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3 Marketing Lessons You Can Learn From Costco 

 July 23, 2020

By  Spencer Smith

What can you learn from one of the world’s largest companies? In this article, I’ll share with you three marketing lessons that you can learn from Costco, and analyze the Costco business model so you can learn to emulate them.

Lesson #1: Collect Data

Whenever you check out at Costco, you scan your membership card. Why? Because Costco builds a database on you and everyone else. They study what it is that you buy and when you buy it.

As a result, they’re able to offer you – and people just like you – better products and services. Without having to ask you, they simply look at your behavior and they’re able to offer you more of what you want, and do away with less of the things that you don’t want.

In other words, it’s a really great system.

What if you don’t have a membership program, though? What can you do?Here are a few thoughts for you:

1) Ask your customers why they chose you. The best time to do this is when your customers are actually buying something from you, whether it’s in person or online.

2) Another way to do this is via surveys via mail, or email, or social media. Ask your customers why they chose you and ask your customers what they want from you in the future.

3) Another way to do this is by simply listening to your customers on social media. A really great way to retain your customers’ business is by following them on social media. Go a step further and listen to what it is that they’re sharing, and make your decisions based on those things.


Lesson #2: Offer Less Choices

Wait… what?

“Spencer, have you been in a Costco before? You’re telling me that my business should offer LESS choices? Look at this place!”

Hold on a second, though. Let’s zoom in...

Think about the toothpaste selection at Costco. There are actually only two options. There’s Crest, and then Costco's own Kirkland brand.

Why would they do this?

Costco knows their customers. Costco knows that their affluent customers have more money than they do time, so their customers don’t want to make decisions.

The implication of this is that by only offering you a couple choices, Costco has already done all of the hard work. They say, “Look, regardless of what it is that you choose, you’ll be making a great decision.”


Lesson #3: Stand By Your Guarantees

Here’s Costco’s return policy:
 On your membership – they’ll refund your membership fee in full at any time if you’re dissatisfied. On merchandise – they guarantee your satisfaction on every product they sell and they’ll refund your purchase price with the following exceptions, which include electronics, diamonds, alcohol, that kind of stuff.

Consider that there are two kinds of guarantees – there’s the guarantee that everybody has, and then the guarantee that we actually believe. There’s a huge, huge chasm between these two things.

When you offer guarantees or assurances, make sure that you honor them, and that you follow up on them.

What do you think about these three lessons? Would you agree? Is there anything that I missed? I’d love to hear in the comments.

Spencer X Smith Headshot

About Spencer

Spencer X Smith is the founder of social media marketing company AmpliPhi, and an instructor at the University of Wisconsin and Rutgers University. He was formerly a VP of Sales for two Fortune 100 companies. He’s been called a “Social Media Expert” by Forbes, and AmpliPhi is the winner of four consecutive (2016-2019) InBusiness Magazine Executive Choice Awards for Social Media Consulting Company.


Spencer has spoken at over 250 events since 2015, including a presentation at the New York Stock Exchange in 2017. His book “ROTOMA: The ROI of Social Media Top of Mind” was featured in Forbes, and is an Amazon Bestseller.

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