. And it can be as simple as having a list. An employee can access quickly to see which offers are legit and which are not.

Case Study – Eames Chair

On the flip side of that, you had talked before about people not being aware that there are bills for sale or discounts available through Costco. That’s actually points of pride and it’s part of their brand. I used to be skeptical of it. Did you know that there’s a famous Eames chair and footstool, that usually sells anywhere from $6,000 when they had a version of it for sale and it was authenticated by the manufacturer?

It was an official Eames chair and it was for sale for $1,800 for one month. So a few lucky people would be able to buy a $6,000 chair for $1,800, and it was authentic. They do this kind of thing frequently and the idea is to kind of keep things shaken up a little bit. you do not Know what you’re gonna get when you walk into a Costco store.

And it’s a big part of what draws customers back so frequently. That and the dollar 50 hotdog, which is very tasty. But I do think also to your point, Once they’re in the store, it has to be communicated somewhere somehow. The Eames chair was sitting there in an aisle. So you turn a corner, walk up on it and Oh my God, there it is.

And it went viral on social media and they sold out really quickly because they had a very limited supply. It could be the same with the vehicles. There has to be some way of letting people stumble onto it. Realize what it is, understand the impact, and start communicating it out. And then I think they’ll really maximize that experience for the customer and blow that up for Volvo as well.

It’s a balance between predictability and discoverability. Giving the audience the perspective that you are going to have a great time coming to Costco. You are able to discover and explore different items you didn’t think about.

We want you to come into the store, not just to have a direct laser focus on what you need, but also to spend dwell time to discover what is also available that you didn’t anticipate. Costco has been able to find that amazing balance to get you to spend more time there without feeling like, oh, I’m spending way too much time there until it’s too late.

Wrap Up

Yeah. Yes, yes. But they feed you so it’s not, it’s not all bad. Well, I definitely love their hotdogs. one of these days I want to go around the world, go to all the different Costcos and see what type of items they have on the menu beyond hotdogs. Oh, that would be fun. Yes.

On that note, this is another episode of Retail Mashup, the podcast. If you like the podcast, please like, comment, and subscribe, and we’ll talk to you next time.

* We made some modifications to the transcript to improve understandability and flow

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