Costco Customer Loyalty: Visitor Frequency Analysis
July 23, 2021
While many companies focus on building free membership programs, Costco Wholesale’s model thrives on paid membership: its customer retention rate among its annual members is about 90%. This stat proves that Costco has developed a very loyal customer base. This loyalty didn’t waver even during the COVID-19 pandemic.
What keeps Costco members coming back? Costco’s great customer experience and member deals have made the brand a leader in customer satisfaction. But, how often do Costco’s customers return? To find out, we analyzed return visits within 3 days to Costco stores between January 3 and June 6, 2021 to determine exactly how loyal their customers are.
Costco Customer Loyalty for 2021
In 2021 (so far), 21% of Costco visitors return within 3 days, which is up significantly from 17% in early January. This proves that value shopping at brands like Costco continues to be important to consumers looking at price and convenience. Costco sales surged during the spring holiday season and this could explain why return visits started to increase in late April. Could the spring holiday surge have boosted Costco? It’s possible. Consumers might have made multiple trips to get what they need for holiday celebrations.
Costco Customer Loyalty by State
Consumers living in Hawaii, Nevada, and New Jersey return to Costco the most frequently. Why is customer loyalty to Costco so high for Hawaiians? Hawaii is known for being expensive – whether you are a tourist or live there. Costco’s pricing and bulk options allow consumers in Hawaii to get affordable groceries and more without having to travel to multiple stores. The convenience factor is definitely a big part for Hawaii, especially due to the logistical challenges of getting products from the mainland. Consumers in Arkansas, Maine, and Mississippi don’t go to Costco as frequently as those in other states. This could be due to the lack of Costco locations in these areas, or consumers opting for competitors like Sam’s Club or Walmart for their grocery needs.
When you view the same data on a map, regional trends emerge. The West Coast, certain states in the Midwest, and parts of the upper Northeast can’t get enough of Costco’s products and services. Again, convenience and cost are big factors for Costco customers. So, why aren’t certain areas of the U.S. as enthusiastic about Costco? Unlike many other retailers, Costco is still expanding its store locations across the U.S and abroad.
How Can Costco Keep Customer Loyalty Going?
During the COVID-19 pandemic, wholesalers like Costco saw a big boost in consumer foot traffic. What can wholesalers do in the future to keep customer loyalty growing? They’ll need to continue to iterate their customer experience, including membership programs. Increasing (or even maintaining) membership involves getting insights from data. A data-driven customer loyalty strategy is best built with a real-world data solution like location intelligence.