Costco: A Proven Customer Service Role Model for 40 Years

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Costco: A Proven Customer Service Role Model for 40 Years

I have speaking and writing about customer service since January 1980. There are only a handful of companies that have been Relentless and kept their focus on incredible customer service. COVID gave most firms an excuse to say “To Hell with the Customer”

Costco is one of only a handful of companies that has never lost sight of its focus on the customer experience. Its fiscal year sales ending September 1, 2024 of $249.6 billion, an increase of 5 percent from $237.7 billion in 2023. This is a $11.9 billion increase in sales.

Costco currently operates 890 warehouses, including 614 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, four in Spain, two in France, and one each in Iceland, New Zealand and Sweden. Costco also operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia. It is open 7 days a week.

In May of 1983, I invested $1,000 each in 9 service leaders at the time to see what the results would be over time. As of September 17, 2024,  41 years later the $1,000 I invested in Costco is worth $37,633 and I now have 42 shares. Amazon the $1000 has grown to 640 shares and is worth $119,603  JetBlue is only worth $414. Walmart which owns Sam’s, a major competitor to Costco is only worth $6,403. The total $9,000 investment is now worth $196,185 Most firms lost their focus on delivering great customer service.

Sam’s has probably 1-2 people at checkout counters with long lines. Costco has 2 people at each checkout counter and regardless of the lines it only takes a few minutes to check out. A huge cooked chicken is only $4.99.  Costco has incredible prices and quality. On almost all of their products, they have a lifetime guarantee. The computers are only 6 months. A vendor selling to Costco must have the highest standards of quality and they have to stand behind their products.  Speed is incredible.

Customer service is as bad today as it was in 1980 when I launched Feelings. Costco is an exception and you can see they had a $12 billion increase in sales and the $1000 invested is now worth $37,633 vs only $6,403 at Walmart.  A 37-time return vs only 6 times for Walmart. Walmart and Sam’s have very poor customer service. When I started in 1980 Walmart with its founder Sam Walton was a service leader. In the 1990s under Lee Scott as CEO, they gave up on customer service and only focused on price. In fact, the stock of Walmart was worth less after his 10 years as CEO vs when he started.

In my book Achieving Excellence Through Customer Service, I tracked Walmart vs Kmart. Walmart was killing Kmart because of its focus on customer service.

Costco and Amazon both pay their employee some of the best pay in the US. Both firms value their employees and customers. Almost every firm says they love their customers and employees. Frankly, this is a bunch of nonsense.

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