Why am I a Costco fan? 1 word: Churro. Just kidding, although I do look forward to a Costco churro as a reward for pulling myself away from their deal sprinkled aisles with anything less than a $300 bill.
The truth is that I love Costco’s mixture of constancy and variety.
Constant features: accepting returns for things like unwanted wedding presents we received from other states, Costco’s giant & delicious premade spinach salads, cheap wine/diapers/gas, and money back with their higher end memberships. The constancy of their great deals on large TVs encourages me that we will be able to afford a sweet LCD in our next house.
Variety: The Greenville Costco launched with piles of deeply discounted Chip & Pepper and True Religion jeans. 2 weeks later? Totally gone, but Coach watches took their place. Every Costco I have visited has succeeded in their treasure hunt merchandising mission and kept me wanting to come back in a few weeks.
And so, dear Costco, should you deem it desirable to bring together the faithful to seek feedback on Costco’s future and what your core constituents want, I am ready for my invitation.
Note: Costco’s success is well documented, but this weekend I’m going to talk not about their fiscal success, but how they’ve created evangelists and why I am among them. They exemplify a brand that is worthy of a weekend.
To me, the exciting thing about Costco evangelists is that lurk in unexpected places. There are lots of people who do not need to pinch pennies or stock a house to feed a family of 12 who will still go out of their way to shop at this membership warehouse. Here’s my take on their ingredients for success:
Amazing Customer Service – How do they achieve this? They take care of their employees (paid an average of $17/hour) which reduces turnover and supports a knowledgeable sales staff. Costco both creates internal evangelists and makes the connection between taking care of employees and their motivation in taking care of customers.
Return Policy – They return everything for any reason. They have only recently limited electronics to a 90 day policy due to the amount they were losing on those tech returns.
Controlled Markup – Costco marks prices up by no more than 15% over wholesale. So no matter what a great buy they make, they pass along the savings to customers.
The Treasure Hunt – This is the secret sauce. Costco goes out of its way to surprise and excite its visitors with limited availability designer items. This solves two major challenges faced by warehouse stores – with products sold in such huge quantities, why visit regularly and why buy now? According to CEO Jim Sinegal last month:
“We have used the analogy in the past that one time they may come in and see that we have some Coach handbags and they come in the next time and the Coach handbags aren’t there, but perhaps there are some Fila jackets. The attitude is that if you see it, you have got to buy it because it may not be there next time. We purposely try to merchandise to that type of mind-set…We carry about 4,000 stock-keeping units, and about 1,000 of them are constantly in that changing mode, where they provide that treasure-hunt atmosphere.”
QUESTION TO THE READER – Costco sells very cheap sodas, hot dogs, and my very favorite – the churro. What role do you think this plays in their success??
5 years ago, I decided that I wanted to look at little different when I got married. This largely stemmed from the fact I am 6 feet tall and sturdy and I knew that wearing any variation on the typical strapless meringue princess dress was not going to work. I grew up in Richmond, Virginia where St. John Knit was spoken of in hushed, reverent tones and worn by some of the most elegant women I knew. I somehow got it into my head that a St. John evening gown would be a distinctive choice.
Of course, this was some years ago and I didn’t have funds to pay full retail, so I bought a white and gold gown on eBay (never worn, with tags). It was perfect, except for plunging neckline which was decidedly un-bridelike. I went to a St. John Outlet, where I had purchased some other items, and asked them how and where I should get it altered. They pinned the dress and sent it to St. John HQ in California for the alterations to be done. It was returned unchanged with a note explaining that they refused to do the alterations because they would ruin the integrity of the design.
I was shocked and crushed. I loved this brand so much that I wanted to be wearing one of their gowns on my wedding day and they wouldn’t alter it so I could? I wrote a very upset letter to CEO Kelly Gray, mailed it, and forgot about it as I started brainstorming what I was going to do for Plan B.
