Gotta hand it to Costco once again. Their growth continues healthily through the pandemic, largely because of their unwavering dedication to customer service (and their strong employee support doesn’t hurt either). And, this is despite ranking lower than some competitors in the convenience category, cited by a recent ZDNet.com report as a chief consumer buying criterion.
A November 5 Motley Fool article frames the discussion: “Costco’s Incredible Sales Growth Streak Continues…The warehouse club giant’s consistently strong sales growth is proof that members are increasingly relying on it for a mix of everyday essentials and discretionary items. Its sales momentum also casts doubt on critics who believe that Costco needs to match rivals that have rolled out in-store and curbside pickup options…Costco’s sales totaled $13.82 billion in the four-week fiscal month of October, up 15.9% year over year. Comparable sales increased 14.4% year over year. Excluding the impacts of currency fluctuations and changes in gasoline prices, adjusted comp sales increased 16.5%, nearly matching the company’s September growth pace.”
The article continues, “Costco couldn’t do much better…Despite its recent success, a growing number of pundits, retail analysts, and investors…believe that Costco is making a big mistake by not rolling out a curbside pickup program. (It doesn’t even offer a “buy online, pick up in store” option for most items.)”
The ZDNet.com article emphasized that convenience “is overshadowing other brand selection criteria,” with roughly 70% citing this as a primary reason to buy from a company.
What’s the big takeaway from all this? Consumer loyalty is not a one-size-fits-all formula. The ZDNet.com article addressing Salesforce’s State of the Connected Customer report points out: “Companies actions are under scrutiny for their impacts to all stakeholders, not just their shareholders. Ninety percent of survey respondents agree that how a company acts during a crisis reveals its trustworthiness. From how they treat essential employees to their actions against injustices to their environmental practices, a company’s demonstrated values have an outsized factor in whether or not they’ll earn a customer’s business.”
According to the report, a whopping 85% of customers cite treatment during this year’s crises as an influential buying criterion. Eighty-two percent cite treatment of employees. These are two of Costco’s greatest strengths driving sales, loyalty and continuing growth since the company was founded.
What does this mean moving forward?
Companies that focus on key tenets of conscious capitalism—taking care of all stakeholders, most notably customers and employees, will find continuing paths to success. Convenience, driven by improved technologies and ability to deliver quickly and easily (e.g., Amazon) also will continue to drive improved revenues and allegiance.
In sharp contrast, companies talking customer service with clever catchphrases and campaigns that don’t deliver will find themselves trying to figure out where it all went wrong, and why their competitors are shopping elsewhere in droves.
“Nuts and bolts” of a company’s strengths and credibility once focused on length of time in business, track record and proven abilities—in other words, historical measures. Now, companies increasingly are judged based on their customer service-related performance in the present and moving forward. Historical reputation, while still a factor in buyer decision-making, is taking a backseat to such customer service measures as convenience, understanding and empathizing with customer needs, and trust tied to how well companies treat all stakeholders.Mark Lusky
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Mark Lusky (aka The Happy Curmudgeon)
is the owner of a Denver-based marketing communications firm. He’s a veteran writer, storyteller and author, with 40+ years of public relations, advertising, marketing and journalism experience, and author of A Wandering Wondering Jew… and co-author of Don’t Get Mad, Get Leverage.