My first Costco experience – business lessons learned from a customer’s perspective

 

So today my wife, son and I experienced a first – our first trip to Costco.

I have known about the Costco in my area for some time, but never taken the plunge. Mainly because you needed to be a member to be able to buy anything there, and I admit this did initially deter me – how could a supermarket be so exclusive and yet so profitable?

When I picked my son up from childcare last week there was a flier next to the sign in computer with an offer to attend Costco on 2 weekends and be able to buy all manner of their wares, without being a member – sounded like a great opportunity to me, so my family and I took the 30 minute drive up the highway to Costco this morning.

In my 3 hour experience this morning I learned several lessons about how one of the world’s most profitable businesses operate, and I will share them with you.

The first lesson I learned is that until you are a member of invited into the store, they don’t care about you or try to market to you in any way. I had to reach out to them. I had to want to go to Costco – it was not simply a matter of dropping in there on my way home to pick up dinner or some groceries, like every other grocery store. Costco is exclusive. Not everyone is allowed in there. At the front door they check your membership card, or, in our case, our invitation. To receive this invitation Costco must have partnered with the childcare centre that my son attends – I don’t know how yet but I am assuming someone who works at the childcare centre is a member and they have a referrer programme which brings Costco a large percentage of their new clients. This is the best way to get new clients.

The second lesson I learned is that Costco is a one stop shop. When we entered the store we were greeted by all manner of technology – TVs, computers, audio equipment. After that was whitegoods, clothing, at the back was fresh produce and meat, then dairy, then household cleaning items, and finally dry goods and toiletries. Near the checkout they had an optical store, and finally cosmetics – those wonderful impulse items. After our shop there was nothing else that we needed – this is very different from shopping at most other supermarkets, where you can get most of what you need but not everything.

My third lesson was that Costco has a very well defined point of different (unique selling proposition) compared with other supermarkets. Everything you buy there is a well known brand, and NOTHING is small. If you want to walk out with one of something you have another thing coming! Virtually every single thing in the store is upsized, sold in bulk, or simply way bigger than it is in normal supermarkets. When you get a trolley at the front there is no little coin thing, and the trolleys are twice normal size, with a platform down below similar to a Bunnings trolley. These trolleys are designed for you to buy loads of stuff. The trolley wheels are impeccable, and the trolleys even come with 2 baby seats.

My fourth lesson was that Costco does not advertise itself as the cheapest. They stock well known brands, and my wife did some price comparisons on her phone while we were there, and found that many other stores actually stock the same products at cheaper prices than Costco – but we were not there for the prices, we were there for the experience, and the exclusivity. Much of the time you cannot see where the product you want it – you have to walk the aisles and find the product yourself. The product’s price is not displayed in big fancy numbers – prices are advertised discreetly, and we came across at least 10 opportunities to sample products during our experience. There were no discounts – the price was the price and that was final. In saying that the products appeared to be of very high quality – the meat and fresh produce looked and smelled great all products were packaged well, and were displayed professionally and were laid out logically within the store to maximise the ease of shopping so we followed a straight line from entering the store to the checkout.

My fifth lesson is that they have basically thought of everything their customer needs. The carparks had a foot of extra space designated on each side for putting loads of food and other groceries in the side doors of your car! The trolleys worked well and you did not need a coin to operate them. The place was enormous but things were laid out logically, unlike a Bunnings store where you have no idea where things are. In places where they had items stored in boxes they had the item in display above the boxes. There were multiple staff in each section in case we wanted to ask questions. When we came to the checkout they actually had a person who packed out groceries for us! And after the checkouts they had restrooms, a restaurant, sitting area, and member’s enquiry desk. Would you believe as you walk out they had 3 really random items – a 10 person spa, a queen size bedding range, and you can even buy one of 4 coffins to make your transition into the next world seamless for your family!

My sixth lesson is that everyone we interacted with was smiling and happy – the shop assistants, other shoppers, the checkout staff, even the door attendants. The environment was infectious – I wanted to be there. My wife and I walked in the door at 9am and waked out at 11. Never in my life did I imagine that I would spend 2 hours in a grocery store! And I walked out almost $500 lighter in the pocket and guess what?? I was excited about it! I wish I could have spent more, there was so much more stuff I wanted there, and interestingly it wasn’t useless stuff, it was all stuff that we needed. It was like the Costco buyers had read our minds and had loads of really useful items.

When we arrived home I was proud of my purchases, and that afternoon we had some friends over and guess what? I spent about 15 minutes raving to them about Costco. This is the only marketing they need, and I’m sure they planned things to work like this.

The final jewel in the crown is that the initial referral form we got from the childcare centre stated that we could attend on 2 dates – this weekend and next weekend only (without registering for a membership). My wife is already proposing going back there next weekend. I never thought I would pay $20 for a paleo muesli, but honestly I didn’t even bat an eyelid when my wife put it in the trolley. It was all about the experience.

So how is this post relevant to your business? I will summarise based on my 6 lessons above.

Lesson 1 – Make your clinic exclusive – don’t be for everyone – be for your ideal client, their friends and family. Don’t be desperate and believe every person is your ideal client, as they aren’t. Don’t chase people you don’t love treating. Let them go, or refer them to your closest competitor! I bet plenty of people who don’t like Costco go to Coles or Woolies (not that there is anything wrong with that).

Lesson 2 – If your patient wants a service, or you find yourself referring outside your clinic regularly for that service, you have the option to bring that service in house and make yourself a one stop shop. I have noticed that the more services we offer at Scarborough Physio and Health, the more different services our clients buy. So if you only offer physio you are doing your best customers a disservice.

Lesson 3 – You must have something unique about your business, and your patients need to be able to define this when they leave after their first consultation. Our clinic’s experience is the professional medical suite experience – they sit in a beautiful, waterfront waiting room, they are greeted by an impeccably dressed therapist, treated in an airconditioned private room one on one by a therapist who guarantees to be on time or their appointment is free. No polo shirts, no curtained rooms, no rushing from one patient to the next, and no waiting. Simple, but effective.

Lesson 4 – Be the best, not the cheapest. Offer a premium service. Go over and above for your clients – but charge them a premium for it. Value your service. Many of your clients will be like I was at Costco, and enjoy spending money with you. Many of your clients will be like I was, and not bat an eyelid when a product they buy exceeds their expectation. Remember – people don’t buy based on price, they buy based on value. If you charge high prices and offer a shitty service, well you will go out of business quickly. Charing a high price forces you to step up in every aspect of your service offering.

Lesson 5 – Think of everything your customer needs. In my experience people in pain and injured need a listening ear, a plan, a team who wants to help them, someone to keep them accountable, and practitioners and services to help them at every stage of their journey. More than anything our patients need an “Oracle” – someone to call on when they have a problem to give them sage advice. Make this person you and your team – including your admin team.

Lesson 6 – Smile and be happy. Make sure your team smile and are happy. Then your clients will smile and be happy. Then your clients will refer people who are smiling and happy. This will create an infectious environment of positivity, that attracts people who are positive and repels people who are negative. Create a place where your people want to come that inspires them, makes them feel safe and happy, and helps them create the life of their dreams.

Oh, and make sure you get to a Costco at some stage of your life. Tell them Ultimate Physio sent you.

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