I didn’t have to think long because less than 48 hours later, I received a phone call at work from the Vice President of Customer Service. She apologized profusely, gave me her personal mailing address and proceeded to walk the dress through the alterations studio at the St. John mothership and FedExed it immediately back to me. Like so many loyalty making moves, this cost the company nothing beyond care and effort. This act of listening and engaging has increased my lifetime customer value to the company by many multiples. Pay attention to the squeaky wheels – the people who make the effort to tell you when something is wrong have the potential to become your most active evangelists.
Note: This is the first of the “Brands Worthy of a Weekend” series. These are, quite simply, brands that some find inspiring enough that they would make the personal sacrifice of a weekend to spend time learning about the company and meeting other enthusiasts. St. John Knit is one of my selections – today I’ll cover how they create enthusiasts and tomorrow I’ll share my personal story of fan creation. Please go to the Contact or comment her to share brands that you would deem worthy of a weekend.
This year, St. John Knit is celebrating its 45th anniversary. Kelly Gray, daughter of the founders, former face of the St. John ad campaign (before being replaced by Angelina Jolie), and former CEO of the company, was at Neiman Marcus in Houston greeting the faithful this week. One of the women waiting in line to meet her confessed to owning 200 outfits from various St. John lines. That is a fan. And, potentially, someone with a shopping addiction, but a fan nonetheless. St. John Knit has proven itself as a company that can inspire loyalists. But how do they do it?
Product – Despite the wild meanderings of fashion since its founding in 1962, you can identify a St. John item no matter its age because of its basic silhouettes and completely unique fabric. St John is not just a design house, but a manufacturer who spins, dyes and weaves its own blend of materials to make their signature knit. The advantages of the fabric include the way the garments hold their shape for decades, are completely wrinkle-free, and rarely show signs of wear. Another unique element of the cloth is that a qualified dry cleaner can use a product called “blocking” to redistribute the knit in such a way to size them up or down – thus allowing them to grow or shrink with your figure through the years.
Ownership Experience – While St. John does produce certain more “editorial” pieces with each collection, their bread and butter remains classic silhouettes of their signature fabric, accented with their elegant enamel buttons. Because of the easily recognizable looks, fans can easily spot each other and know they share certain values and taste. I think the recognizability of the garments is a key component in the ownership experience. One doesn’t need to wear logoed items (a la Coach or LV) for others to recognize that they are a part of the St. John brand promise and who wouldn’t want to live the promise of beauty and success promised by Angelina Jolie in this shot?
St. John is also known for its remarkable customer service, but I’ll expound on that when I share why I’m a fan tomorrow.
In my post last week about high end brands such as Kimpton Hotels rewarding customers with unique experiences instead of things, I mentioned my personal choice to give my father a night at Kimpton’s Hotel Monaco property in DC for his birthday. Last night, I called him in his room and heard a new man. He was borderline giddy about how much fun they were having and, let me assure you, my parents are deep and wonderful, but not the giddy type. His quote was “I don’t think I’ve ever done anything to deserve being treated so well!”
With my credit card authorization fax to the hotel, I submitted a note explaining that it was my Dad’s birthday, that I am a Kimpton enthusiast, and that I wanted my parents to understand why I am so passionate about their brand. They were clearly up to the challenge. My father informed me that they upgraded my parents to a 2-room corner King suite, had champagne for them at check in, delivered wine to the room, and generally treated them like VIPs at every turn despite the fact that they had never before spent a night at a Kimpton property. Now, the business side of me understands that that suite would have gone unoccupied anyway (all hotel rates were cut this week in DC because everyone’s in Iowa!) and that it didn’t necessarily cost them extra to do what they did. That being said, I know most hotels would not have taken the time or effort to create this personalized experience.
The actions of the staff of this hotel gives me another great story to tell about why I love Kimpton, and gave my parents not just a great experience, but a story I know they will tell over and over again. To please my parents is the greatest gift that this brand could give me, and I am deeply , deeply appreciative.
