Costco’s aggressive new tactic upsets members
There’s a reason Costco has been so successful in recent years while rival retailers have floundered.
Costco doesn’t have to worry about profit margins like other retailers do because it has a not-so-secret weapon in its back pocket: membership fee revenue.
In Costco’s last fiscal quarter, membership fee revenue increased 14% compared to the previous year. And most of that came from Executive memberships.
Costco members have a choice of membership tier when they sign up. Basic Gold Star membership costs $65 per year, while Executive membership costs $130.
However, Executive members receive a number of additional benefits.
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2% cashback Most Costco purchases
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Early shopping hours weekdays and weekdays
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A. $10 monthly credit Same-day grocery orders of $150 or more
Costco is investing in adding extra value to Executive members because it wants more people to join or advance to that level.
However, the company may be taking things too far with a recent move.
The more revenue Costco generates in membership fees, the better. So it’s easy to see why Costco would love it if more members upgraded to Executive.
To that end, Costco encourages its employees to approach shoppers in the checkout area and ask if they’re interested in updating their membership.
But these employees often do so persistently. And many Gold Star members are tired of being harassed.
Related: Costco makes changes to its large food court
As Bob from Central New Jersey comments, “The last few times I’ve been in for a checkup, I’ve gotten third-rate on my membership. It’s really getting old.”
“I don’t shop here much,” he continued. “The membership I have is meaningful to me.”
Other members expressed disappointment at being forced to upgrade.
“A cashier called someone to give me this sales pitch,” one Reddit user commented. “What bothered me was that I had to say ‘no’ three times before going to this woman.”
Not only are Gold Star members at Costco increasingly annoyed at having to fend off persistent requests for upgrades, but some store employees are upset at having to get in customers’ faces to promote their Executive memberships.
“We’re tired of harassing everyone for upgrades,” one Costco employee said on Reddit. “We even have one employee apologize before we start talking because we know the pressure it puts on you.”
